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Business News/ News / World/  US imposes fresh curbs on H-1B visa

US imposes fresh curbs on H-1B visa

The new rules increase the compensation requirements for H-1B workers

Higher wages will impact startups and smaller firms, who may not be able to meet the increased wage requirements.Premium
Higher wages will impact startups and smaller firms, who may not be able to meet the increased wage requirements.

Latest changes to the H-1B visa programme introduced amid a tough US presidential election campaign are expected to directly affect technology companies, foreign workers and employers who rely on these non-immigrant US visas.

The new rules narrow the definition of specialty occupation, employer, employee-employer relationship, limits the amount of time that an employer can place a worker at a third-party worksite to 1 year, and increase the compensation requirements for H-1B workers. The one-year rule is expected to increase complexity and scrutiny, and attract additional costs.

“This will likely have the biggest impact on employers that hire many technology workers and then contract them out long-term to their clients," said Rebecca Bodony, senior business immigration attorney at Davies & Associates, a New York-based immigration law firm.

“IT services providers can expect delayed decision-making and hence even longer sales cycles, besides expecting requests from clients to renegotiate existing contracts. This might well mean smaller and more expensive contracts (on the back of increased cost of delivery) here on," said Sanchit Vir Gogia, CEO and chief analyst, Greyhound Research.

The changes come just a month ahead of the US polls, with president and Republican candidate Donald Trump pitching for saving American jobs, even as doubts remain on the availability of sufficiently qualified talent in the US.

The proposal to modify wage conditions is another step to encourage local employment. This will significantly increase costs of bringing in skilled workers on-site to US, and reduce the price advantage enjoyed by many Indian services companies.

“This effectively means that employers will be required to pay higher wages to all H-1B workers at all experience levels. It will also mean increased scrutiny in defining which jobs are ‘specialty occupations’ eligible for H-1B," added Bodony.

Higher wages will impact startups and smaller firms, who may not be able to meet the increased wage requirements. Gogia said the changes will add immense cost pressures on these companies and make existing locally available skill sets more expensive.

“Whether the US-based firms use local resources or use partners for the much-needed IT skill sets, they will need to spend more," he added.

India’s IT industry body Nasscom said the new rules will harm the US economy.

“These regulations seem to be based on misinformation about the programme and runs counter-productive to their very objective of saving the American economy and jobs," said Shivendra Singh, vice-president & head of global trade development, Nasscom.

Indian IT firms such as Tata Consultancy Services Ltd, Infosys Ltd and Wipro Ltd had said earlier that they have reduced their dependence on H-1B visas to a large extent.

However, a reduction in the overall quota of H-1B visa workers would still mean that they would either have to shell out more money to hire local talent or pay more to the existing H-1B work visa holders.

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Published: 08 Oct 2020, 06:13 AM IST
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