President Donald Trump's crackdown on the H1B visa—the most popular employment-based, non-immigration visa offered—could have a negative impact on tech companies, especially those who have an outsourced labor stream from India.
The negative impacts, in effect, could limit several Indian IT services companies forcing them to re-evaluate their business models to fit within the American regulatory framework.
The Mighty Protectionist
Upon his ascension to the presidency, then President-elect Trump struck fear in investors when he announced several plans to reform and shutout loopholes in the H1B visa program with other immigration policy-related changes. Investors sold off and tech companies that rely heavily on H1B authorized labor, like IBM or Infosys, were given a beating in the stock market.
One of the main reasons why the news of coming H1B crackdowns sparked fear in investors was because most recipients of these types of visas come from India. Other reasons stemmed around the fears of investing in a company or industry the president clearly had a bias against and made it publicly known that he did (i.e. Trump's Twitter rants).
Speculation aside, now far over the hundred day mark into his presidency, Trump has followed through with drastic immigration overhauls. Notably, the so-called Muslim ban comes to mind with the rules he ordered to control and reconsider minimum wages, country caps, and the lottery system that the H1B program has grown accustomed too. Essentially, tighter rules on how many petitions companies can file to shutting potential civil fraud were at the center of the debate.
Members of Congress are also trying to change the H1B program. There has been a bipartisan effort via a series of legislative proposals that would alter the H1B, without presidential intervention, to reflect a program that will place American applicants and companies over foreign onlookers.
Yet President Donald Trump's stance on immigration has been lauded by Republicans who wish to stay on his good side, as well as those who truly believe in what he is doing. What cost does limiting specific visas have on the American economy when highly skilled labor is a dime a dozen internationally?
Investing in American Talent
Despite this, Indian-based IT services companies do have contingency plans in place to navigate any drastic changes in H1B, and general immigration policy. Quartz India points out that several of these companies (non-IT included) are considering investing in local, American talent while still retaining a healthy overseas staff.
"We have already started to react. We anticipated this. We started ramping up our Atlanta center with local hires, fresh from campus. We’re doing the same thing in Troy, Michigan,” tech firm Wipro chairman Azim Premji said in a 2009 interview via the Quartz report.
And to make up for limited access for American clients, Indian-born staffers are being sent to centers in Latin America to maintain a presence in the western hemisphere while avoiding any major draw downs of international workforce numbers.
These centers have become known as "global delivery centers" so that non-American citizen staff can still be close to the action. At the same time, the executives and home offices remain in India. The purchasing of American firms and other types of acquisitions and long-term investment has also sparked interest among these companies as a means to maintain a presence.
Companies digitizing their workforce and conducting operations remotely has also given these firms the ability to shift gears and have a flexible, international team that can address international clients in real time.
Bigger Than Just Tech
Moving forward, many firms will continue to adapt to changing policy environments. However, the current path for employment-based immigration policy is heading down a path will negatively impact the American tech industry, among others.
H1B visas were used by thousands of IT workers, it's true. However, skilled nurses, financial planners, artists, and other have used this visa, and similar ones, to come to the United States and make a living.
Now, the so-called "startup visa" is in the Trump administration's crosshairs. The startup visa is a colloquial term for a program that President Barack Obama started in the waning days of his administration that allowed Indian entrepreneurs to stay in the United States on a renewable, 30-month basis as they generated seed money to begin operations. Commonly, this money would derive from federal and other public grants.
The Economic Times reports that this crackdown could badly impact foreign entrepreneurs who seek to do business in the United States.
Bobby Franklin, president, and CEO of the National Venture Capital Association was one of many to criticize this latest move by Trump.
"At a time when countries around the world are doing all they can to attract and retain talented individuals to come to their shores to build and grow innovative companies, the Trump Administration is signaling its intent to do the exact opposite," he said in a statement.
Nevertheless, there is no expectation for Trump to back down from further altering employment-based visas given his stance on immigration and focusing on an "America First" mantra.
What are your thoughts? Let us know in the comments.
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