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A clever switch by US

Rajkamal Rao | Updated on December 11, 2018

New H-1B visa rules will hurt Indian IT majors

Two major H-1B beneficiary groups — Indian employees that work for the big IT majors in the US; and Indian students who obtain a US Master’s/Ph.D. degree and then apply for H-1B visas at US-based companies — have been at each other’s throats for years to gain preferential treatment.

The Trump administration has just proposed rules which, if adopted after the comment period early next year, will dramatically tilt this fight in favour of the students. The IT majors, supported by heavy lobbying by Nasscom and the MEA mandarins in South Block, will lose heavily — to a tune of over 10,000 visas each year.

Unlike other Trump immigration proposals which have been struck down by the courts, these rules will likely stay on forever. The US government grants 85,000 H-1B visas each year, bucketed into two silos: 65,000 visas are a general pool into which both groups can dip; 20,000 visas are exclusive to those who have advanced degrees from US institutions.

Until now, when an Indian student with an advanced degree applied for an H-1B visa, she would automatically be placed into the specialised bucket first. That Java developer with an IT major in Chennai with only an Indian bachelor’s degree would be processed out of the general pool. Once all 20,000 special visas were issued, then and only then, would students move into the general pool.

Given that all 85,000 annual visas are generally dispensed out within a week and applications are processed by lottery, Nasscom loved the current system. By the time students overflowed into the general bucket, the 65,000 visas would already be granted to the IT majors.

The new rule cleverly switches the order in which visas are processed. Every application will in the future be first processed out of the general bucket — which means that the Chennai Java developer has to compete with a student who graduated with a Master’s degree (and is likely already working in the US on a practical training visa). Only when the 65,000 visas are exhausted will the specialised bucket open for processing, a silo which is shut off to Nasscom employees who don’t have advanced degrees from the US.

In a statement to CNN Business, USCIS spokesman Michael Bars said that by inverting the order, the new process could increase the number of H-1B holders who have advanced degrees by up to 16 per cent — ensuring that “more of the best and brightest workers from around the world come to America” under the programme. You can do the math: 16 per cent of 65,000 is 10,400 visas which will now be simply taken away from Nasscom and awarded to Indian students in the US.

Foreign students are a $40 billion export market, so favouring students helps university budgets and America’s trade balance. And H-1Bs granted to tech majors could be abused to outsource American jobs to India, a practice Trump ruthlessly wants to limit.

There are collateral benefits to Trump as well. Foreign students on H-1Bs are more likely to secure green cards and gain US citizenship, becoming productive members of society. They are more likely to be upwardly mobile, switching from job to job. The Nasscom H-1Bs are more likely to be bonded to the majors with most profits flowing to India.

The proposed rules further weaken body-shopping consulting companies, mostly Indian owned, which thrive on importing cheap labour from India to place at third-party clients. But the big loser clearly is Nasscom.

The writer is Managing Director,

Rao Advisors LLC, US.

Published on December 11, 2018

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