Home >Industry >Infotech >US visa freeze to hit IT, but seen as election year rhetoric
Top IT services firms have been hiring more American citizens to cut dependence on H-1B visa.
Top IT services firms have been hiring more American citizens to cut dependence on H-1B visa.

US visa freeze to hit IT, but seen as election year rhetoric

  • The flare-up of the work visa issue during the US election year should be seen as a temporary but recurring theme, analysts said
  • The Trump administration believes the move will open up employment opportunities for Americans in an economy that has reported record job losses

The US decision to freeze work visas, including the H-1B visa for highly skilled workers, till the year end will add to the troubles of Indian software services companies that are already struggling to cope with travel curbs amid the pandemic.

The decision, fiercely criticized by US tech leaders such as Elon Musk and Sundar Pichai, is the latest in a series of measures by President Donald Trump to crack down on legal immigration to combat staggeringly high unemployment levels in the country before the presidential elections in November.

The flare-up of the work visa issue during the US election year should be seen as a temporary but recurring theme, analysts said.

“President Trump has made it clear that he sees restricting immigration as a key campaign issue, so it is likely that as the election draws closer, we will see further action on these issues," said Rebecca Bernhard, partner at international law firm Dorsey & Whitney.

The Trump administration believes the move will open up employment opportunities for Americans in an economy that has reported record job losses.

Analysts dismissed the claim. This is just election-year rhetoric, said Siddharth Pai, a venture capitalist.

“The US will continue to have programmes to bring in skilled workers from India and other countries. Even if the ban is imposed, it is likely to be for the short term," he said.

Industry body Nasscom said that thousands of US firms, universities, medical facilities, research institutions, directly and through their associations have asked Trump not to take such action because of the harm it would do as the country reopens and recovers.

Tata Consultancy Services Ltd, Infosys Ltd and Wipro Ltd have been increasing hiring American citizens to cut dependence on the H-1B visa amid changing regulations.

Infosys hired 78% of senior management and staff locally in FY20. “We are committed to strengthening local hiring practices and continuously increasing the proportion of senior management hires from the local regions of our operations," Infosys said in its annual sustainability report 2020. It recruited over 6,932 staff locally in its markets and around 92% of the hiring in each location was principally local.

“FY21 is likely to see impact on demand, which reduces the need for new H-1B visas as new projects are delayed and rising unemployment levels in the US allows opportunities to hire locally," Nomura Research said in a note on Monday.

Around 69.5% of Wipro’s workforce in the US is local, the company said in its annual report 2019-20. It employed more than 41,000 employees located outside India, out of its total workforce of 188,270 in FY20. In continental Europe, 67.6% of Wipro’s workforce is local followed by Australia (40%) and the UK (33%).

Infosys, Wipro and TCS declined to comment on the visa restrictions.

Nasscom has also called out the action against skilled immigrants in the US as “misguided and harmful to the US economy." It has urged the administration to shorten the duration of these restrictions to 90 days.

“Lengthening these burdensome curbs on US firms that are trying to recover from the economic fallout of the covid pandemic will only serve to harm our economy," Nasscom said.

C.P. Gurnani, managing director and CEO, Tech Mahindra, said the Indian IT industry has prepared itself for immigration challenges in the past as well and the impact will be minimal in the short term.

“...From a Tech Mahindra standpoint, we have been hiring locally, opened new centres in US and have been reskilling and upskilling a lot more engineers there. Moreover, we strongly believe the ‘future of work’ will be hybrid, a mix of both of physical and remote, and the overall application count for H-1B visas from India will continue to de-accelerate," Gurnani said.

Nandita Mathur and Abhijit Ahaskar contributed to the story.

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