By Apoorva Mandhani
Amid the hue and cry over President Trumps travel ban, another prospective reform is set to strike closer to home.
[su_pullquote]A draft executive order, aiming to serve, first and foremost, the U.S. national interest, is on the rounds.[/su_pullquote]
On Monday, the House of Representatives witnessed the introduction of two bills which set the minimum wage for exempt H-1B visa workers to $100,000 or $130,000. This is more than twice the current limit of $60,000 – which was introduced in 1989 and had remained unchanged. The bills aim to reduce the number of visas in the open category (effectively c42,000) and to replace the existing lottery system with a market-based allocation system for H-1B visa applications in the open category – that is if the demand is more than the limit.
A draft executive order, aiming to serve, first and foremost, the U.S. national interest, is on the rounds. Like several other reforms, the one in H1-B policies wont just affect the government and the corporations. It would by extension affect the lives of the few hundreds of thousands of Indians in the US.
What is the H-1B visa?
The H-1B visa is a non-immigrant visa. It permits US companies to employ foreign workers in occupations that require theoretical or technical expertise in specialised fields. The provision is utilised by Tech companies to hire tens of thousands of employees each year.
However, it seems that the proposed reform concerns itself with allegations that claim that foreign work visa programs are abused to bring in cheaper workforce from overseas. This, in order to fill jobs that would have otherwise been occupied by Americans.
India will take up visa and trade issues with Trump | Photo Courtesy: Business StandardTreading forward in measured steps?
Trumps policy of protectionism has managed to create a frenzy in India. In response, concerns have been conveyed to the US administration and the US Congress at senior levels, according to the External Affairs Ministry. Further, Indian services companies, led by NASSCOM, will be putting forward their point of view to the Trump administration in the last week of February.
These companies maintain that outsourcing benefits all stakeholders involved.
While the prospect of such reforms being introduced is worrisome, a frenzied response might be untimely. One needs to consider the limitations on the reforms that are capable of being introduced by an executive order. Procedurally, the congressional rule-making goes through a long process with an uncertain outcome.
[su_pullquote]Hence, in the absence of a concrete policy to reason against, it would be inopportune to engage in a fruitful discussion over the reforms.[/su_pullquote]
A research note submitted by JM Financial elaborates on the scope of the immediate changes. These could include a) discouragement of bulk-filing by significantly raising the costs of applications; b) modifying/replacing the current lottery system (that does not require congressional approvals); c) increasing the compliance requirements on non-displacement/local recruitment with stringent penalties for violation. Furthermore, as opined by Mr. Kris Lakshmikanth, CEO of Headhunters - the Presidents contradictory statements on foreign labor while campaigning must also be borne in mind.
Hence, in the absence of a concrete policy to reason against, it would be inopportune to engage in a fruitful discussion over the reforms.
But what if this order passes?
In the event of such an order being passed eventually, it bears on the IT service companies to seize the field, and shift their business model away from labour costs as the fundamental source of competitive advantage. The policys impact can further be muffled by reducing applications to exempt H-1B visas (currently 100%) and go through the normal route, as suggested by JM Financial. This could prevent the inherent triggering of the market-based allocation by lowering fresh applications.
It would therefore be worthwhile for India to take this opportunity to look beyond the United States and rethink its policies at home, while Trump aims to make America great again.