Curbs on H1-B to hurt US IT sector more than Indias

Written by P P Thimmaya | Bangalore | Updated: Apr 17 2013, 06:22am hrs
The US information technology industry, already faced with an ageing workforce and a paucity of quality IT services talent, could further hurt itself if certain provisions in the the proposed Immigration Bill comes into force, stifling the movement of Indian software professionals into the country.

According to data provided by Indian IT experts, some 34% of the software engineers in US are under 34 years of age. In India, that number shoots to between 65% and 70%.

As per data available with the US Department of Labour, there were about 1 million software developers in US as of mid-2012 and computer programmers and web developers included, the figure could reach 1.4 million. Out of the total number of IT professionals in the US, 18% of the workforce comprise Indians, showing the high dependence on software talent from India. This could mean that any move to impede the movement of software professionals on H-1B visa scheme through certain legislations would directly impact the US technology industry.

Former Infosys board member and Manipal Global Education chairman TV Mohandas Pai told FE he may not be surprised if the provisions are voted against. Moves like this is not based on data and this would only hurt the US economy more. There is a large unmet demand for software engineers in the US and any such move would only push the jobs offshore.

The comprehensive Immigration Bill, which is likely to be placed in the US Senate for debate in three days. The draft Bill was scheduled to be unveiled on Tuesday, but the move has been postponed on account of the Boston blasts.

Sangeeta Lala, senior vice-president and co-founder, TeamLease Services, told FE, It is a fact that the US is struggling with an ageing workforce and talent crunch and India will be at an advantage for the next 20 years when it comes to exporting talent. The current measures adopted by the US is more of protecting their people, but business runs on quality and talent. So how much they can achieve with these kinds of populist measures needs to be seen. In the long run it calls for a lot more investments by the government and corporates to skill their own people.

The demand for H-1B visas, which is currently capped at 65,000, is dependent on the prevailing economic conditions in the US and this is reflected in the time taken to reach this cap in terms of applications being submitted. In 2013, the US received close to 135,000 applications and got filled up in a span of just under five days, but in 2012, it took more than two-and-half-months to reach this cap.

The Immigration and Innovation Act of 2013 (I-Squared Act) Bill in the US Senate has sought for adjusting the H-1B cap based on demand with lower limit being 115,000 and the maximum being 300,000.

The Obama administration has constantly urged the Senate to approve new laws to close international tax loopholes, which could produce $210 billion in tax revenues over the next 10 years for the US. But it is still cheaper to outsource. The on-site or onshore cost of a junior engineer in an US IT company is about $60 an hour. The corresponding cost for work done offshore either in India or China works out to around $25-30 an hour. If the US disallows offshore payments as expenses, the cost of offshoring will go up considerably. Hence, any anti-outsourcing move is likely to hit US companies as hard as it will hit the Indian IT sector, which earns over half of its revenue from the US.

In January, Googles senior vice-president, people operations Laszlo Bock, wrote on a blog: At a time when the US economy needs it most, our immigration policies are stifling innovation. The 2013 cap for the H-1B visas that allow foreign high skilled talent to work temporarily in the US was exhausted by June 2012, preventing tech companies from recruiting some of the worlds brightest minds.