Nasscom slams US move to stop federal agencies from hiring foreign workers

IT industry body Nasscom said on Tuesday that US President Donald Trump’s executive order which prevents federal agencies from contracting or subcontracting foreign workers was based on misperceptions and misinformation.

The order on “Aligning Federal Contracting and Hiring Practices with the Interests of American Workers”, signed by Trump on Monday, focuses on review and policy development around the federal contracting and H-1B programme rather than mandating immediate changes, the industry body said in the statement.

The order directs the heads of each federal department and agency to review the use of offshore services as well as temporary foreign labour (H-1Bs, L-1s) in the execution of contracts awarded in FY18 and FY19 and issue a report within 120 days to the Director of the Office of Management and Budget.

The report will summarise the results of the reviews and recommend corrective actions that may be taken by the agency in certain cases. The reports will also assess the impacts on US workers, the US economy, national security, and the efficiency of federal procurement.

The executive order also requires the secretaries of Labor and Homeland Security to “take action” within 45 days to protect US workers from any adverse effects on wages and working conditions caused by the employment of H-1B visa holders at job sites (including third-party job sites), Nasscom's statement said.

Nasscom said this action underscores and sets a timeline for the agencies to finalise and publish some of the regulatory measures that have been discussed by the Trump Administration and mentioned again in the June Proclamation— which banned the issue of non-immigrant visas till the end of the calendar year 2020.

"The order particularly comes at a time when there is a huge shortage of STEM skills in the US, that workers on short-term non-immigrant visas like H-1B and L-1 help bridge," the body's statement said. The unemployment rate for IT occupations (those most common amongst H-1B visa holders) declined from 3 per cent in January to 2.5 per cent in May-2020, while the unemployment rate for all other occupations grew from 4.1 per cent to 13.5 per cent in the same period.

The executive order will have a limited impact on Indian IT players given lean exposure to US federal business, according to brokerage house BOBCAPS. "However, this is symbolic in the run up to US presidential elections. Over the medium-to-long term, we stay optimistic about the sector’s resilience in managing onsite workforce supply backed by localisation effort," said Ruchi Burde, assistant vice president (Research) at the brokerage house.