The positive side of H-1B Visa reform: Will India brain-gain?

While H-1B visa reforms are likely to spell doom for the Indian IT companies, India could also gain from reverse brain drain and more startup ventures

H-1B Visa

Author

An author who has a keen interest for the ‘off-beat’

Nearly $6.4 billion has been wiped off the Indian stock market since morning, after the news of the introduction of the H-1B visa reform Bill in the US House of Representatives, came in. The Indian IT stocks went into a tizzy, and the sector is looking down a doomed barrel. But is there a positive side to it? If hundred thousands of Indians could lose their jobs in the US, can India gain from the reverse brain drain?

Techseen spoke to a few industry experts to get the positive side of the story, who feel the Indian IT industry will see better talent and more entrepreneurial ventures

Joyjeet Sarkar, Co-Founder and CTO, Mindscroll
Joyjeet Sarkar

Joyjeet Sarkar

$130,000 the proposed lower limit of the annual salary is higher than the average salaries companies offer in Master programs in MS & B-Schools (non Ivy-League) outside India. Indians graduating out of these schools in Europe will soon find India as a much better opportunity. Because of STEM visa and other incentives, the top talents outside will still find better employment in Europe/US, but a good chunk of this crowd will start inflowing back to India.

Tech startups in India will have good alternatives in hiring because European /US Masters in Computer Science and other branches are a very good pick for any Technology Company doing some serious job. The startup scene now is already seeing muted hiring and further surplus in supply will see a reduction in salaries of top Executives. Big companies like Google, Microsoft, SAP already has big offices in India, outside their home locations but some smaller companies still treat India as their back office.

This will change in coming 4-5 years and Indian Masters will have improved job prospects because companies will now choose to treat India and Indian talent seriously. Most enterprise startups in India already have a subsidiary in US and hire US talent in those offices. We will see some good Enterprise Software startups emerge out of India in coming 3-4 years riding on improved Talent, funding and competition.

Mindscroll is a tech-startup that develops mobile first Learning platform that helps enterprises and certification institutes to deliver on-demand learning.

Akshay Chaturvedi, Head of Partnerships and Outreach, Babajob.com
Akshay Chaturvedi

Akshay Chaturvedi

I think it’s still too early to make a call on what this will eventually lead to. We’re seeing a lot of activity by ACLU and the tech community in the US. Most Indian tech enterprises would ideally just play the ‘wait and watch’ game for now. In either case, what this is a good reminder of is ‘increasing domestic spending and consumption’.

“Moving on from the bigger tech players to the startup scene in India, I believe we’ve already seen most companies moving towards solving real problems for real Indian consumers. We’ll see more RedBus like stars in the scene, that’s a given. There’s been a rise in the number of product startups too. We are still dependent on international venture money, specially when it comes to later rounds, but the early-stage fundraising scene has also boomed up and we are seeing multiple domestic funds come up.

All of these are super indicators. However, that said, I sincerely hope things improve in the US, not just Indian but all evolving tech ecosystems the world over need to be led for a bit till we come into our own.

Babajob.com is a startup that has developed a digital recruitment marketplace for blue-collared jobs in India.

Apoorv Ranjan Sharma, Cofounder and President, Venture Catalysts
Apoorv Ranjan Sharma

Apoorv Ranjan Sharma

It’s likely to hit Indian IT industry post the limitations on H-1B Visas for foreign workers. As according to the ComputerWorld magazine, nearly 86% of H-1B visas for computer-related jobs and 46.5% for engineering positions were given to Indians.

It has also come to the ears about IT majors doubling the salary of H-1B visa holders to minimum of $130,000 from $60,000. Here it calls for survival of the fittest, as it gives less room for IT companies to hire foreign workers. However the Bill would set aside 20% of allocated H- 1B visas each for startups. i.e. startups having 50 or less than 50 employees. This will definitely bring big relief to Indian startups.

Venture Catalysts is a seed investment & innovation platform

BACKGROUND

What is the H-1B Visa?

US congress created the H-1B Visa to bring in highly educated and foreign workers into the county. The bill was stated to provide for vital increases for entry on the basis of skills infusing the ranks of US scientists and engineers, fill shortages for computer programmers, engineers and doctors among many other professions. Around 85,000 H-1B visas are allotted a year which last up to a period of 6 years and can be extended. The people who apply for H-1B visas have to be highly educated, having a minimum bachelors degree and a specialization degree and 20,000 of these are reserved for Master’s degree holders.

What is the H-1B Visa reform?

A legislation has been introduced in the US House of Representatives called the ‘High-Skilled Integrity and Fairness Act of 2017’ by California Congressman Zoe Lofgren of the US President, Donald Trump administration, that calls for doubling the minimum salary of H-1B visa holders to $130,000, which is more than double the current amount of $60,000, established in 1989. This according to several industry reports will pose as a challenge for tech firms to induct workers from abroad.

It will also cancel the lowest-pay categories and raise the salary at which H-1B employer is exempt from non-displacement and recruitment attestation requirements. With regard to startups, the Bill would set aside 20% of the allocated H-1B visas each year for startups and firms that have 50 or less than 50 employees. It would also establish wage requirements for L-1 workers and improve H-1B wage requirements to encourage companies to hire qualified American workers and prevent them from using foreign workers as a source of cheap labor.

What was happening before the reform?

The ones who are bringing the reform claim that the H-1B visas are not being used to fill shortages but are being used to bring in workers who could be paid less than the American workers. To protect the American workers, a prevailing wage was set up by the labor department that would limit the number of H-1B visas which, is being abused and are not going to hard to fill jobs. The critics also claim that the employers are themselves abusing the H-1B visas, if an employee on H1B visa is thrown out and is unable to get another, then the employee has to leave the country. From an Indian perspective, most of the Indians that have the H-1B visa are from the IT and Tech industry.

Where does India fit into the picture?

The UK in the past had already hiked the minimum wage requirement for Tier-II visa immigrant workers to about $43,000 (GBP 35,000), industry spokespersons believe that this bill will pose a threat to the Indian outsourcing sector. A report in ZDNet last year quoted the Head of research at Nasscom, Achyuta Ghosh, stating that the Indian IT-BPM (Business Process Management) industry exports stood at $108 billion in 2016 and India accounted for 56% of the global outsourcing market.

If the bill does go into effect, IT firms in the country that are running their business model on managed services will be hit badly as India will not be an economically viable country for recruitment and off-shore employment. There will be lesser visas for Indians and IT engineers or advance degree holders in the technology segment going to or being sent to the US will become a very costly affair.

How does it affect the US?

Right now, the visas are allocated by a lottery system. The new bill would shut it down and build a preferential system directed at the students studying in the US, advanced degree holders, valuable skill holders and high income individuals, a priority on visas. The bill will also give the Department of Labor audit applications from overseas employees of US companies asking for transfers to the US.

According to a media report by CNN Tech, 236,000 foreign nationals applied for H-1B visas. About 28% of new tech startups are started by immigrants, and more than 50% of the top US companies worth over $1 billion have at least one immigrant founder.

Pratham Foundation partners L&T Infotech to launch ‘Digital Sakshar’
Epaathsala launches ERP solution for educational institutions