President-elect Donald Trump, working with Congress, may try to make it harder and more expensive to hire H-1B workers. His intent would be to change the economics of visa usage and encourage employers to hire U.S. workers.
Trump could do this by working with a bipartisan group in Congress committed to reform. But Trump also has executive power levers and could impose changes on his first day in office. He also can prod various federal agencies to launch investigations into visa use.
Ron Hira, associate professor of public policy at Howard University, said it’s too early to predict what a Trump administration will do, if anything, about the visa programs. Republicans and Democrats have splits on this issue in each of their parties, and “business interest groups will be out in full force trying to stop any sensible reform.”
Also uncertain is the business response to visa changes by a Trump administration. The practice of offshore outsourcing is deeply embedded in major U.S. companies. The use of the H-1B visa grew with industry, and IT services companies use about half of all the visas issued.
India-based Infosys, for instance, earns more than 60 percent of its $9.5 billion in revenue from business in North America. It employs about 200,000, but only about 20,000 of those employees work in the U.S. Many of those workers are on an H-1B visa, but much of the work is done offshore.
One possibility is that H-1B visa restrictions could force India-based firms and other large H-1B-using companies to hire more U.S. workers. It also may prompt IT services firms to try to cut the amount of work they do in the U.S.
Increases in H-1B wages makes "managing complex IT projects a lot more expensive,” Phil Fersht, the CEO and chief analyst at HFS Research, wrote in a blog post following Trump’s victory.
Fersht said that more enterprises will turn to cloud-based systems because the cost of maintaining legacy systems will spiral with visa reforms. Maintaining legacy systems is a staple of IT outsourcing firms, he noted.
Fersht also said Trump’s effort to restrict visa will help push the industry to automate, in much the same way the auto industry has been automating. “IT is no different,” he said. But this may have more impact on lower-skilled workers.
Hira said he doubts that automation will bring many changes to IT services delivery. “The industry remains very labor intensive and will remain so for the foreseeable future. The question is whether that labor is delivered from U.S. workers or foreign workers, who are offshore and on-site with guest worker visas.”
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