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Tuesday, July 07, 2020

Indian IT companies to be hit as US bans work visas till end of year

The suspension of H-1B and other work visas by US President Donald Trump is likely to have a severe impact on majority of Indian information technology (IT) companies.

Written by Aashish Aryan | New Delhi | Updated: June 23, 2020 10:11:04 am
H1-B visa, H1-B visa banned, Donald Trump, Trump bans H-1B visa, US immigration visa H-1B visas are generally approved for a period of three years for a person, but many visa holders change employers to extend their US stay. (Getty Images)

The Trump administration Tuesday extended the 60-day ban on immigration and non-immigrant worker visas till the end of 2020, and said some work visas including the much coveted H-1B and H-2B visas will remain suspended. Certain categories of H-4, J, and L visas will also remain suspended till the end of the year, an official release stated.

“Many workers have been hurt through no fault of their own due to coronavirus and they should not remain on the sidelines while being replaced by new foreign labour. With some exceptions, we should not permit large numbers of foreign workers to enter the United States at a time when so many Americans are out of work,” an official statement by the White House read.

The suspension of H-1B and other work visas by US President Donald Trump is likely to have a severe impact on majority of Indian information technology (IT) companies, which corner the lion’s share of most of these work visas.

Explained: How US pause on work visas will impact Indian companies

As of April 1, 2020, the US Citizenship and Immigration Services (USCIS) had received about 2.5 lakh H-1B work visa applications, according to official data. Indians had applied for as many as 1.84 lakh, or 67 per cent of the total H-1B work visas for the current financial year ending March 2021.

The US government has a cap of 85,000 total H-1B visas for each year. Of this, 65,000 H-1B visas are issued to highly skilled foreign workers, while the rest 20,000 can be additionally allotted to highly skilled foreign workers who have a higher education or masters degree from an American university.

H-1B visas are generally approved for a period of three years for a person, but many visa holders change employers to extend their US stay. The visa norms have often been criticised for allowing cheap labour in the US at the expense of its local workforce.

After Trump took over as President in January 2017, the US government had started moving towards a more conservative work visa regime, alleging that Indian and Chinese IT companies had been sending workers on very low costs, which hurt prospects of skilled workers in the US.

In November the same year, the US House Judiciary Committee had, in a bid to deter Indian and Chinese companies from misusing H-1B visas, voted to pass a legislation to increase the minimum annual salary of H-1B visa holders to $90,000 from $60,000.

Apart from the suspension of these work visas, the executive order signed by Trump has also made sweeping changes to the H-1B visa norms, which will no longer be decided by the currently prevalent lottery system. The new norms will now favour highly skilled workers who are paid the highest wages by their respective companies.

“These reforms will help protect the wages of American workers and ensure that foreign labour entering our country is high skilled and does not undercut the United States labor market,” the White House statement said.

A flag is waved outside the White House, in Washington. (AP Photo: Carolyn Kaster, File)

Earlier this year on April 22, Trump had signed an executive order which had banned the entry of foreign workers in the country for a period of 60 days.

“I have determined that, without intervention, the United States faces a potentially protracted economic recovery with persistently high unemployment if labor supply outpaces labor demand,” Trump had then said in his executive order.

Extending the validity of the April 22 executive order till December 31, Trump said that while under normal circumstances “properly administered temporary worker programmes can provide benefits to the economy,” the extraordinary economic contraction created due to Covid-19 posed a threat to US workers.

“The entry of additional workers through the H-1B, H-2B, J, and L non-immigrant visa programs, therefore, presents a significant threat to employment opportunities for Americans affected by the extraordinary economic disruptions caused by the Covid-19 outbreak,” Trump said in his executive order.

In April this year, the Indian government has requested the US government to extend the H-1B work visas and other visas of all Indian citizens until the pandemic was over. Industry body NASSCOM too had sought exemptions for technology workers arguing that such staff was crucial for operations of critical infrastructure in the US.

Apart from the H-1B visas, the US government also issues L1 visas which allows companies to transfer highly skilled workers to US for a period of up to seven years. H-2B visas allow food and agricultural workers to seek employment is the US.

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