Indian outsourcing firms applied for fewer H-1B visas in 2016 and Trump is not the reason

The figures are from the financial year 2016

A new report published by the National Foundation for American Policy (NFAP) has found that top seven Indian outsourcing companies filed 37 percent less H-1B applications in the financial year 2016, as compared to 2015.

According to the report released this week, the government data accessed by NFAP revealed a surprising drop in the applications filed by the Indian outsourcing companies for the lottery held in April 2016.

The new trend, according to NFAP, will most likely continue for the 2017 financial year, for which the applications have been already received. The agency predicts that there could be a further drop in the number of H-1B applications filed by the Indian companies when the data is released early next year.

According to the findings of NFAP, the reason for the steep decrease in the number of applications could be the direct impact of the technology industry moving more towards cloud computing and artificial intelligence that require fewer workforce.

The structural change that US IT companies are trying to implement by relying on less H-1B based foreign workers and hiring more skilled domestic workers, could be another reason, according to the NFAP.

Interestingly, the new figures are from the financial year 2016, for which applications were filed in April 2016, way before Trump came to power. This also shows that the decision of the companies to go with less H-1B application was not influenced by Trump and his anti-immigrant rhetoric.

What makes the new finding more significant is the growing clamor against Indian IT firms, who are accused of looting American jobs. This was taken up as a major reason by congressman and politicians who proposed restrictions to the existing visa program. Among several proposed changes, proponents pushed for a significant increase in the existing wage scale of the H-1B beneficiaries.

The findings of the new report are contradictory to the popular belief and some of the statements of American politicians who have been accusing Indian IT companies of entering into bad practices to hoard H-1B visas.

According to the report, only a total of 9,356 new H-1B petitions were approved for the top seven Indian IT companies in FY 2016. This is just 0.006 percent of the US labor force. The number looks insignificant when compared with approvals received in 2015, which were 37 percent lesser compared to that of 2015 figure of 14,792 applications.

These figures provide enough proof to conclude that the common rhetoric that Indian IT companies are draining American jobs is just an exaggeration. The US, in total, has a job market of 160 million and the numbers discussed here is fewer than 10,000.

The report also reveals that according to the Bureau of Labor Statistics data, the unemployment rate for STEM jobs in the US till 2017 was 2.5 percent, a very low rate when compared to the 4.4 percent in All Occupation category.

The study said, “This illustrates a disconnect between reality and claims that high-skilled foreign nationals are preventing U.S. workers from pursuing careers in tech fields.”

According to Code.org, Bureau of Labor Statistics data indicates there will be “1.4 million more software development jobs than applicants who can fill them by 2020…and there are more than 500,000 open computing jobs nationwide.”

An analysis by Glassdoor shows 9 of the 10 highest paying majors for US students five years out of college are in STEM (Science, Technology, Engineering, and Math) fields. The number of approved H-1B petitions for Tata Consultancy Services (TCS) declined by 56 percent from FY 2015 to FY 2016, i.e. from 4,674 to 2,040, a drop of 2,634. Wipro declined by 52 percent between FY 2015 and FY 2016, a drop of 1,605, going from 3,079 to 1,474 approved petitions for initial employment during those years. Infosys declined by 16 percent (or 454 petitions), with 2,376 approved H-1B petitions for initial employment in FY 2016, compared to 2,830 in FY 2015.

The report said that in the past implementing a software platform required highly skilled workforce in great numbers. But, with technology getting upgraded over the years, this gave way to digital engineering and more sophisticated services including better data analysis. This requires fewer workers and more advanced technology.

The report also criticized the members of the Congress and the policymakers who eluded the change in trends and went against companies, mostly Indian IT companies, with false claims and proposing stricter visa regulations.

The NFAP report also warned the Congress that if more restrictions are imposed on the use of H-1B and L-1Visa the US IT companies will look for alternatives. And that they will be forced to move out of the US market and increase their investments outside the United States. Adding that this practice might be followed both in their own offices as well as of affiliates. This might push them to contract more work to other companies.

“New restrictions on the ability of IT services companies to hire people on H-1B visa holders or transfer employees with specialized knowledge will increase the amount of work that is performed outside the United States,” said the report.

The report mentioned that approximately 25,000 US-based employers hired at least one high-skilled foreign worker on a new H-1B petition filed in 2016.

Manufacturing employers like Tesla Motors approved 108 new H-1B petitions and Cummins with 197. Uber had 121 approved H-1B petitions in FY 2016, eBay 115, and the Mayo Clinic 111.

Among the top companies with new H-1B petitions approved in 2016 were Cognizant (3,949), Infosys (2,376), TCS (2,040), Accenture (1,889), IBM (1,608), Wipro (1,474), Amazon (1,416), Tech Mahindra (1,228), CapGemini (1,164), Microsoft (1,145), HCL America (1,041), Intel (1,030), Deloitte (985), Google (924), Larsen &Toubro (870), PricewaterhouseCoopers (713), Ernst & Young (649), Apple (631), Syntel (583), Facebook (472), Oracle (427), Cisco (380), Mindtree (327), Goldman Sachs (287), UST Global (283), JPMorganChase (271), IGATE (255), Stanford (221), Yahoo! (206) and KPMG (198).

Last month, President Trump had signed an executive order Buy American Hire American to end the visa abuse by reviewing the existing norms that allow skilled foreign immigrants to work in the US.

Meanwhile, Infosys has already announced its intent to hire more than 10,000 Americans in the span of two years to avoid the immigration restrictions enforced by the new administration under Donald Trump.

The report indicates that by raising the current level of salaries for the H-1B applicants the foreign students who graduated from the US might lose their chance to work as they cannot demand higher salaries, forcing them to leave the US after their graduation.

According to the report, the best solution to ensure US employers can retain “the most-skilled or highest-paid” foreign nationals are to raise the H-1B cap or to exempt more H-1B visa holders from the annual limit.

The report criticized the Trump administration for providing misleading data while briefing its Buy American, Hire American executive order. A Trump administration official told reporters that “about 80 percent of H-1B workers are paid less than the median wage in their fields.”

NFAP report said this statistic is misleading as it relies on a Department of Labor database that includes multiple applications for the same individuals since a new filing is generally required when H-1B professional moves to a new area. That means it “double or triple counts anyone who works in more than one geographic location (primarily younger workers sent to multiple offices).”

“The median salary in 2015 for H-1B computer-related recipients who have worked about three years (listed as “continuing employment” in DHS data) was about $7,000 higher than the median salary in the industry,” the report added.