Another H-1B salvo

| Updated on December 05, 2018 Published on December 04, 2018

The squeeze on the IT industry should be seen as an opportunity to adapt to new challenges

The recent proposal by the United States Immigration and Citizenship Services (USCIS) to reverse the order of conducting the ‘Regular’ and ‘Masters’ cap lottery for H-1B visas comes as no surprise. Tougher immigration laws and tightening visa rules have become a predictable feature of Donald Trump’s Presidency. Over the last four years, there have been several tweaks of H-1B visa rules, making it harder for Indian techies to land their dream job. In February, for example, a new rule was introduced, which forced companies to prove that their H-1B employees at a third-party worksite had specific and specialty function to perform. This allowed USCIS to limit the duration of visa to less than a month at times. All this emanates from a belief held by the Trump administration that companies are bringing in cheap labour to replace American workers through the H-1B route. While US-based research firm Brookings Institute shows that H-1B workers are paid more than US-born workers with a bachelor’s degree ($76,356 versus $67,301), it is also a fact that for far too long some IT services companies have relied on shipping low-cost skilled labour to countries such as the US. This model had led to a situation where Indian IT firms had become the global experts in executing low-value projects but found it difficult to move up the value chain in terms of switching over to new transformational platforms like robotics, artificial intelligence and automation.

The tougher visa rules have come as a blessing in disguise for many large Indian IT services firms as they have been forced to change their business models. Indian companies have started to ramp up onshore hiring. Leading companies are also increasing their proportion of offshore work to reduce dependence on such visas. Recently, TCS won a landmark verdict in a US lawsuit when a California jury unanimously rejected claims that TCS had discriminated against non-South Asian workers in the US. TCS won the verdict only because it was able to show that it has invested over $100 million in building talent in the US and has created 17,000 US jobs between 2011 and 2017. Other Indian IT services companies have also started hiring locally instead of relying on H-1B visas. This is also indicative of a shift to digital technologies, which rely on automation, leading to a lower requirement of huge workforce. Globally, these new technologies are enabling tectonic shifts in systems and processes that require very different capabilities.

Indian IT companies should spread the business to more geographies, especially in the domestic market. India accounts for less than 10 per cent of the revenues for most large IT companies. While the US and Europe increasingly move towards stringent immigration rules, IT services companies should use this as an opportunity to adapt to delivery platforms for the digital age.

Published on December 04, 2018

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