Bill Clamps Down Indian Tech Firms’ H-1B Usage

In a rare bipartisan decision on immigration, the Congressional House Judiciary Committee has unanimously approved legislation to make it increasingly challenging for Indian outsourcing companies to hire high-skilled foreign workers in the U.S.

At the same time, the bill has relaxed U.S. high-tech firms’ rules on H-1B usage creating a them vs. us environment between Silicon Valley and Indian outsourcers.

Firms which make extensive use of the H-1B visa are known as “H-1B dependent”. More than 15% of their workforce is using the H-1B visas. The bill would change the definition of H-1B dependent to employers with greater than 20% of their workforce utilizing the H-1B visa. These companies will be the focus of the new legislation known as the Protect and Grow American Jobs Act.

Outsourcing firms such as those in India would either have to pay employees as much as $135,000 per year or prove they tried to recruit qualified American workers. The bill would require a new obligation to submit a recruitment report with each Labor Condition Application. In addition, no American workers can be laid off because of the recruitment of foreign nationals. Lastly, the bill authorizes Labor Department investigation and raises fees to support this.

The bill specifically focuses on drawing a distinction between American outsourcing firms like Business Machines Corp. and Accenture Ltd, and Indian-based firms like Infosys Ltd. And Tata Consulting Services Ltd. The U.S. Chamber of Commerce has spoken out against the bill saying that it sets a “dangerous precedent” of U.S. government interference in business.

The problem with this legislation is that it’s extremely detrimental to the economy. A study from the Center for Global Development shows that H-1B visas issued between 1990 and 2010 generated $431 million for American workers. The equates to $1,345 per H-1B visa according to Gaurav Khanna, CGD senior fellow and assistant professor of economics at the public policy school at the University of California-San Diego.

The H-1B visa resulted in $17.3 billion in revenue across all countries in 2010 alone. Diversity in the workplace drives innovation which stimulates the economy. At 59%, this year’s H-1B approval rating was the lowest of the decade. Previous to this, the lowest approval rating of the decade was 74%. The H-1B cap was once set at 195,000. Since FY 2006 it has been 85,000.

H-1B visas are critical to the technology sector. 59% of H-1B petitions between FY 2007 and FY 2017 were for computer related occupations. America, with companies like Google, AWS, Microsoft and Oracle, is central to the global tech hub. Tech workers are also integral to the functionality of every company, tech-based or not. If the United States wants to remain innovative.

The United States lags behind other nations in immigration. Just percent of U.S. visas are designated for employment. In other countries this number is as high as 50% Our universities attract the best and brightest in the world, but there is not clear path to keep that talent in our country after graduation. In 2013, 56.3 percent of doctoral-level engineering students and 52.2 percent of doctoral-level math and computer science students at U.S. universities were temporary residents, a group with no clear path to stay in the United States after graduation.

The shortage of STEM tech workers is also a reality. IT outsourcer Harvey Nash and auditing firm KPMG surveyed over 3,000 technology leaders for their annual CIO Survey and found that an astonishing 65% said that hiring challenges are hurting the industry. That number marks a six-point increase over last year’s survey, where 59% expressed that sentiment. Tech jobs are staying posted longer as universities output less degree STEM professionals.

STEM occupations will see the fastest growth of any field between 2010 and 2020.11 By 2018, the United States will face a shortage of more than 223,000 people in STEM fields. An enlargement of the H-1B program could generate an extra 2 percentage points of wage growth for highly educated natives over the following 20 years.

In a survey conducted by indeed.com, 83% of respondents said they found it difficult to hire the talent they need, and that it had hurt their business. If Congress makes it increasingly difficult to hire the talent needed to fill positions of technology and innovation, companies may begin to look to base their companies overseas to nations with more amicable immigration conditions. This would be a huge loss for the American economy and American people.