How new H-1B visa regime will impact Indians, Indian firms

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In yet another policy stance change on H-1B visa within six months, the US administration on October 6 said it was announcing an “interim final rule” which will “strengthen” the non-immigrant work visa programme. The new rules will be effective 60 days from their publication in the Federal Register, which is the official journal of the US government, much like the Gazette of India.

What is an interim final rule?

Executive policies announced by agencies such as the Department of Homeland Security (DHS) or the US Citizenship and Immigration Services (USCIS) require them to consult stakeholders and give them a notice period of 60 days and seek comments before any sweeping changes are brought in. This method allows agencies such as DHS to act with urgency and within a specified time after a new rule or law is made.

In the latest announcement on the proposed policy changes, the DHS said that USCIS would forgo the usual 60-day comment and notice period to “immediately ensure that employing H-1B workers will not worsen the economic crisis caused by COVID-19”.

The impact that the pandemic was having on the US economy and its domestic workers was an “obvious and compelling fact” which justified the agency issuing an interim final rule.

Also read | ExplainSpeaking: How robust is India’s economic recovery post Covid-19 lockdown?

What are the new proposed changes?

As per the Department of Homeland Security, whose main job is to secure the US from the threats it faces, the H-1B work visa regime had over the years gone far beyond the mandate for which it was launched, often “to the detriment of US workers”. Therefore, in order to bring back the integrity to the work visa regime, the DHS has announced some changes which would ensure that H-1B petitions are approved only for “qualified beneficiaries and petitioners”.

Though the exact contours and specifications of the change is likely to be announced by the DHS over the week, it has specified that the new rule will narrow down the definition of what constitutes a “specialty occupation”.

This means that companies and agencies which hire workers on H-1B visas will have a tough time proving to the immigration agencies that such employees are not available from the domestic pool of US workers.

The second proposed change relates to companies allegedly making fictitious work offers to fictitious employees just to fulfil their quota of H-1B visa applications approved. The US administration has in the past alleged that both Indian and the US-based companies have often given H-1B work visa offers to foreign employees “just on paper”, thereby allowing them to evade some part of taxes, while also undercutting the jobs for eligible US workers.

The third and final proposed rule change talks about better enforcement of the new H-1B norms which will be announced later. This, the DHS said, will be done through worksite inspections and monitoring compliance, before, during and after the H-1B work visa is approved.

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How will the changes impact Indian IT and other H-1B visa holders?

Every year, the US administration issues 85,000 H-1B work permits in all. Of these, 65,000 are for people with specialty occupations, while the rest 20,000 are reserved for those foreign workers who have earned a masters or higher university degree in the US. Every year, Indians and Indian companies corner a lion’s share of the number of H-1B work permits issued each year.

As of April 1, 2020, the US Citizenship and Immigration Services (USCIS) had received about 2.5 lakh H-1B work visa applications, according to official data. Indians had applied for as many as 1.84 lakh or 67 per cent of the total H-1B work visas.

Since the DHS has proposed to narrow down the definition of what would constitute a “specialty occupation”, it is likely that the 65,000 visas issued every year would be brought down significantly.

Though Indian information technology giants such as TCS, Infosys, Wipro, HCL and others have in the past insisted that they have reduced their dependence on H-1B visas to a large extent, a reduction in the overall quota of H-1B visa workers would still mean that the number of workers they would either have to shell out more money to hire local talent or pay more to the existing H-1B work visa holders.

The proposed change could also impact global IT companies which hire H-1B visa workers in a great number.

According to the US government’s official numbers, global tech giants such as Amazon hired up to 3000 H-1B work visa holders in 2019, while Google hired between up to 2,500 such workers during the year. Most of these H-1B work permit holders were Indians.

H-1B visas, most often used by Indian and Chinese companies, are generally approved for a period of three years for a person, but many visa holders change employers to extend their US stay. The visa norms have often been criticised for allowing cheap labour in the US at the expense of its local workforce.

What happens to the old rules and relaxations announced on H-1B visa regime?

Though the DHS has come out with a broad plan on what it intends to do to “overhaul” the H-1B work visa regime, the final contours and exact changes are not known yet. The changes are also seen as a poll promise being fulfilled by US President Donald Trump.

Trump had, while taking charge as president in 2017, hinted that the visa regime would be overhauled to ensure that the system was no longer gamed by companies which continued to pay lesser than the annual average salary paid to US workers, thereby undercutting jobs from them.

Once the DHS comes out with the final norms, it will have to be seen whether the new rules apply only to the fresh work visas that are issued or also to the existing visa holders. Until then, the relaxations announced by the Trump administration in August would continue to apply.

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