BENGALURU: US President Joe Biden has said that a pandemic-led ban on temporary workers' visa, especially H1-B visas, will be allowed to expire, bringing much relief to information technology companies in India.
The H-1B visa is a non-immigrant visa that allows US companies to employ foreign workers in specialty jobs that require theoretical or technical expertise. A big portion of the roughly 85,000 H1-B visas issued every year by the US is used by Indian IT services companies like Tata Consultancy Services (TCS) Ltd, Infosys Ltd, and Wipro Ltd.
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Due to uncertainties in the US H1-B visa regime, a number of large IT companies have accelerated local hirings to reduce visa dependence. However, this impacts margins as the cost of hiring US nationals is much higher.
Employee expenses account for 60-65% of total operating costs for large IT services companies. According to estimates, operating margins for the sector can decline up to 80 basis points as local hires cost 25-30% more than their H1-B counterparts.
Former US president Donald Trump had issued a Presidential Proclamation (PP) on 22 June last year, barring entry of H-1B, H-2B, L-1, and certain J-1 visa holders into the US, claiming they posed a risk to the country's labour market. He later issued a second PP extending the date of the suspension through 31 March 2021, which has now expired.
IT industry apex body Nasscom believes allowing the suspension to lapse makes great sense for the US.
"As the courts seemed to agree, there was no credible evidence that the visa holders do harm to the US labour market. Quite the contrary, these individuals are a vital part of the US workforce and their presence enhances and helps enable the US economy, innovate, and grow jobs across the country. Nasscom believes this will help US businesses access talent critical to the economic recovery phase in the post-covid world," Nasscom said in a statement.
Unemployment rate in the US jumped to 6.2% in February from 3.5% a year ago, while the rate in computer occupations remained stagnant at 2.4% in this period. Also, as of 30 March, 2021, there were over 750,000 job vacancy postings for jobs in computer occupations, a 20% increase since May last year.
Immigration experts believe that Biden has taken the safe route rather than creating H1-B visa reforms.
"It is telling that Biden let Trump’s H-1B visa ban expire naturally rather than explicitly lifting it when he became president. With such a sweeping and divisive immigration agenda, it is unlikely that Biden would choose H-1B reform as the hill upon which to make his stand. Indian H-1B visa holders already in the United States are exploring less-contentious alternatives like the EB-5 Investor Visa, which brings in millions of dollars of investment and creates hundreds of thousands of jobs at no cost to the taxpayer," said Mark Davies, global chairman, Davies & Associates, LLC.
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