H1B Visa Reforms Poised to Hit Indian IT Firms; Applications From US Employers Lowest in 5 Years
Infosys stocks fell down by 4.5%, followed by Tata Consultancy Services (TCS; 5.5%), HCL Technologies (6.3%), Tech Mahindra (9.7%), heralding a nightmarish run for the Indian IT industry.
It is no surprise US employers chose to toe the line by US President Donald Trump. This year sees sharp decline in number of American employers seeking H1B visas. The employers have applied for 16% fewer H1B visas for highly skilled workers this year compared to 2016. Employers seeking visas for 2018 have submitted 199,000 applications, compared to 236,000. The figures were disclosed by US Citizenship and Immigration Services.
The development reflects the concerns of businesses about USA’s President Donald Trump’s inclination towards restrictive visa regime and measures to curb influx of foreign workers into America. The H1B visa program allows organizations to hire skilled workers, especially for technical jobs. Although the number of applications this year have exceeded the 85,000 limit, it is for the first time in 5 years when number of employer requests have gone down.
Impact of H1B visa reform on Indian IT companies and businesses
This is on expected lines. Trump administration’s crackdown would have major consequences for Indian Information Technology companies. In fact, when news about H-1B visa reform had surfaced months back, Indian IT stocks plummeted. The effect was $6.4 billion going up in smoke. Infosys stocks fell down by 4.5%, followed by Tata Consultancy Services (TCS; 5.5%), HCL Technologies (6.3%), Tech Mahindra (9.7%), and Wipro (4.1%). The stocks of mid-cap IT companies like NIIT, Geometric, Mphasis, Mindtree and KPIT Technologies also plunged by 4%, heralding a nightmarish run for the Indian IT industry.
Moreover, the US government suspending the fast-tracking of H1B visas for 6 months is also a rude shock. Indian IT companies like TCS, Wipro, and Infosys, who bank on cheap Indian workers will be hardest hit. It would become increasingly difficult for IT companies to transfer skilled workers from India to the USA for clients. Indian IT companies make up for 17,000–18,000 of H1B visas per year. Moreover, suspension of visa fast tracking will affect IT firms as many use the facility for sending staff on an urgent basis.
More international trouble for Indian Information Technology (IT) companies
After the trouble with H-1B visas, Indian IT professionals are being denied visas by Singapore and other countries as well, which have developed a sudden aversion to foreign workers. For instance, Singapore has not issued any visas for Indian IT professionals since January 2016.
“It apparently wants to recruit locally. Consequently, Indian IT firms, which are Singapore-based, will have tough time. Most of the companies used to import manpower and resources from India for operations, which was profitable due to low wages and costs,” says an industry insider.
However, there are views to the contrary as well.
“This would mean more highly skilled workforce to be taken advantage of in India or the much awaited reverse brain drain. The start-up ecosystem is booming and for enterprising entrepreneurs this is the best time to start a new venture. We are working with individuals and small companies who have returned from the USA. Such trained people are innovating in a variety of sectors, ranging from medical devices, renewable energy, healthcare and most importantly software products. So, although this could actually be a temporary setback for software majors but it could also be a blessing in disguise for India,” says Nilanshu Shekhar, founder, KAnalysis Consultants based in New Delhi.
However, for now, top Indian IT companies like Infosys, TCS, Wipro, and Cognizant have offices in Singapore and will need to get their act together and scout for fresh talent elsewhere.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house
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