The US government has signalled a major policy shift in the H1B work visa programme, making computer programmers ineligible for the non-immigrant visas by default, firing a shot across the bow of India’s largest outsourcing firms.
In a memo issued on Monday, the US Citizenship and Immigration Services (USCIS) agency said previous policies and guidelines framed for the H1B programme in 2000 would no longer be valid.
In the memo, USCIS indicated that previous definitions of the term “computer programmers" would need to be amended and that “it is improper to conclude based on this information that USCIS would “generally consider the position of programmer to qualify as a specialty occupation."
On the face of it, the order looks to be levelling the playing field for Silicon Valley’s biggest firms, such as Google Inc., Apple Inc. and Facebook Inc., which have for long complained that they lose out in the race to acquire highly skilled immigrant talent to large outsourcing firms such as Tata Consultancy Services Ltd (TCS) and Infosys Ltd, which are often the biggest recipients of the H1B visas.
The USCIS memo is likely to cause short-term disruptions to the operations of Indian IT firms, which typically generate a majority of their revenue from the US and are already fretting over the prospect of having to pay higher minimum salaries for workers posted on-site as the administration of President Donald Trump pushes a ‘Hire American" initiative.
India’s software services industry lobby Nasscom insisted that the latest guidelines would not impact India’s $155-billion information technology (IT) industry, as top Indian IT firms typically only send “highly experienced professionals" for on-site jobs.
“The clarifying guidance should have little impact... as this has been the adjudicatory practice for years and also as several of our member executives have noted recently, they are applying for visas for higher-level professionals this year," Nasscom said in a statement on Tuesday.
India’s top IT firms, including TCS and Infosys, declined to comment. In recent interviews, top CEOs of the industry have raised concerns over the H1B clampdown and pledged to reduce their reliance on on-site jobs.
TCS chief executive officer Rajesh Gopinathan told PTI that the company had reduced the use of H1B visas while creating more US IT services jobs.
“All that we can ask for is a level playing field. As long as the rules of the game are similar, we are quite confident in our competitiveness that we can take on the best in the world... as long as we don’t see discriminatory policies," Gopinathan said in the interview.
US-based Cognizant Technology Solutions Corp. and India’s third-largest software services firm Wipro Ltd also declined to comment.
The latest memo and guidelines are likely to affect applications for the H1B lottery process for the 2017-18 financial year and invite more scrutiny towards applications from large Indian outsourcing firms. The visa lottery for the 2017-18 fiscal opened on Monday.
The memo implies that a large majority of H1B applications are still for positions that do not require specialist programmers and are mostly for routine tasks that do not require highly skilled technology workers. A Bloomberg report on Tuesday said computer programmers made up about 12% of all H1B applications certified by the US department of labour in 2015 and of those, 41% were for positions at “the lowest wage level".
“Visa is a risk that Indian IT cannot wish away; we believe the changes to visa rules will hurt profitability but not impair the business models unless the intent is so of the current administration," analysts Kawaljeet Saluja and Jaykumar Doshi of Kotak Institutional Equities wrote in an early February note to clients.
Over the better part of the last three decades, India’s largest outsourcing firms, led by Infosys, TCS and Wipro, built swanky, American-styled campuses to woo large American corporations that were looking to outsource low-end software maintenance jobs to India and also house thousands of fresh engineering graduates, many of whom were routinely sent on postings at client sites in the US.
Those postings over the years shrank as the US government has attempted to curb outsourcing and attempted to crack down on discrimination against local US workers. For their part, Indian software firms have reduced the number of H1B visa applications and in fact increased the proportion of local US employees, according to a recent JPMorgan report.
“Question: Is the India IT industry hogging H1B visas to the detriment of locals? Answer: NO even if it appears so...we think that the percentage of H1B visas issued to third-party India IT firms (such as TCS/Infosys) is not really increasing. In fact, the opposite may be true. Top India tech firms are applying for far fewer visas today vs three-four years back," said Viju George, an analyst at JPMorgan India, in a recent note to clients.
Other experts tracking the matter said that while the latest guidelines may prove to be a short-term speedbump, they would not dramatically shake up business models of top Indian firms.
“I don’t think the latest memo will dramatically shake things up for Indian IT. Most top companies have been gradually sending more experienced professionals for on-site postings over the last 3-4 years, and have actually been firing low-skilled workers who are ineligible for more complex roles," said an analyst with a multinational brokerage firm. He requested anonymity as he is not authorized by his firm to speak to reporters.
“What, however, this means is that the on-site dream of Indian engineering freshers and graduates is effectively over now. This is the final nail in the coffin of that dream," he added.
Bloomberg contributed to this story.