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Photo: Mint
Photo: Mint

Trump’s order queers the pitch for H-1B workers

The move is set to hit Indian IT firms offering solutions to US federal govt projects

Bengaluru/Mumbai: US President Donald Trump’s order restricting American federal agencies from hiring foreign workers, including those on the coveted H-1B visas, is likely to further squeeze Indian outsourcers as they work on many such projects either directly or as sub-contractors.

“We believe jobs must be offered to American workers first," he said.

Trump’s executive order follows the federally owned Tennessee Valley Authority’s (TVA) announcement that it will outsource 20% of its technology jobs to companies based in foreign countries, which could cause more than 200 highly skilled American tech workers in Tennessee to lose their jobs to low-wage, foreign workers hired on temporary work visas.

While the immediate impact on Indian IT services companies like Tata Consultancy Services, Infosys Ltd and Wipro Ltd will be minimal as they have already stepped up visa-independent local hiring in the US, the move has been termed as regressive and based on misinformation by most IT firms who have benefited from the H1-B visas.

IT industry’s apex body Nasscom said the order is based on “misperceptions and misinformation".

It further stated that the order comes at a time when workers on short-term non-immigrant visas like H-1B and L-1 are helping in bridging the acute shortage of STEM (science, technology, engineering and maths) skills in the US.

“As the world opens up after covid-induced lockdowns, it is important for the US to be able to access talent critical to the recovery phase. Measures that restrict access to talent will slow down the recovery phase of US economy, jobs, innovation and R&D," Nasscom said.

The H1-B visa ban has also put a question mark on many Indian IT professionals who were hoping to work in the US. Typically, engineers in IT services companies aspire to work out of the US in client locations at least for a couple of years as on-site employees are paid much higher wages than their offshore counterparts.

Jessy Varghese, a Kochi-based IT professional, was hoping to join his H-1B visa-holding wife, who is already on-site in Florida, later this year through his own client project.

“Neither of us is placed in projects (through respective Indian IT employers) that cater to any direct government clients, but my insurance industry client addresses multiple US government customers. The pandemic has already impacted work due to our inability to travel and now my on-site role is potentially at risk because my US-based clients cater to federal government projects," he said.

Sanchit Vir Gogia, CEO and chief analyst, Greyhound Research, said: “While Trump can take a call on federal agencies, he can’t decide on behalf of the private companies who would still want to outsource to countries like India. Also, it is impossible to locally develop the high-end skillsets overnight."

Among Indian IT firms, currently, 60% of Infosys’ US employees are visa-independent. “In the last 24 months, we have implemented our localization initiative at scale in the US, recruiting more than 10,000 US nationals or permanent residents and significantly reduced our dependence on visa," said U.B. Pravin Rao, chief operating officer, Infosys.

Even at Wipro, nearly 70% of the workforce in the US has been locally hired. “The intention is and continues to be a lot more contextually relevant to our customers. So, we do not anticipate any disruptions in business due to the recent changes in visa norms," said Bhanumurthy B.M., president and chief operating officer, Wipro.

The likes of TCS, Infosys, Wipro and HCL, which employ H-1B workers, also work as third-party technology solution vendors to US federal government projects.

ayushman.b@livemint.com

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