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IT service providers prepare for potential H-1B visa changes

Stephanie Overby | Jan. 30, 2017
Indian providers prepare for possible H-1B visa reforms that could increase onshore costs by 20 percent for IT outsourcing companies who depend on the temporary worker visa program.

While new U.S. President Donald Trump’s recent proclamations related to immigration have centered on his plans for a Mexican border wall and bans on Syrian refugees, the IT outsourcing industry is anticipating details on his strategy for reforming the H-1B visa program.

Trump railed against the shifting of U.S. jobs overseas during his campaign and called for raising the minimum salary for H-1B holders to $100,000 per year, from the current threshold of $60,000 per year.

A purported draft of an executive order recently published called for an investigation into the impact of such nonimmigrant visa programs on American workers and directed the Department of Homeland Security to "consider ways to make the process for allocating H-1B visas more efficient and ensure that beneficiaries of the program are the best and the brightest.

A new bill was also announced last week by U.S. Senators Chuck Grassley (R-Iowa) and Sen. Dick Durbin (D-Ill.) that “explicitly prohibits" the replacement of American workers by visa holders and give foreign students who graduate from U.S. schools priority in obtaining H-1Bs.

Over the last two weeks, India’s top IT outsourcing providers have acknowledged the uncertainty around potential changes the H-1B program, which they use to transfer employees to work at client sites in the U.S., and said that they are prepared for the impact.

Natarajan Chandrasekaran, CEO of India’s largest IT services firm Tata Consultancy Services, said the company began taking steps more than a year ago that will help it operate in a “visa-constrained regime.”  TCS had applied for around 14,000 visas in 2015, but only 2,000 in 2016, Chandrasekaran noted.

The chief executive of number two Infosys, which earns about 60 percent of revenues from U.S. clients, acknowledged in a press conference two weeks ago that there were likely changes coming to the H-1B program but said he was not “overly concerned” because the company had already increased local hiring. “This is something that I have been focusing on since I started,” said CEO Vishal Sikka, himself a U.S. citizen. “So, we are absolutely committed to creating U.S. jobs, similarly in Australia, in Europe and other geographies where we operate in... Regardless of visa policy, the right thing to do for innovation is to have a lot of rich local talent.” Likewise, HCL Technologies CEO C. Vijayakumar told reporters this week that the company has already been increasing campus and entry-level hiring in the U.S. to support future growth.

Wipro CEO Abidali Z. Neemuchwala told a reporter at the World Economic Forum in Davos, Switzerland, last week that potential changes to U.S. skilled temporary worker visas are just one challenge the Indian IT industry is facing. Indeed, the offshore IT services market is being disrupted by smaller and shorter deals, cloud computing options, increased automation, and intense competition. Similarly, Tech Mahindra vice chairman Vineet Nayyar said in a television interview that adapting to automation would be a bigger challenge for outsourcing providers than dealing with the new American political administration. Both executives said they were confident in the resilience of the Indian IT services industry. Regarding any forthcoming limits on temporary skill worker visas, Wipro’s CEO said it was partnering with U.S. schools and recruiting more local workers, and Nayeer noted that less than five percent of Tech Mahindra’s workforce required H-1B visas.

 

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