H-1B visa limits unfilled for first time since 2004

Only 65% of quota filled; most years, it is exhausted on the first day.

Almost a week has passed since the United States Citizenship and Immigration Services (USCIS) started accepting H-1B applications for financial year 2009-10. Till date, it has received only 42,000 H-1B petitions or around 65 per cent of the total quota of 65,000. This is the first time since 2004 that the quota has not been exhausted.

Compare this to last year’s figures when the quota was exhausted on the first day — the USCIS received over 131,800 applications in the first five days alone. For this fiscal, the agency said it will continue to accept applications till the cap of 65,000 is achieved.

The unenthusiastic demand for H-1B visas, which allows US companies to temporarily employ foreign workers in speciality occupations, is the result of a slowdown in the US market and increasing focus of Indian IT firms for offshore work (rather than onsite).

Industry experts believe that unlike earlier years, when the visa applications exceed the quota on the first day, this year the exercise might go on till June.

This is what happened in 2004, when the cap was reached on October 1, 2004. H-1B filings started on April 1 and continued all the way till October 1, until the USCIS announced that the cap had been reached.

“We are not seeing the same level of interest as last year. Firms are not rushing to prepare H-1Bs at the start of the H-1B filing season on April 1, 2009, as they did prior to April 1, 2008. We are seeing a more than 50 per cent drop in interest against last year on H-1B applications during the April 1 to 7 filing period,” says Cyrus D Mehta, Attorney at Law, Cyrus D Mehta and Associates, a US-based law firm.

Other than protectionist noises that the US government had been making on “exporting jobs overseas”, Indian IT firms, the biggest users of H-1B visas, have also reduced the number of applications, owing to cost considerations.

In an earlier interview to Business Standard, Pratik Kumar, corporate vice-president (HR), Wipro, had said applying for an H-1B visa is a huge expense. The cost of one H-1B visa is around $3,000. For instance, last year Wipro received 2,500 to 3,000 H-1B Visas at a cost of $10 million (around Rs 48 crore).

“We will apply for H-1B visas, but the numbers will be significantly lower than last year. It is a misconception that if the visa cap is removed, Indian firms will rush to file for H-1B visas. Companies are very careful about the number they take on. Besides, there is a huge focus this year on offshoring,” added Kumar.

“H-1B visa requirements are directly related to the business. If business from US has gone down, then the number of H-1B visa applications will also get impacted. For Tech Mahindra, while we have been using the H-1B visa, we have a much larger base of L-1 visas,” said L K Bhatia, vice president, recruitment, Tech Mahindra.

Moreover, as a part of cost management, firms are planning to use H-1B visas they hold from last year.

“Most of the firms applying for H-1B visas take future needs into consideration. This is done in anticipation of new contracts and the required ramp-up then,” added Deependra Chumble, Chief People Officer, Hexaware Technologies. For Hexaware, though, he does sees a marginal impact. The company, too, is focusing on encouraging customers to offshore.

The number of new H-1Bs issued each year in the US is subject to an annual Congressionally-mandated quota. Those beneficiaries not subject to the annual quota are those who currently hold H-1B status or have held the H-1B status at some point in the past six years and have not been outside the US for more than 365 consecutive days. Both US (read Silicon Valley) and Indian companies have repeatedly stressed the need to raise the limit, which was reduced from 195,000 to 65,000 two years ago.