Blow for Indian IT: New US bill proposes doubling wage limit for H1B visa

New bill at US House of Representatives mandates minimum wages of H1B visa holders at $130,000

India's information technology (IT) sector will face temporary setback to move workers from India to the US with the bill introduced in the US House of Representatives that mandates minimum wages of H1B visa holders at $130,000, double the current limit.

IT stocks reacted negatively on the Bombay Stock Exchange as investors panicked over US President Donald Trump plans to keep his electoral promise of imposing tougher immigration rules on the H1B visa plans.

“This is a significant blow to the Indian IT sector. There will be ramifications of it from both the US and India. This bill should ideally have been backed by the aspect of availability of skills as well and not only increasing the minimum wage,” said Sanchit Gogia, chief executive of Greyhound Research.

The High-Skilled Integrity and Fairness Act of 2017 introduced by California Congressman Zoe Lofgren prioritises market-based allocation of visas to those companies willing to pay 200% of a wage calculated by survey, eliminates the category of lowest pay, and raises the salary level at which H1B dependent employer are exempt from non-displacement and recruitment attestation requirements to greater than $130,000.

This is more than double of the current H1B minimum wage of $60,000 which was established in 1989 and since then has remained unchanged.

Nearly two-thirds of H1B visa applicants are Indian nationals who either work for Indian IT services firms such as TCS, Infosys and Wipro or the local operations of US firms such as Accenture, IBM and Google. 

Nasscom, the software industry lobby, has argued that this could potentially impact the US as America faces a talent shortage that needs to be addressed by importing engineering workers from countries such as India.

"By 2018, there will be more than one million IT jobs lying vacant in the US and there are no candidates. Apart from the shortage in the available workforce, even in the Universities, more than the 50% of the enrolment in the STEM programme are foreign nationals. Even if you need to employ these foreign nationals, you need to have H1B visa programme. This is a reality," said R Chandrashekhar, President of Nasscom, the software industry lobby in a recent interview.

Indian firms also argue that they have seen bills presented in the US congress in the past that talk of visa curbs but the final outcome would be different due to the consultation and debates that happen.

“The bill has been introduced. It has to go through the US legislative process before it becomes a law,” said an executive of an IT services firm. “Let us not panic and we will wait for an outcome."

India expects that the immigration restrictions could see more work being offshored to the country as US firms look to cut costs and improve efficiency due to high cost labour in their country.