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H1-B visa program bill: Why Indian IT companies consider it a bad news?

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Indian’s make use of 70% of the total H-1B visa’s issued worldwide by Washington.

Photograph of a U.S. Department of Homeland Security .

There has been a lot of discussion over the last one week about the H-1B Visa program, which is one of the most popular non-immigrant visas for foreign employees to get an occupation in the US.

When a bill was introduced in the congress by California Republican Congressman Darrell Issa to curb ‘abuse’ in the H-1B visa system, the ripples were even felt in India as the stocks of all major IT companies including Infosys, Wipro, Tech Mahindra etc. fell causing a loss of over 3 million in one single market day.

So, why is H-1B so interlaced with the Indian technology firms that any new recommendations have a direct impact on them. Let’s take a look at what happened last week that disrupted the normalcy.

Two US lawmakers Republican Darrell Issa and Democrat Scott Peters reintroduced a bill that was rejected by the congress last year to make amendments to the existing H-1B visa program. The new bill, titled “Protect and Grow American Jobs Act,” aims at bringing jobs back to Americans by making sure that only highly-skilled foreigners get the benefit of H-1B visa program.

The lawmakers proposed a hike in the annual salary of the H-1B visa employees (cheap labor is one of the highlights why companies opt H-1B employees instead of Americans) by $100,000. In addition to this, they also recommended the master’s quota/cap, also known as advanced degree cap, which allows a total of 20,000 petitions be eliminated.

The immediate reason for the two lawmakers to reintroduced the bill once again in the congress is believed to be the expose of US companies misusing the H-1B visa program. Companies such as Disney, SoCal Edison, and others were caught red-handed for replacing American workers with foreign H-1B employees for a lower salary.

What is H-1B Visa program?

H-1B Visa program is a non-immigrant visa that can be availed by employers to hire highly skilled workers from foreign countries for a limited period of time. An H-1B visa employee can work in the US for a maximum period of Six years, provided they get an extension after three years. The H-1B employee must exit the US for one year after the completion of six year stay to be eligible for another H-1B visa.

What is the fiscal year cap of H-1B visa program?

Congress set the current annual regular cap for the H-1B program at 65,000. In addition to this H-1B cap for 20,000 is reserved for beneficiary who has obtained a U.S. master’s degree or higher (commonly known as the “advanced degree exemption”).

USCIS receives way too many H-1B applications than it needs to fill the regular cap within the first five days of the announcement. So, they resort to a computer-generated random selection process commonly known as a “lottery” to select an adequate number of petitions needed to fill the cap.

Can an H-1B employee work in the US beyond six years?

Yes. In certain circumstances, an H-1Bholder is allowed to stay in the US even after the completion of six years.

  1. According to USCIS norms, an H-1B visa holder can extend his/her stay in the US provided their petition for EB-1, EB-2, or EB-3 visa petition is approved and is waiting for the new announcement of the Visa quota for an adjustment status. In such cases, the H-1B visa holder is eligible to apply for a visa extension. However, the USCIS has the discretion to approve or deny such applications.
  2. An H-1B visa holder whose EB-1 or NIW application was filed for over 365 days can file for an extension of H-1B visa even after he/she completes 6 years in one year interval.
  3. Similarly, am H-1B petitioner for EB-3 and EB-2 (other than a National Interest Waiver) status whose labor certification was filed for over 365 days may apply to extend his/her H-1B status beyond the six-year limit in one year intervals. For details, please read article on H-1B Extensions beyond the 6-Year Limitation.

What are the implications of the reintroduced H-1B visa bill?

  • The H-1B Visa bill strictly prohibits companies based in US from hiring more than 50 foreign employees in the popular visa category or if 50% of their staffs are employed under the H-1B or L-1 visa program.
  • The bill by increasing the annual salary of H-1B visa employees gives the American citizens more employment opportunities. This would force companies relying on false H-1B practices from employing large number of H-1B and L-1 workers on training basis and send them back to their country to the work that otherwise would provide Americans job opportunity.
  • The bill out rightly prohibits US companies from hiring H-1B and L-1 visa holders as replacement for American workers.
  • This bill amends the Immigration and Nationality Act to revise the definition of “exempt H-1B nonimmigrant” to eliminate the masters or higher degree requirement.
  • The bill proposes to raise the annual salary threshold requirement from $60,000 to $100,000.
  • The Bill seeks to give the Department of Labour enhanced authority to review, investigate and audit employer compliance as well as to penalise fraudulent or abusive conduct.

What is President-elect Donald Trump’s attitude towards H-1B Visa program?

With just days left for Trump to replace Obama in the White House his take on H-1B visa is very important. Looking at his campaign trail it is clear that Trump is not in favor of the popular visa program. He had vehemently attacked the companies that misused the H-1B program.

More seriously, he is not all ok with Indian companies as in a wild mention during one of his campaign speeches, Trump had said “My administration will follow a simple rule — buy American, hire American. Years earlier we used to take pride in buying things ‘Made in America’. We love our companies, but we don’t love them when they go out of our country. There will be consequences.” His comment came at a time when Disney World was caught red handed hiring contract Indian IT Professionals via H-1B program of HCL Inc and Cognizant Technology.

Indian IT companies send thousands of its employees to the US on H-1B visa and the new bill is believed to affect them adversely. According to the US Assistant Secretary of State for Consular Affairs, Michele Bond who recently visited India, the number of H-1B visa’s issued to Indian’s remains high and it constitutes 70% of the total H-1B visa’s issued worldwide by Washington.

But some reports suggest that Indian IT companies don’t have to worry a lot as the bill has completely failed to address the root cause for the crisis – shortage of Americans with STEM skills.

According to a report published by the US Labor Department in 2015, the skill gap in the US is accentuating and by the end of 2022 there is an expected shortfall of 445,000 computer professionals. There are also reports that the Indian companies who mostly employee H-1B workers for Fortune 500 companies will get significant support for lobbying for easing of skilled worker visa restrictions.

But there is a strong feeling that the profit margin of the Indian IT companies will be adversely affected as there will be an increase in the sub-contracting expense. The recent stock crash of IT companies in India suggest that the sector is under panic as it offers a wide variety of outsourced back-end jobs.