New U.S. Visa Rules H-1B Visas

Restrictions by the U.S. government on international workers are having an impact on Indian outsourcing firms but also present opportunities for companies looking to hire talent within India.

In June, President Donald Trump passed an executive order that barred entry into the U.S. of people holding several types of employment visas, including the H-1B visa for highly skilled workers. The restrictions will remain until the end of this year and don't impact work visa-holders already in the U.S.

The new rules have thrown the plans of thousands of workers from India into disarray. People who hold H-1B visas but who have lost their jobs amid the pandemic would be forced to leave the U.S. if they can't land another job within 60 days. Workers who were traveling overseas with work visas that were about to expire won't be able to return to the U.S., and thousands of people who were supposed to go to the U.S. on work visas this year are now in limbo.

This order impacts India's outsourcing and information technology services companies, including Tata Consultancy Services, Infosys, Wipro and Tech Mahindra, who sponsor thousands of employees every year to work in their U.S. offices on H-1B and other work visas. These companies were among the top 15 employers with the maximum H-1B visa petitions approved in 2018, according to the U.S. Citizenship and Immigration Services (USCIS).

The new order hinders the companies' ability to bring more workers to the U.S., which in turn could hurt their profitability because hiring workers based in the U.S. is typically more costly.

"Their margins are going to get compressed," said Sahil Sharma, vice president, global human capital, at RateGain, a software firm headquartered in Noida.

RateGain had planned to move three people to its U.S. offices this year but has deferred those plans due to the new rules, Sharma said. The company has around 200 employees working in the U.S., mostly local hires, he said.

Overall, Sharma said India's IT industry is prepared to weather the impact of the restrictions. During the pandemic, more clients and companies have gotten used to employing remote workers, so now companies will look to get more of their work done from India or other offshore locations. This would reduce the need for H-1B and other work visas.

With increased levels of working from home, "the relevance of borders is going to be absolutely negligible," Sharma said.

Industry Preparation

In recent years, as the U.S. government took a harder line on immigration, India's IT and outsourcing companies began reducing their dependence on H-1B visas.

"There were 68 percent fewer H-1B applications from the likes of TCS, Infosys and Wipro in [the first quarter of] 2020 compared to last year," said Mrinal Rai, an analyst at technology research and advisory firm ISG in Bengaluru. Around 40 percent to 50 percent of the U.S.-based staff of TCS and Infosys are on work visas, which is lower than before, Rai said in a research note.

Bengaluru-headquartered Wipro said in a statement that 70 percent of the staff in its U.S. offices are now local hires. "We do not anticipate a big disruption based on the recently announced changes."

Similarly, Tech Mahindra said it has been hiring locally and reskilling and upskilling its workers in the U.S. "We strongly believe that the 'future of work' will be hybrid: A mix of both physical and remote, and the overall application count for H-1B visas from India will continue to de-accelerate," said C. P. Gurnani, chief executive officer and managing director for Tech Mahindra, in a statement.

Talent Pool for India

Meanwhile, growing Indian companies are opening their arms to workers who may be returning to India due to the tightening visa conditions.

"There are tons of opportunities in India, and it's an exciting time to be here," wrote Rahul Ganjoo, vice president and head of product management at Zomato in Gurgaon, an online food delivery platform, in a recent LinkedIn post addressed to "folks in the U.S. anxious about visa issues."

Ganjoo offered help to those who were planning to return to India, adding that Zomato is hiring for technology roles.

"Smart people are looking at this as an opportunity to hire the best people right now," said Sharma, who added that his company was also hiring for select roles.

To be sure, overall hiring in India is slow as companies remain cautious about keeping costs low.

"The market is opening up in bits and pieces," said Ratna Gupta, Bengaluru-based senior director at ABC Consultants, a recruitment services firm. She said she isn't expecting a large-scale move of H-1B visa holders to India, as many of them may choose to go to Canada or other countries with more-welcoming immigration policies.

"We don't see an enhanced stream of applications from returning Indians as of yet," Gupta said.

Among those who have returned to India recently is 33-year-old Varun Verma, who was working as an IT product manager at a health care company in California. Verma said he got the job after completing his MBA in the U.S. and was working on his student visa. He said he had to leave the U.S. because he did not make it in the computer-generated random selection process, or "lottery," of the USCIS, which is needed for the H-1B visa.

Although Verma would have preferred to stay in the U.S., he said he is positive about prospects in his home country.

"The more H-1B restrictions are being imposed, a lot of opportunities will move to India," said Verma. "That's a good thing for India."