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  1. Contrary to Donald Trump claims, H1B visas benefit US companies the most

Contrary to Donald Trump claims, H1B visas benefit US companies the most

Contrary to Trump’s claim, the share of Indian firms in temporary work visas is smaller than those of American counterparts.

By: | Updated: May 4, 2017 4:38 PM

Trump administration, Donald Trump, H-1B visas, TCS, Infosys, National Foundation for American Policy, H-1B workers, H-1B visa system

The Trump administration may blame Indian companies, particularly TCS and Infosys, for allegedly cornering the lion’s share of H-1B visas, but data show large American corporations have grabbed a bulk of these permits that allow foreign professionals to work in the US temporarily. Of the top 30 companies that accounted for 35,120 of the roughly 65,000 H-1B visas approved by the American authorities in the financial year 2015, at least 19 were headquartered in the US and only nine in India and one in France, according to the data available with the US Citizenship and Immigration Services and the National Foundation for American Policy.

These US companies (nearly all of them have India operations) and Accenture, which has large US operations, together grabbed 19,436 H-1B visas in the financial year 2015, much higher than the 15,136 visas obtained by the nine Indian companies. The one French company–CapGemini–received 548 visas. The rest of the H-1B visas were obtained by people mostly belonging to small companies. Although it is listed on the New York Stock Exchange and widely assumed to be an American company due to its long history of operations in the country, Accenture has said it doesn’t have a corporate headquarters and was incorporated in Dublin, Ireland, in 2009. However, even excluding Accenture–which accounted for the third-highest number of H-1B visas (3,385) in 2014-15 after TCS and Cognizant–the US firms in the top 30 list accounted for as many as 16,051 visas, higher than those obtained by the key Indian companies. The top US companies to get such visas were Cognizant (3,812), IBM (1,919), Deloitte (1,203), Amazon (1,058) and Syntel (1,050), while the leading Indian companies were TCS (4,674), Wipro (3,079), Infosys (2,830), Tech Mahindra (1,576) and HCL (1,339).

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“The share of the Indian companies in the total H-1B visas would still be much less than their American counterparts,” said an industry source. “The Indian IT companies are not complaining about the US firms getting such a large number of H-1B visas. But they are hurt by the selective targeting of them by some of the US officials when they make public statements,” he added. Indian IT industry sources told FE the number of such visas received by the Indian companies in FY16 was even lower than the previous year, although details are not yet available.
Also, while the US alleges H1-B visa holders are paid much less, indicating they are not high-skilled professionals, an internal survey of IT industry body Nasscom has suggested the average salary of such professionals was as much as $82,000 in 2015 (excluding a fixed cost of $15,000 for each visa issued), 35% higher than the US government’s minimum prescribed exempt wage of $60,000.

According to a Brookings Institution study in 2013 titled ‘H-1B Visas and the STEM Shortage’, H-1B workers were paid more than their US native-born counterparts with a bachelor’s degree generally. It also found that of the 20 occupations groups, wages for H-1B workers were significantly higher in as many as 17. An earlier study by Madeline Zavodny, a research economist with the Federal Reserve Bank of Atlanta, found that the entry of H-1B professionals neither reduced the contemporaneous earnings of natives, nor had an “adverse impact on contemporaneous unemployment rates”.

Ironically, the attempt to tighten the H-1B visa system by the Trump administration comes even though the US department of Labour has forecast as many as 2.4 million unfilled STEM jobs by 2018, with over half of these vacancies in computer and IT-related positions. Interestingly, the annual number of Indian IT specialists working on such temporary visas for Indian IT service companies is only 0.009% of the 158-million members of the US workforce, according to data available with US government agencies.

“The Indian IT industry is a net creator of jobs in the US. It supports nearly half a million jobs (directly and indirectly) in the US,” said Shivendra Singh, vice-president (Global Trade Development) at Nasscom. In fact, Infosys said on Tuesday it will hire 10,000 more American workers over the next two years and set up four technology centres in the US.

Also, every renowned data source—from the US department of labour and National Science Foundation to the Brookings Institution – has documented a huge and expanding shortfall between the supply and demand for computer science majors in the US workforce, especially in cutting-edge new technology fields such as cloud, big data and mobile computing. In fact, Indian analysts argue that the H-1B visa system exists precisely due to this persistent shortage of highly-skilled domestic talent in the US.

Still, at a recent White House briefing, an official in the Trump administration said a small number of giant outsourcing firms, including TCS, Infosys and Cognizant, flood the system with applications which naturally raises their chances of success in the lottery draw, according to agency reports.

“And those three companies are the firms that have average wage of between $60,000 and $65,000 (a year) for H-1B visas. By contrast, the median Silicon Valley software engineer’s wage is probably around $150,000,” the official has reportedly claimed. He also said contracting firms that are not skills employers, who often use workers for entry-level positions, capture the lion’s share of H-1B visas. “And that’s all public record.”

 

 

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