Indian IT industry in a fix as US mulls H1-B visa suspension

BENGALURU: Reports of Donald Trump-led US government planning to temporarily suspend various guest worker visas, including H1-B visas, have caused an uncertainty in the Indian IT/ITes sector — the highest beneficiary of these visas.

According to US official data, 2,75,000 H1-B visa applications were received for FY21 alone. However, due to stricter regimes and compliance costs, the rejection rate for these visas stood at 30 per cent in the first quarter of FY20. The rejection rate for Indian IT/ ITes and consultancy firms is even higher than the US-headquartered firms. Nearly 67 per cent of fresh H1B visa applications for FY21 came from India, the data showed.

Amid a soaring unemployment rate in the US with 20.5 million jobs having been lost in April alone due to Covid-19 pandemic, four US lawmakers have written  to Trump seeking “suspension of guest worker visas for at least next year or until unemployment returned to normal levels.” The letter mentions that given the extreme lack of jobs for American job-seekers, it defies common sense to admit more foreign workers for such limited employment.

“A move to temporarily suspend the H1-B visas will be unprecedented for the Indian IT/ ITes sector who definitely rely on these visas for many of their contracts within US. The industry needs to adopt a wait-and-watch policy to see if the Republicans also vote for the legislation that bans H1-B visas. If at all such a law is passed, it will trigger a new wave of recruitment by Indian IT firms within the US in short term. For now, there is a huge uncertainty,” Shailesh Shah, CEO, Strta Consulting, told TMS.

The United States Citizenship and Immigration Services earlier extended a grace period of 60 days for H1-B visa holders who were laid off, in a big relief to lakhs of Indian techies stranded in the US right now. Many skilled professionals from the IT industry who were laid off in the current wave of unemployment have been asked to either leave the country or find a suitable job within the period.

“Any such law, if at all passed, will be only implemented next year, given the H1B visa applications process for this year has already begun. Even a temporary ban on H1-B visas is highly unlikely as Indian and global tech firms, and Silicon Valley start-ups have been hiring Indians on H1-B visas,” said Pareekh Jain, founder, EIIRTRend and Pareekh Consulting.