Print Friendly, PDF & Email

Insights into Editorial: H1B visa reform bill introduced in US



Insights into Editorial: H1B visa reform bill introduced in US 


With a hard stance on immigration, the High-Skilled Integrity and Fairness Act of 2017 that will overhaul the popular H1B and L1 visas has been tabled in the US Congress. This reform bill, if passed, would mean significant changes in the way the H1B visas are granted to companies and allocated to employees by them. Some of the worst hit by the new H1B bill will be Indian companies such as Infosys, TCS, and Wipro, as well as US tech giants like Apple, Facebook and Google, who use the H1B visa to fill positions that cannot be filled by American workers.

H1B Visa

What is H1B visa?

The H1B visa is a non-immigrant visa that allows companies to employ foreigners for a period of up to six years. This visa is aimed at helping companies employ foreigners in positions for which they have been unable to find American employees. The minimum salary for an employee holding the H1B visa is set at $60,000 per year. H1B visa holders are allowed to apply for permanent residency in the US as well as buy or sell property in the country.


Why is H1B visa programme criticised?

The aim of the H1B visa programme was to supplement the US workforce with high-skilled workers to do jobs that Americans are not skilled to do, not to replace the US workers. But over time, there have been many grumblings that many companies use the H1B visa to replace American workers with foreign ones, as the latter can be hired at lower salaries without compromising on the skill sets. In some cases, American employees have alleged that they were made to train H1B holders to do their own jobs, and then fired.


What does the new H1B reform bill propose?

  • The new H1B visa reform bill proposes a radical overhaul of the process, increasing the minimum salary for visa holders to be $130,000, more than double the current minimum. This would mean that companies would have to either pay rather highly for the skilled workers, or not choose foreign employees in favour of American citizens.
  • The new visa reform bill also eliminates the category of lowest pay, and raises the salary level at which H1B dependent employer are exempt from non-displacement and recruitment attestation requirements to greater than $130,000.
  • The H1B visa bill removes the ‘per country’ cap for employment-based immigrant visas.
  • It sets aside 20% of the annually allocated H1B visas for small companies and startup employers (50 or fewer employers) to ensure small businesses have an opportunity to compete for high-skilled workers.
  • The Bill encourages companies to recruit American workers. This provision would crack down on outsourcing companies that import large numbers of H-1B and L-1 workers for short training periods and then send these workers back to their home country to do the work of Americans.
  • It explicitly prohibits replacement of American workers by H1-B or L-1 visa holders.
  • The Bill seeks to give the Department of Labour enhanced authority to review, investigate and audit employer compliance as well as to penalise fraudulent or abusive conduct.


Who will be impacted by the H1B visa reform if it passes?

Among the biggest recipients of H1B visas each year are Indian IT firms, such as Infosys, TCS, Wipro, HCL, Igate, Cognizant, as well as global giants IBM, Accenture, Microsoft, Google, and Amazon, among others. If this bill passes, they will to bear significantly higher costs for employing highly-skilled foreign citizens. The visa reform may even create a gap in demand and supply for talent for smaller companies that cannot afford incurring high costs to employ skilled workers.

  • It will eliminate the Master’s Degree exemption for employers. The current H-1B visa program has an annual limit of 65,000 visas each fiscal year, and the first 20,000 visas for U.S. master’s degree holders are exempt from that cap. These visas fill up pretty quickly and if the applications exceed the cap, a lottery system is used to allot them further.
  • The new rules are expected to overturn the existing duration of the optional practical training work visas known as OPTs, which are issued to students after the completion of their studies to gain work experience.
  • The new rules may bring back restrictions on the spouses of H1B visa holders who until recently were not allowed to work in the US and these draconian restrictions were seen as career killers, but in 2015, those work restrictions were removed to allow H4 visa holders to legally work.


How will this affect the US?

Skilled foreign workers who come to work in the United States on H1-B visas don’t just directly supplement the US IT industry with specialised skillsets, they also contribute indirectly to other industries in the US. Often H1-B workers bring their families along and thereby bring additional business for other industries like real estate, Banking, hospitality, to name a few. The effects of this announcement will impact the GDP and the overall business economy and growth of US. While 20% of H1-B visa quotas have been set aside for start-ups and small employers with 50 or fewer employees, there is no denying that this will be a dampener to the spirit of innovation and entrepreneurship.

In midst of all this, it’s critical to remember that most US-based companies (including many Fortune 500s) are highly dependent on IT Services Providers. These companies actively outsource for both skills and cost advantages – important to note, it’s not just the latter that drives the decisions. Changes in the H1-B visa arrangement will add immense cost pressures on these organisations.


How is India responding?

The Indian government appears to have taken notice of the reports but it is unclear if it’s going to escalate the matter as a diplomatic issue. India has been largely silent on Trump administration’s recent immigration ban barring foreign nationals from seven Muslim-dominated countries.

However, India’s interests and concerns have been conveyed both to the US administration and the US Congress at senior levels.


What had to be done?

Using wage as it’s only pivot, the bill has more than doubled the minimum wage requirement of H1-B visa holders from $60,000 to $130,000. There is no mention of any skills based criteria/requirement. In addition, the High-Skilled Integrity and Fairness Act of 2017 prioritises market-based quota of H1-B visas to companies willing to pay 200 percent of a fixed wage. In light of the STEM (Science, Technology, Engineering and Math) skills gap currently prevailing in the US, a thorough on-the-ground study of multiple factors, with skills being the primary factor, should have been the foundation of the Act.


Way ahead:

As labour and capital quit American shores, the more they try to protect their jobs, the more it will affect the rest of the world. But India being one of the fastest growing markets, has plenty of opportunities to stand up to it and deliver, but that require persistent mending of ways things function. While there may be a temporary plug on legal issues in the US, it will lose the perception battle internationally. Since it is arguably inevitable, this gives a lot of chance to India, to introspect and build its own infrastructure.

When it comes to the IT industry, initially the Indian companies will be pressurised to hire Indian talent, but eventually, it will help in overall growth. Additionally, Make in India and Buy American can work together too, which can only improve bilateral trade between the nations. While there may or may not be much logic in the events to come, the unpredictability can also be the sole reason for India to improve internally.