The new US visa regime

Lessons for Indian information technology firms

United States President Barack Obama's executive action to initiate the much-needed immigration reform, stalled in the United States Congress, is mostly about coming to terms with illegal entrants who have been in the country for a long period. A small part of it deals with making it easier for technically qualified people to remain in the United States, add to its knowledge and skills, innovate and create value, both intangible and real. It is this aspect that concerns Indian information technology (IT) firms. Their current business model depends on them being able to send knowledge workers to the United States to serve the 60 per cent of their market that resides there.

For these Indian IT firms, Mr Obama's action has come as a big relief; it does not include some of the very negative features that were part of the Bill that the United States Senate - but not the House - had passed. A final sense of what the measure holds has to wait for the all-important fine print to become clear. But it should become evident that while not doing any damage, its positive aspects only really tinker at the edges. Two key changes are that henceforth, holders of H-1B visas who have applied for a work permit or citizenship will be able to change jobs (thus reducing exploitation by their employers) and their spouses will be able to work. The United States government expects 400,000 more skilled workers to be able to come in, though the cap on H-1B visas has not been raised.

It should be clear that the United States and Indian interests in this regard are different, and they do not by any means entirely overlap. It is in the United States' interest to retain its position as a global leader in technology and innovation, and to that end make it easy for highly skilled people to live in the United States and add to its innovative bandwidth. India's interest, on the other hand, is to work for a global regime that facilitates trade in services and lets its skilled people work round the world. In this scenario, the Indian information technology industry and government have two distinct items on the agenda before them. The information technology firms, while lobbying for an easier regime for temporary knowledge workers in the United States, have to remain mindful of United States political opinion that sees these as taking away jobs from locals. So sending larger numbers of skilled people over to the United States is a declining business model. Where the Indian government and the information technology industry must work together is to make India a good host for innovative endeavours. The good news is that global venture capital firms are increasingly taking notice of Indian start-ups, and some Indian firms have begun to move away from maximising cost arbitrage and begun encouraging innovation. The boom in e-retailing, creating new applications and aggregation portals is a very positive sign, and it is to be hoped that the present government's emphasis on e-governance and smart cities will give a boost to innovation in information technology geared to the Indian market.