Trump govt not to change H-1B visa rules: Time Indian IT firms looked at changing business model, focus on acquisitions, say experts

Editor's Note: This is the second in a three-part series on the proposed change in H-1B visa regulation and its impact on India's IT industry, its employees and the future of offshore projects, particularly in the US. In Part-2 of the series, IT sector analysts outline the various ways Indian IT sector could choose to steer clear of the H-1B visa changes and also changes in regulations in other countries.

Read here for the first part of the series on Mohandas Pai, former director of Infosys and present chairman of Manipal Global Education,

Offering a bit of reprieve at least for now, the Donald Trump government in the US has stepped back on its proposed H-1B visa regulations that would have led to hundreds of thousands of Indian IT professionals returning home. US authorities on Tuesday said that the Trump administration is not considering any proposal that would force H-1B visa holders to leave the country.

The announcement by the US Citizenship and Immigration Services (USCIS) came days after reports emerged that the Trump administration was considering tightening H-1B visa rules that could lead to deportation of 7,50,000 Indians, a PTI report said. The reports had said it was mulling ending extensions for H-1B holders.

 Trump govt not to change H-1B visa rules: Time Indian IT firms looked at changing business model, focus on acquisitions, say experts

File image of President Donald Trump. AP

The USCIS "is not considering a regulatory change that would force H-1B visa holders to leave the United States by changing interpretation of section certain language in Section 104 C of the American Competitiveness in the 21st Century Act (AC21) statute that states that USCIS may grant the extensions", an official said.

This provides for H-1B extensions beyond the six-year limit.

So does this signal better times for Indian IT? Or does it simply go to show what IT veteran Mohandas Pai had told Firstpost on Monday that Indian IT is far superior to any in the world and not replaceable. That the IT sector in the US would take a hit if the proposed H-1B visa regulations come to pass. Globally, there is an acute crunch in filling tech hires due to a scarcity of talent. (Read here).

India has largest IT presence in US

Most Indian IT giants earn their highest revenues from the US. (see graph.) It is not only in the Indian IT sector's interest to have the H-1B visa issue smoothened out but also for the survival of the US tech industry too.

IT Revenue table - 9 January 2018

So does the latest move by the Trump government allay the fears of the Indian IT professionals and the companies in the US? President Donald Trump is known for his ‘whimsical’ nature, an IT expert said, adding that there is no saying what will be the next ‘surprise’ on this front.

The strict laws operating in the West making it mandatory to hire locals in IT companies against hiring foreign nationals (read Indian IT professionals) don't bode well for the future of Indian IT professionals seeking foreign shores. This is not the case only in the US but also in the United Kingdom, Singapore and Australia among others.

India has the largest presence in the US IT sector at 247,927 visa applications in 2017. China is a distant second with 36,362 and Canada 3,551 applications. So if the over 70 percent Indian IT professionals in the US are sent back home, does the US have a workforce of its own or even the talent pool to replace them? Even if the US decides to replace with its own home-grown talent, how much time will it take to reach the levels of the Indian professionals? These may be questions that the US government too may have considered.

What can Indian IT do?

What can Indian companies do to move through the swift-paced IT landscape? For starters, the Indian IT sector should respond to the change and react, say industry watchers. "We will have to move through this change by responding to it and not reacting," says Raja Lahiri, partner of transaction advisory services at Grant Thornton India LLP. He suggests ways to do that: “You can respond to change by tweaking the business model – use artificial intelligence, cloud, analytics, for instead. Use these as delivery models instead of sending people abroad. Another way of meeting with this challenge would be to look for acquisitions in the US and that will bolster US citizen workforce as well.”

Another way of approaching the issue that seems to be ever-looming on the horizon of not hiring Indian techies abroad to give a boost to local hiring is to do what leading American companies have been doing in India. For instance, Google, IBM, Microsoft, Hewlett Packard, Qualcom among many others have operations in India. “We have the best tech talent in India. Offshoring will be the way out for Indian companies to maintain their edge in technology," says Uday Chawla, managing partner at Transearch India.

The present situation in the US with regard to H-1B visas is not prompted by business as much as it is by socio-economic and political reasons driven by likely US policy changes, says Chawla.

As Pai said to Firstpost earlier, the Indian workforce in the US comprises of qualified and a very skilled set of people. Adds Lahiri, "The Indian IT professionals are of gold standards and that is globally accepted. It has been proven and tested for many years and decades. There is a skill that comes from the Indian workforce which is far superior to any other in the software industry."

Lack of employment opportunities is a reality that hits political constituencies and most leaders take cognizance of it and are out with an appeasement policy. The Indian IT sector cannot complain about this policy as it is a matter of political survival for governments across the globe, be it the US or the UK, for instance.

It is important to come to terms with the reality of lack of employment opportunities for locals in the West. It is time to take the US H-1B visa regulations as a wake-up call and for the Indian IT sector to start talking about the opportunities of hiring from the West so as to have a win-win situation abroad, suggests Sanchit Vir Gogia, chief analyst, founder and CEO of Greyhound Research. “Why should we wait for the West to mandate us? Let us be proactive and take the first step,” he said.

Any industry competes with its counterpart in the country and abroad. “We should start aggressively our agenda on the competition. Let us get into co-opetition – cooperative competition. Cooperate with the right partners in the region,” says Gogia.

There are other markets that India could look at. “Near-shoring would be the way to go about it. Let us work in places like Mexico, Canada, Belgium, etc, to deliver our services,” says an industry veteran. Before President Trump sends out another scare, India's IT sector would do better to look for greener pastures elsewhere sooner than later lest White House presses Delete for H-1B visa holders in the country.

(Data support by Kishor Kadam)

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Updated Date: Jan 10, 2018 07:25:51 IST