The H-1B Visa Conundrum

The tightening of H-1B visa norms will restrict movement of low cost skilled labour and negatively impact margins of Indian IT players.

- Gaurav Jain

The Indian IT sector traditionally has been heavily dependent on H-1B Visa. For companies with a presence in the USA, it has been the most preferred visa for bringing skilled foreign workers into the country. Typically, visas are issued for three years and are further renewable for three years. The H-1B visa is renewed continuously for visa holders who have applied for permanent residency (commonly referred to as a Green Card leading to a perpetual work authorisation permit subject to the meeting certain requirements) through eligible foreign employers and whose application is pending approval. The Indian companies’ share of total H-1B visas (fresh as well as renewals) issued in FY2017 (October-September period) was close to 75.0% (65.3% in FY2013), coupled with 70.0% of the total such H-1B visas for the computer-related field. Hitherto, the cap on new H-1B visa issuances has been 65,000, with an additional 20,000 for highly-skilled labour possessing a master’s or a higher degree from a US university.

THE RAMIFICATIONS 

With a view to protect US jobs and wages, the United States Citizenship and Immigration Services (USCIS) has been gradually tightening the H-1B visa scrutiny. This is bound to have several implications for Indian information technology (IT) services companies in the near and medium-term. As a prerequisite for H-1B visa, the USCIS in March 2017 issued an internal memo clarifying that all entry-level programmers will not generally qualify for a position in a specialty occupation. This will affect the profitability margins of Indian IT companies as a result of direct impact of restrictions in the movement of low-cost skilled labour from India.