- Trump’s order doubles the minimum salary of H-1B visa holders to $130,000 from the previous $60,000
- Infosys, TCS, Wipro and Tech Mahindra, each lost between 3%-6% on the Bombay Stock Exchange
- There are close to 350,000 software professionals working in the US under H-1B visas
As of January 31, a legislation has been introduced in the US House of Representatives which among other things, calls for more than doubling the minimum salary of H-1B visa holders to $130,000, making it difficult for firms to use the programme to replace American employees with foreign workers. This is more than double of the current H-1B minimum wage of $60,000 which was established in 1989 and since then has remained unchanged.
According to the new order, The High-Skilled Integrity and Fairness Act of 2017 introduced by California Congressman Zoe Lofgren prioritises market based allocation of visas to those companies willing to pay 200 per cent of a wage calculated by survey, eliminates the category of lowest pay, and raises the salary level at which H-1B dependent employers are exempt from non displacement and recruitment attestation requirements to greater than $130,000.
With this legislation being passed the effect on Indian IT stocks was immediate. The Indian tech stocks plunged. Reports in various business media state how Infosys, TCS, Wipro and Tech Mahindra, each lost between 3%-6% on the Bombay Stock Exchange on fears of reducing competition and the change in hiring decisions.
Trump’s entry on the hot seat of America has been making news from Day One. Not a single day goes by when the US President is not issuing some controversial order or the other. It began with his declaration to build a wall to keep the Mexicans out, then his recent diktat on the temporary ban on nationals from seven Muslim countries from being granted American visas for a period of 90 days. Meanwhile, Syrian Refugees get an indefinite ban.
The next on his list had to be the H-1B visa policy and the US immigration policy. His election alone worked against home grown companies like Infosys, TCS and other US companies like Cognizant , IBM who recruit a lot of Indian professionals. H1B visas had been a preferred route for Indian IT companies, to send thousands of tech workers to the US.
Indian tech workers on H-1B visas who are in India or elsewhere on deputation with American companies are now facing the important question of whether their jobs will remain or not and how can they get back to their lives in America. A report in ET highlights how many Indians have their passports stuck at US diplomatic missions due to “administrative processing”.
There are close to 350,000 software professionals working in the US under H1B visas
Talking in sheer numbers there are close to 350,000 software professionals working in the US under H1B visas , according to estimated by ET. Those affected are people with H-1B visas who came to India for personal visits and needed to get their passports stamped in order to re-enter the US. Their applications were sent for administrative processing under Section 221 (G) of the US Immigration and Nationality Act, then back to the State Department for additional background and security checks, which can take four to eight weeks or more.
In December 2016, the information technology stocks were hit by tough talk on visas by US president-elect Donald Trump, while oil retailers declined after crude prices surged to their highest since mid-2015. IT firms were among the leading decliners, with the Nifty IT index shedding as much as 1.51 percent, after Trump’s remarks on streamlining the visa process.
A report in Business Standard highlights how even the major US market indices posted their largest drop so far in 2017. The Dow Jones Industrial Average fell 122.65 points, or 0.61%, to close at 19,971.13, the S&P 500 lost 13.79 points, or 0.60%, to 2,280.9 and the Nasdaq Composite dropped 47.07 points, or 0.83%, to 5,613.71.
Bengaluru in particular, the hub of the IT industry, will be the epicentre of this meltdown that Trump has caused. Already in the past few months the view has not been good for the Indian IT industry as it is facing multi-fold challenges of automation, cloud computing, the Digital onslaught and lack of investment along with Trump’s immigration policy hanging on the head like the Sword of Damocles.
Already you can see the changes in the hiring patterns with Indian companies and American reviewing their choices. Indian companies abroad will have to toe the Trump line which means jeopardising the job prospects and in India itself more jobs will have to be created for those professionals being left behind. Home companies like Infosys and TCS have started to hire more engineers from campuses in the US already.
Last Updated 31, Mar 2018, 6:31 PM IST