Changes in H-1B norms give sleepless nights to IT Inc

Written by P P Thimmaya | Bangalore | Updated: Apr 8 2013, 06:14am hrs
The new US Immigration and Innovation Act, designed to substantially increase the cap on H-1B visas, has Indian IT majors worried. While the Act (known as the I-Squared Act) will help IT firms globally, Indian software companies feel there could be higher rejection rates that could impact business.

The Immigration and Innovation Act has sought for adjusting the cap of H-1B visas based on demand. The lower limit is set at 115,000 and capped at the 300,000 mark. As of now, there is a cap of 65,000 on the number of H-1B visas provided by the US government, with Indian IT companies like Tata Consultancy Services, HCL, Infosys and Wipro being some of the key recipients. Several IT firms that FE spoke to said that higher rejections may become a reality once the Act comes into play and will result in other countries cornering these visas.

As seen in the recent past, Indian IT services companies operating in the US have faced anti-outsourcing measures with regard to H-1B like doubling of the fees, in 2010, or the rise in rejection rates of visa applications in 2011 and 2012. Nasscom president Som Mittal told FE, There are several positive provisions in the Bill but there is always a tendency to put certain restrictive clauses. Mittal said that despite the positive intent of the proposed Bill, there are other interest groups in the US that could put Indian IT companies at a disadvantaged position. Recently, US Senator Charles Grassley had sought to deny H-1B visas to foreign firms operating in the US, which seemed to rely heavily on expatriates rather than hiring local Americans.

The $76-billion Indian IT-BPO export segment generates close to 60% of its revenue from the US. Indian IT firms have often been on the receiving end while applying for H-1B visas with the criticism that they were taking away tech jobs in the US and are slapped with discriminatory legal regulations.

Indian IT companies are dependent on the H-1B work permits to carry out their operations in the US and any disruption in this process can impact them adversely.

A struggling US economy has raised the spectre of protectionism with an eye on protecting local jobs leading to numerous anti-competitive legislations. Even the visa "fraud" cases faced by large Indian companies such as Infosys and TCS in US courts generated significant interest with some of the US lawmakers seeking a probe into these allegations. Infosys, in fact, is facing a federal grand jury probe over the use of B1 visas.

An executive working with a leading Indian IT company based in the US said that the frequency of unscheduled checks undertaken by US government officials of their visas records has substantially increased in the last 18 months.

Brookings Institution, a US based non-profit public policy organisation, has said that the new Act is a n H-1B escalator that automatically adjusts the cap depending on demand. The proposal raises the initial H-1B cap to 115,000 and, depending on how quickly the cap is met in a given year, it would increase incrementally by up to 20,000 visas the following year. Likewise, if the cap is not met in a given year, it would decrease by no more than 20,000 visas the following year.

The I-Squared Act proposes that the cap be no fewer than 115,000 and no greater than 300,000. At the very least, it would take 10 consecutive years of reaching the cap within 45 days to hit the upper limit of 300,000 visas, said Neil G Ruiz and Jill H Wilson in a Brookings blogpost. There is still a severe shortage of highly skilled technical resources in the US and H-1B is one of ways to bridge this shortfall.

The I-Squared Act also proposes to allow foreign students to apply for a permanent green card, to provide unlimited H-1B visas for foreigners with US advanced degrees, to staple permanent green cards to graduate degrees in science, technology, engineering, and mathematics (STEM) earned by foreigners at US universities, and to increase visa fees that would be invested in educating the American workforce in STEM.

Said the Brookings Institute, The current immigration reform debate is a great opportunity to overhaul the system and move away from an arbitrary race against time for H-1B visas. A new method that structures Americas future immigration system to better meet the demand for high-skilled workers through less-arbitrary H-1B visa caps, new visa classes, and better targeted workforce training will be welcomed by employers and workers alike.

The cap of 65,000 H-1B visas was introduced since 2004 and prior to that it was 195,000 for 2001, 2002 and 2003. The time taken to exhaust the quota of H-1B visas is generally dependent on the prevailing economic conditions in the US. For example, in 2012, it took about 10 weeks for the visas quota to be exhausted and a year before that it got extended even more. This year it got over in a week.