How the US pause on H1-B visas will impact Indian Companies?
The US authority on Tuesday announced an embargo on immigration and non-immigrant worker visas. The extension from the 60-day ban will last until the end of the year 2020. They will also suspend popular work visas including the desired H1-B. However, they will postpone it until December 31. All these came from the White House press release.
US President Donald Trump explained that this would help save domestic workers due to the shrinking of the economy. These are as a result of the Covid 19 pandemic.
What is H1-B?
The US Government always issues a particular number of visas every year for companies outside the country. Thus, organizations will send their employees to work on their sites. Meanwhile, this helps the US to fill the gap of skilful low-priced workers in IT and other related sectors.
The H1-B visa is the most popular amid Indian IT Companies. The US Government always has a total of 85,000 H1-B visas every year. Out of these, they issue 65,000 H1-B visas to the most skilful foreign workers. Likewise, the remaining 20,000 goes to the most skilled workers who have degrees from American universities. Some have higher education or master’s degree.
Besides the H1-B visas, the US Government also issues L1 Visas. Therefore, companies will be able to convey the most skilful workers to the US for about seven years. Moreover, H2-B visas enable food and agricultural workers to look for work in the US.
Why the suspension?
Since its inception in 1952, the H-1 visa program has gone through a lot of amendment. In other words, it permits or refuses certain classes of skilled workers in the US. But that depends on the economic situation of the country.
Many graduates were ready to work at a moderately low price in the US. That is due to the rise in technology in combination with the emergence of the internet. And low-price computers in developing countries, including India and China. But, it was a productive venture for both the employer and employees. Moreover, there has been a lot of criticism for sending low price workers to work in the US at the detriment of domestic workers.
So, when Trump took over as US President, he suggested that the low price workers are hindering the economy and subverting jobs for citizens. Thus, the decision to reform the ‘broken’ H1-B visa program came up.
Trump now grab the opportunity given by the economic contraction as a result of Covid 19. Firstly, he banned that non-immigrant workers should not enter the country until June 23. After that, he extended it to December 31.
In his Senior Administrative order extending the ban, the president said that under standard conditions ‘a well managed short-term workers scheme can offer benefits to the economy’. Therefore, the exceptional economic decline caused by Covid-19 constituted a threat to US workers.
Who does it affect?
The ban is effective straightaway. Hence, there has been a suspension on the processing of all H-1B and other visas in that group. Therefore, those who don’t have a valid non-immigrant visa as at June 23, and are outside the US will not be permitted to enter the country until December 31. Meanwhile, essential services workers in the agricultural section have been spared. Thus, the consular officer for immigration services will decide their entry.
Moreover, the new worker visa ban shall not affect H-1B and other visa holders, and their families who are already residing in the US.
How does it affect Indian IT Companies?
Among the greatest beneficiaries of the US H-1B, visa scheme is Indian IT companies. Meanwhile, they usually dominate by gaining most out of the total number of visas that the US gives out each year since the 1990s.
Since April 1, 2020, the US citizenship and immigration services (USCIS) has gotten up to 2.5 lakh work applications. Indians application is up to 1.84lakh or 67% of the overall H-1B work visas for the ongoing financial year ending March 2021.
Besides the suspension of these work visas, the executive order that Trump signed made amendments to the H-1B work visa ethics. Thus, the recent widespread lottery system will no longer decide on it. The new standard will benefit highly skilled workers who receive huge pays from their companies.
Indian IT companies that send a lot of low-price employees to work on client sites in the US will experience a remarkable impact at their edge. Most of the great Indian IT companies have minimized their reliance on H-1B by employing more staff locally. Yet, they still depend on these visas to reduce expenses.
Indian IT companies also allocate subcontracts to their citizens residing in the US who have valid H-1B visas.