Indian IT firms may set up new outposts in Canada, Mexico amid H-1B visa curbs3 min read . Updated: 30 Jun 2020, 11:56 AM IST
- Visa processing is an elaborate, months-long affair so any disruption could hurt the ability of critical workers to travel to clients sites for an extended period
- Indian companies could see an impact on their margins because of increased worker salaries
Indian and U.S. technology companies are urging the Trump administration to reconsider an executive order freezing access to many work visas, warning the move would undermine a business model used to supply high-skill talent to clients from Wall Street to Silicon Valley.
Donald Trump’s order last week halts approvals of a range of visas through year-end, including those for intra-company transfers and study-abroad programs, and is aimed at giving Americans preference after record job losses from the coronavirus pandemic. Key for the tech industry are H-1B visas used by workers from India and other countries to fill key roles.
Visa processing is an elaborate, months-long affair so any disruption could hurt the ability of critical workers to travel to clients sites for an extended period. Already, the virus lockdowns have blocked consulate visits essential to the process and forced hundreds of thousands of workers into challenging work-from-home situations.
India’s technology trade group, Nasscom, called Trump’s order “misguided and harmful to the U.S. economy" and warned it would exacerbate the country’s economic pain. Indian companies provide technology staff and services to U.S. hospitals, drugmakers and biotechnology companies, Nasscom pointed out. In addition, the industry may send more workers to Canada or Mexico without access to the U.S. market.
“These are highly-skilled workers who are in great demand and they will be mobile no matter what," said Shivendra Singh, president of global trade development at Nasscom.
Among the other critics of the order were Alphabet Inc. Chief Executive Officer Sundar Pichai, Microsoft Corp. President Brad Smith and Tesla Inc. founder Elon Musk. Pichai, himself a beneficiary of the H-1B visa system in the 1990s, tweeted, “Immigration has contributed immensely to America’s economic success making it a global leader in tech, and also Google the company it is today."
Tata Consultancy Services Ltd., Infosys Ltd. and Wipro Ltd., among the largest outsourcing companies in Asia, declined to comment.
India accounts for about 70% of the 85,000 H-1B visas issued annually, according to immigration data. Of this total, 65,000 visas are issued to foreign talent with bachelor’s degrees, while the remaining 20,000 can be allotted to workers who have more advanced degrees.The visa system was conceived so companies could hire overseas workers to fill a shortage of high-skilled talent in technology services and product development. The fact that Indian outsourcers collect a substantial share of the visas each year has made the program controversial, with critics arguing that companies abuse the system by replacing American workers with cheaper foreign labor.
Soon after taking office, Trump vowed he would crack down on work visas and reform the “broken" immigration system. One longer-term concern for outsourcers is the administration’s planned revamp of the current H-1B visa program, which would replace the current lottery system for determining who gets visas with a merit-based system that prioritizes applicants based on wages. That would mean more workers with high salaries would likely receive visas.
Now, outsourcing companies are dealing with the unpredictability of the visa situation and the prospect that an H-1B revamp could make it difficult to send anyone but the most critical of talent overseas.
The most recent visa curbs could hammer outsourcers’ current model of talent deployment. Companies are beginning to question whether so much onsite travel is necessary, and some are ramping up local hiring or local subcontractors. The pandemic has prompted companies to look at worker clusters away from client sites but close enough to collaborate on projects. For instance, if a company has 20,000 employees spread across 40 cities, these could be aggregated in a few clusters and if the visa restrictions continue, the clusters may not be in Texas or New Jersey but in Canada or Mexico.
“Offshoring could increase because, for clients, the virus lockdowns have already driven home the merits of remote working," said Singh, speaking over the phone from New Delhi.
Indian companies could see an impact on their margins because of increased worker salaries, higher costs of local hiring and subcontracting and the collateral damage from visa rejections and prolonged processing times. “The temporary suspension of H-1B visa programme till December 2020 will hamper execution of pipeline and new projects coupled with margin impact resulting from higher onshore hiring," credit rating company ICRA said in a note last week.
This story has been published from a wire agency feed without modifications to the text.