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Why H-1B Visas Are So Important to India’s Outsourcing Industry?

  • February 2, 2017
  • by Admin

What is the H-1B visa?

  • H-1B is a type of US visa that allows skilled foreigners to work in the US.
  • This non-immigrant visa lets a firm employ foreigners for up to six years in positions for which they have been unable to find American employees.
  • The H-1B visa holders can apply for permanent residency in the US and buy property in the country.
  • In 2016, Richard Verma, then US ambassador to India, said an estimated 70% of these visas go to Indian citizens.

Why does the US want this new law?

  • The High-Skilled Integrity and Fairness Act of 2017, introduced last week,calls for replacing the lottery system with a preference for companies that can pay the highest salaries.
  • It suggests raising the effective minimum wage for an H-1B visa holder to over $130,000, more than double the current $60,000 level established in 1989.
  • “My legislation refocuses the H-1B programme to its original intent – to seek out and find the best and brightest from around the world, and to supplement the US workforce with talented, highly paid, and highly skilled workers who help create jobs here in America, not replace them,” Rep Lofgren said on her website.

Why does this worry India’s IT industry?

  • The proposed new legislation mainly targets companies not based in the US that bring in foreign employees on the visa quota. This effectively targets Indian outsourcing firms.
  • “The new bill does not treat all IT companies with H-1B visa holders equally,” Shivendra Singh, vice-president and head of global trade development at Nasscom, told the BBC. “If the objective is to protect American workers, then this bill will defeat that objective. Companies that are not dependant on H-1B visas will continue to bring in skilled workers on lower wages which will nullify the whole objective of saving US jobs.”
  • Amar Ambani, the head of research of India Infoline, said,” the bill would be bad news for the Indian economy as it “comes at a time when India’s IT sector is already facing challenges to improve their margins and profitability”.

How could India respond?

  • If the bill does become law, options before India could include retaliatory action, given that major portions of India’s technology markets are dominated by American.
  • Any retaliatory action could impact American firms given the size of India’s computer and smart phone market. India has made a major push towards internet connectivity and digital payments which would mean more opportunities for American and global firms.
  • India and US have a joint target of $500bn bilateral trade and experts say it may not be easy for the US to ignore India’s concerns.

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