Donald Trump's H-1B Bill strangulates IT firms, proposes doubling minimum wages

Infosys, and Wipro - which collectively account for 60% of the revenues of India's IT sector - tumbled on the news.

Commenting on the development, Angel Broking's vice president (Research and IT) Sarabjit Kour Nangra said the hike in H-1B visa cost will have a significant impact on the financials of the Indian IT companies.

For young Indian software engineers and IT graduates, H-1B visa is the ticket to America and fulfilment of their dreams to reside in a "developed nation". Every year, thousands of Indians come to the US on special visas for skilled professionals, the vast majority taking temporary jobs in the tech sector.

Lofgren who extensively worked on immigration reform, plans to allot visas to companies which are willing to pay the highest instead of the existing lottery system. "Maybe they think since I'm a Democrat this won't make law, but I think if we're serious about reforming this program, this is a good first step to doing that". At present, the minimum wage paid to an H1B holder is $60,000.

According to latest developments, the US House of Representatives, has already called for more than doubling the minimum salary of H-1B visa holders to $130,000 (approx Rs 89 lakhs) making it hard for firms to use the programme to replace American employees with foreign workers, including from India.

In addition, there is also a strong likelihood that US President Donald Trump would sign a separate executive order soon with further curbs on work visa programmes. Indians received about 70% of all H-1B visas issued in 2016.

"The Lofgren bill contains provisions that may prove challenging for the Indian IT sector, and it will also leave loopholes that will nullify the objective of saving American jobs", said C. P. Gurnani, CEO of Tech Mahindra, one of India's largest technology outsourcing agencies and chairman of Indian industry body NASSCOM.

While the final outcome of the Bill is yet to be known, NASSCOM said it will continue to engage with the USA administration and legislators both directly and through the Government of India. Mr Trump could also reverse extension of the duration of the optional practical training work visas, which allowed foreign students to stay in the U.S. a bit longer after completion of their studies.

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"I've been working for seven years and I've been waiting for a chance to work in the U.S. ever since" said Chirag, who has turned down other job offers in India for this one.

"The Lofgren Bill provisions may prove challenging for the Indian IT sector and will also leave loopholes that will nullify the objective of saving United States jobs". Five top Indian IT companies lost Rs 33,000 crore in market cap in a single day on Tuesday following uncertainty about the new environment in the US.

"Immigration restrictions are the main source of India's vulnerability", said Sonal Varma, Chief India Economist at Nomura, was quoted as saying by CNBC.

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.

"They are employed by our local technology organizations or are students in our local universities and are vital to the economic health of our region", Russell said.

India's IT companies including Tata Consultancy Services Ltd, Infosys and Wipro, points out that they are serving corporations become more competitive by specialized staff for technology operations.

R Chandrashekhar, president of the National Association of Software and Services Companies, said the industry does not react to drafts.

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  • Darren Santiago