New H1-B restrictions are Trump’s gift to Indian IT Sector

Partha Chakraborty

Partha Chakraborty, Ph.D., CFA, is an entrepreneur in Water technologies, Blockchain and Wealth Management in US and India. An Indian-born immigrant, he is a naturalized US Citizen since 2018. Educated in India and at Cornell University, Partha is currently an entrepreneur in water technologies, Blockchain, and wealth management in the US and in India. All opinions are of the author alone, and do not necessarily represent that of any organization he may be part of. The author alone is responsible for any error or omission.


American Narrative needs Emancipation to make it Exceptional

President Trump can be effortlessly egregious on the stump, and on the pulpit, as he takes the bullhorn touting, née tweeting, his vision of “America First”. On June 22, using a Presidential Proclamation, he extended a previously issued Proclamation (No. 10014), thereby freezing issuance of certain non-immigrant visas for the rest of the year. “In the administration of our Nation’s immigration system, we must remain mindful of the impact of foreign workers”, the Proclamation reads, “particularly in the current extraordinary environment of high domestic unemployment and depressed demand for labor”. “The entry of additional workers through the H1-B, H-2-B, J, and L nonimmigrant visa programs, therefore, presents a significant threat to employment opportunities of Americans”. QED.


Not so, say most. In an Editorial, usually supportive The Wall Street Journal called the order “a pander to the restrictionist right that claims to oppose illegal immigration but really wants to stop all immigration”. The editorial echoes a common sentiment that “keeping out high-skilled foreign workers will hamstring US innovation, aiding China’s effort to dominate artificial intelligence, semiconductors and biotech”. Therefore, the editorial calls Trump’s order a gift for China.


Maybe. I call the order Trump’s gift for organized Indian IT Sector.


The majority of 85,000 H1-B issuances every year go to Indian software companies, where unemployment is 2.5% in May 2020, far below the national rate of 13.3% at peak COVID-19 reign. Nearly 122,000 Information industry jobs are open in April 2020, according to JOLTS survey, slightly more than the number a year back. Pandemic seems to have done little to change demand and supply dynamics, the bread and butter, of H1-B mainstay.


Programming employees have barely any need to be “in office”, regardless of their visa status, or their employer. Lockdown experiences have made it obvious that most employees, given a choice, prefer to work from home. Enablers – high-speed connection, videoconferencing and collaboration apps, VPN and others – help us achieve everything at home as we could when physically together.


It should come as no news for IT Offshoring / BPO companies in India. They exist only because most of what they do does not require them to be next to the user. It is true that delivery of a product, initial prototyping and customer feedback do need a small number – typically “client-facing” or managerial – to be on-site. Today, these employees are doing exactly what their counterparts everywhere are doing – working from home.


What Trump’s order does is to take away ambiguity, at least till end of 2020, on who can serve a new programming requirement, the kind that elicits need for a new H1-B. Since nobody can claim advantages of “on-site”, at a (grossly) simplistic level choice is between resources based in US and those based outside available at, say, one-third the cost, ceteris paribus. No choice for guessing who wins. It is estimated that 30,000 new software jobs will cross the oceans and land in India as a result of new restrictions this year. Similar disposition holds for L1 visas earmarked for managerial roles. Indian IT companies use them for sales and client service professionals, who are forced to work remotely anyway. Business travel is not banned under the rule, but it is impossible to travel from India because of pandemic restrictions. All in, neither developers nor relationship managers are at a disadvantage any more than they have been in pandemic times because of this rule.


For Indian IT biggies, on-site jobs add more to bottom-line than jobs done in India. Employees at Infosys, just to pick a name, get exposure dealing directly with clients on-site, resulting in higher billing rates in future. It also exposes their employees to the underworld of body-shoppers. Body-shoppers are nothing but vehicles where employees may ‘park’ their H1-B while they wait for Green Cards, their access to the Promised Land thereafter. Monetary and other relationships between a programmer and a body-shopper can be murky at best, downright fraud frequently.  What Trump’s order does is in effect it to shut down body-shoppers for some time, to the benefit of established IT biggies; almost every job held at a body-shopper but up for renewal this year will land outside the US. Given that flagrant abuse by body-shoppers has put the H1-B program in jeopardy, repeatedly, even before Trump’s rule, I shed no tears for them.


Trump’s order puts no constraints on innovation that uses development talents from India, e.g.  As we speak, I know of at least three start-up organizations that are critically dependent on Indian software resources in their effort to ‘disrupt’ whatever niche they found a sweet spot in. Even before the pandemic, relationships began and nurtured remotely – startups do not have money to pay for US-based talents, nor for foreign travel. I am sure these are not exceptions and shall be the rule rest of the year.


What about drivers of US growth –big US behemoths like Google, Apple and the ilk? Google applied for 6000 H1-B visas in 2019, Apple, 3500; even if their influence on powers that be fail to get exceptions for their applications, it will be foolish to forget that every one of them has development centers offshore with adequate legal wrappers to ensure they get full benefit of their sweat. In a hypothetical scenario, Google invents their next-gen search engine in India in the next six months, it still remains an innovation that the US company monetizes fully, no matter where the inventor sat when they wrote the code.


In summary, Trump’s newly issued restrictions on H1-B and L-1 visas are no death sentence to US innovation, nor are they injurious to the health of Indian IT companies. At worst it will have barely any perceptible impact on the bottom-line of IT behemoths, they may gain new mandates. Body-shoppers will be in jeopardy and Hallelujah for that. US innovators shall continue to benefit from resources in India, more affordably now, should they choose to do so.


At least for once, America First meant a win-win for everybody. For the organized IT sector in India, Trump’s order is a gift nobody will forsake.