No, America’s visa fee spike won’t spell doom for India’s IT services sector
US President Donald Trump's administration is aiming to curb low-cost labor by massively hiking the fee for the H-1B visa. But for India's booming tech sector, this policy might create unexpected opportunities.
Will the US hike in its fee for prized H-1B visas from a few thousand dollars to $100,000 spell doom for India’s infotech (IT) sector? Hardly. It affects new visas, not the existing ones that usually last for three years and can be renewed for another three.
Even if renewals do attract the hiked visa fee, as policy in Trumpland could tighten on a dime, our IT service companies would have time to recalibrate their business strategy.
For now, this revised fee will hasten the automation that artificial intelligence (AI) has already set in motion and relocate some work to India and perhaps Mexico and Canada; as US-based personnel help service clients on-site, having them a short flight away could serve that end.
American Big Tech companies that have Indian talent on H-1B visas would probably outsource more work to India as well.
The US government has many projects being done by entities that employ people on these visas; so, while it tries to shield its citizens from low-cost foreign labour this way, policy-inflated payroll bills will also inflate the tabs it picks up.
The biggest blow would be borne by second-tier US universities, which will attract fewer Indian students—who will foresee poor post-college job options since it would cost an employer a whole lot more for the first year, including the minimum salary specified for a recruit on an H-1B visa.
In general, fewer Indians would migrate to the US, increasing the supply of talent for Indian enterprises, the more far-sighted of which would employ it to develop intellectual property of their own.
Amid fast-evolving tech challenges, our recruiters should be rubbing palms in anticipation. The readiness of Indian graduates to start businesses on their own might get a boost too, with an American career less viable as a pursuit. We can also expect new space to open up for devising AI tools that ease the relocation of work from the US back home to India.
How can we be confident that the hike’s impact on the IT services sector will be minimal? The work for which Indians are sent to the US does not go away once H-1B visas get costlier. Indian firms won IT contracts because they are the best placed to do that work cost-effectively and a visa-fee spike is not an automatic trigger for a surge in the supply of trained local talent that could take the place of H-1B workers.
Indeed, our companies’ competitors, be they Western or other Indian firms, would face the same talent crunch and cost escalation as a result of this protectionist move. There is no reason why these businesses would not be just as nimble as their rivals in adapting to a reset of payroll costs.
American universities, on the other hand, would struggle to replace Indian students, their largest foreign contingent. Bad political vibes have already constricted the supply of Chinese students and now these varsities stand to lose even more fee revenues. This could push up tuition fees for local students, particularly in science, engineering, technology and math streams, depressing enrolment levels that are already low.
US universities may have to offer fatter scholarships to attract foreign students for post-graduate programmes that usually enrol a large share of seats from overseas.
If they do not, a foreseeable talent shortage would crimp the prospects of America Inc, Big Tech included, more than anybody else’s. In short, it marks an inward turn that ticks all the wrong boxes for another ‘American century.’
topics
