The proposal by a US lawmaker to gradually phase out the H-1B visa over the next few years, alongside the latest round of relaxations to existing conversion rules, will help Indian IT services firms to hire for onsite roles, experts said.
Since companies will be able to shuffle one type of visa into another for those already residing legally in the US, they will have more flexibility in hiring students from American universities without applying for fresh petitions for which the charge has been raised to $100,000.
Simply put, individuals already in the US, such as students graduating from universities there, can now apply for a change of status at a significantly lower cost. “For Indian IT firms, the move translates into a more viable local hiring model in the US,” Neeti Sharma, CEO, TeamLease Digital said.
Recruiting a fresher from a US campus often came with the additional cost burden of a new H-1B sponsorship. The relaxation effectively removes this expense for eligible in-country candidates, making local campus hiring a more attractive option for companies that already face pressure to control onsite costs.
“In the near term, it allows IT firms to hire freshers with relevant skills locally, which in turn will ease pressures on their margins on account of on-site hiring in the US,” Sharma added. Many Indian IT firms have strengthened their presence at US campuses for hiring. During its second quarter earnings call, Tech Mahindra highlighted its efforts to project a better employer brand to attract talent and retain current employees in the US.
Tata Consultancy Services (TCS) has also maintained that it hires freshers in the US. IT firms have also indicated their efforts towards university and institution tie-ups in the market to cultivate a pool of talent to recruit.
However, experts said that the development should not be read as a fast track for Indian students in the US. “While the cost and administrative burden of visa conversions will reduce, recruitment will continue to be driven by skill requirements and performance criteria,” Namratha Dharshan, chief business leader – India Research, ISG, a global technology advisory firm said. The change simply lowers the procedural and financial barriers that previously made such hiring cumbersome.
Though in the near-to-medium term, H1-B visas will be completely out of fashion. They will be reserved for critical roles, for which the larger firms will be able to absorb the $100,000 fee tag. TCS for example said during its quarterly earnings call that it expects to send just 500 people on H1-B visas to the US in the current fiscal, a marked drop from the 5,000 it sent last year. For more senior roles, other visa routes like the L1 can also be explored, experts said.
In the long-term, if the proposed law to phase out the programme takes effect, experts say that Indian IT firms should be in a place to handle the move since temporary visas will still be allowed.
