Indian tech firms to benefit as US court junks controversial Trump rules

In October, the Trump govt brought two policies that tightened eligibility for foreign workers applying for non-immigrant visas and raised minimum pay for foreign employees on high-skill work visas

In a major relief to global companies, especially tech firms that deploy huge workforce in the US, a California federal judge on Wednesday struck down two of the Trump administration's recent rules meant to drastically curtail the number of visas issued to skilled foreign workers every year. The verdict is likely to immensely benefit the export-driven Indian IT services industry which is hugely dependent on skilled workforce from offshore locations including India to manage their software delivery work in the US as well as local American companies that hugely rely on global tech workforce.

“This is a very good development for Indian IT companies that were reeling under the huge increases in applicable prevailing wages for H-1B workers and Covid related business cut back,” said Poorvi Chothani, founder and managing partner at LawQuest, an immigration and employment law firm.

In October, the US administration under President Donald Trump introduced two separate policies including tightening of the eligibility criteria for foreign workers to apply for the non-immigrant visas and raising the minimum salaries for foreign employees who are on high-skilled work visas. While the Labor Department's salary requirements took effect immediately upon publication in October, while the new eligibility criteria rules introduced by the Department of Homeland Security (DHS) were set to take effect in December.

“The judgement also prevents the DHS from imposing stricter definitions in the H-1B classification and onerous degree requirements that were to go into effect on December 7, 2020,” added Chothani.

In his ruling US District Judge Jeffrey White found that the unemployment crisis caused by the coronavirus pandemic was not ‘good cause’ for the. Department of Homeland Security and Department of Labor to flout the proper regulatory procedure when issuing the two policies. "The Covid-19 pandemic is an event beyond defendants' control, yet it was within defendants' control to take action earlier than they did," the Judge wrote.

Shot in the arm

• Nasscom welcomes move, says the new rules are supported by statute or procedure
• IT sector heavily dependent on skilled workforce from offshore locations to manage software delivery work in the US
• Indian firms were reeling from drastic surge in applicable wages for H-1B workers

Indian IT industry body Nasscom has also welcomed the move saying that the new rules were supported by statute or procedure. “We welcome the court decisions that clearly recognizes the importance of the high skill visa programs to the United States; and that the IFRs issued previously did not hold legal statute. Nasscom believes this will help US businesses access talent critical to the economic recovery phase in the post-Covid world,” the industry body said in a statement.

Nasscom on behalf of its member companies had earlier submitted comments objecting to the interim final rules on both procedural and substantive grounds. “We viewed the rule as unjustified and had sought for rescinding the IFR’s in its entirety, given the significant harm it would do to American businesses, American workers, and to the United States’ economy as a whole.”

Even though sending employees to client locations including the US is very much ingrained in the business model of the Indian IT services companies, their dependence on non-immigrant visas such as H1B has however greatly reduced in the past couple of years. Most of the Indian IT firms have stepped up their effort to hire local Americans though a shortage of enough number of skilled workers in the country is posing a major bottleneck for them.