Despite the enthusiastic embrace in Houston, Texas last week between Indian Prime Minister Narendra Modi and US President Donald Trump, vexing trade issues continue to threaten the bilateral relationship between two countries.
Ever since Trump took over office in 2016, his protectionist moves – and a call to “Buy America Hire America” – have imperiled the future of Indian IT professionals who work in the US on non-immigrant HI-B visas. American companies offer temporary employment to these workers through the visa program, which allows them to employ foreign workers in jobs requiring technical expertise.
The US$150-billion Indian IT sector uses the work visas to fly engineers and developers to the US, their biggest market, to service clients, including software giants such as Microsoft Corp, Alphabet Inc, and Facebook Inc.
The Trump administration has blown cold, then hot on H1B visas, with officials telling Reuters in early June that there were plans to cap the visas at 10 to 15 percent of previous levels, then two weeks later that it had no such plans. However, the administration has consistently sought to limit migration to the US across the board.
Now a recent research paper argues that Washington’s move to restrict the visas to push Trump’s employment generation initiative for Americans is not only counterproductive for Indian professionals but US companies as well.
The study, titled “How Do Restrictions on High-Skilled Immigration Affect Offshoring? Evidence from the H-1B Program” by Britta Glennon, Assistant Professor at the Wharton School of Business, suggests that skilled immigration restrictions may not actually give more jobs to American workers and, in fact, may drive firms to move abroad.
Glennon studied data of H-1B visas issued since 2004 when the US began restricting the number of such visas to be issued to 65,000. For every three applications rejected, US companies moved one job offshore over the last decade and half as they looked for talent in high technology areas.
“What I look at in my paper is that there is this unforeseen additional consequence that has been completely left out of the debate, which is that U.S. multinational firms have this alternative choice,” Glennon said in an interview with Wharton’s in-house publication. “If they can’t get the skilled immigrants that they want in the US, they can just hire them abroad at one of their foreign affiliates. If it’s true that they are just going to hire skilled immigrants elsewhere, then those policies restricting them can backfire
The HI-B visa has always polarized opinion. While supporters believe the program gives firms a competitive edge in pursuit of innovation, opponents contend it puts American workers at a disadvantage.
Indian nationals account for 70 percent of the work permits issued by the US to high-tech professionals. The curbs have only become more stringent since Trump took office in 2016. Shortly after taking office, he announced to change H1B visa policy to what he called a move to prevent fraud and abuse of work visas. The Department of Homeland Security also sought to end the provision of allowing extensions to H-1B visa holders whose applications for green card had been accepted.
Under existing US laws, foreign professionals having H-1B visas can remain in the US for up to six years, initially for three years but extendable for an additional three. However, under proposed subsequent amendments, the United States Citizenship and Immigration Services or USCIS may limit the duration to less than three years in case the companies or the applicants fail in meeting the criteria.
According to US Citizenship and Immigration Services data, the H-1B rejection rates for Indian outsourcers have surged from around 4-5 percent two years ago to 40-50 percent today. India’s largest exporter Infosys led with 2,122 denials in fiscal year 2017-18, followed by its larger rival TCS with 1,896s, according to a report by Care Ratings. “The increasing protectionist measures imposed by the US administration to safeguard US workers are directly having an adverse impact on the Indian IT majors,” it said.
Indian lobbies such as Nasscom have highlighted that restrictions on the H1-B visas by the US have compelled Indian tech companies to hire more locally, leading to escalating employee costs. Global tech companies such as Amazon and Microsoft as well as Indian conglomerates such as TCS and Infosys are also impacted by the move.
“This administration has aggressively pursued strategies to clamp down on the use of the H-1B program. The immigration climate has worsened under Trump, inducing fear among Indian techies,” says the CEO of a leading US-based outsourcing advisory.
Others point out that making it more difficult to hire advanced tech workers only weakens the US companies that depend on them to help fill their skill gaps and put jobs at risk as well as creating pressure to send more IT work abroad, rather than be productive in the US.
Glennon’s warning comes at a time when the Indo-US relationship is showing signs of buoyancy. Post Modi’s recent visit to the US, optimism has been generated in both countries about future synergies in defense, commerce, and energy.
However, as analysts point out, bilateral trade issues still need to be addressed in a long-term, sustainable manner. In a shaky economic climate, worsened by the US-China trade war, Indo-US trade ties remain vulnerable too to changing bilateral dynamics and geopolitics.
This was in evidence earlier this year when tit-for-tat tariff actions sent bureaucrats and policymakers in both countries scrambling to look for solutions. Days after India imposed higher tariffs on some US goods, Washington withdrew a key trade privilege for New Delhi.
Thus Trump’s protectionist agenda continues to worry thousands of Indian tech workers in the US. Some feel threatened by uncertain prospects in a land they call home. Many who have been in the US for over a decade with their kids and families feel especially vulnerable.
California-based Arjun Gupta, Senior Manager with TCS, says that with a mercurial president in the Oval Office, he’s hedging his bets. “There’s been so much work insecurity lately, that my mind is constantly working on two tracks. I’m mentally semi-prepared to shift back to India even though I continue with my life here,” he said.
There are many like Gupta in the US. To them the highly staged Trump-Modi theatrics, driven mostly by the desire to amass political capital and impress domestic audiences, means little.
Neeta Lal is a Delhi-based Editor & journalist and a longtime contributor to Asia Sentinel.