IT stocks crash amid concerns over H-1B move

New Delhi/Washington: Hours after a legislation was introduced in the US proposing curbs on American firms that hire cheaper, foreign labour, Including from India, knocking off more than Rs 33,000 crore in market valuation of the top five firms, the Indian government said it had expressed its concerns to the US administration and the US Congress.

Indian IT stocks plunged over 4 per cent on Tuesday, knocking off more than Rs 33,000 crore in market valuation of top five firms after the High-Skilled Integrity and Fairness Act of 2017 was introduced by California Congressman Zoe Lofgren in the US House of Representatives on Monday.

The Bill calls for more than doubling the minimum salary of H-1B visa holders from $60,000 (Rs 40.7 lakh) to $130,000 (Rs 88 lakh) per annum, making it difficult for firms to use the programme to replace American employees with foreign workers, including from India. And there are reports that President Donald Trump may sign a new executive order turning the proposals into law.

Nearly two-thirds of H-1B visa applicants are Indian nationals who either work for Indian IT services firms such as TCS, Infosys and Wipro or local operations of US firms such as Accenture, IBM and Google.

According to Nasscom, the US issues 85,000 H1-B visas every year, out of which Indians get about 60,000 visas. The ministry of external affairs (MEA) said on Tuesday that “India’s interests and concerns have been conveyed both to the US administration and the US Congress at senior levels.”

IT experts have been quoted as saying that by 2018, there will be more than one million IT jobs lying vacant in the US as there are no skilled candidates to fill these jobs. The H-1B visa is a non-immigrant visa that allows US companies to employ foreign workers in speciality occupations that require theoretical or technical expertise in specialised fields. Information technology companies depend on it to hire tens of thousands of employees each year. During his election campaign, Mr Trump promised to increase oversight of our H-1B and L-1 visa programmes.

According to reports from Washington, the Act prioritises market-based allocation of visas to those companies willing to pay 200 per cent of a wage calculated by survey, thereby eliminating the category of lowest pay, and raising the salary level at which an H1-B dependent employer is exempt from “non-displacement and recruitment attestation requirements” to greater than $130,000, more than double of the current H-1B minimum wage of $60,000 which was established in 1989 and has remained unchanged since.

With panic gripping the Indian IT industry, shares of TCS, Infosys and Wipro, Tech Mahindra, HCL Technologies tumbled and the BSE IT index fell by 4.83 per cent to touch an intra-day low of 9401.85.

It is currently trading at 9547.53. The executive order drafted by the Trump administration not only strangulates H-1B and L1 visas but, according to experts, also increases the “inspector raj” and ends employment authorisation cards to spouses on such work visas, which was recently introduced by the Obama administration. Mr Trump could also reverse extension of the duration of the optional practical training work visas, which allowed foreign students to stay in the US a bit longer after completion of their studies.

“You’ve already seen a lot of action on immigration… whether it’s that or the spousal visas or other type of visas, I think there’s an overall need to look at all of these programmes. You’ll see both through executive action and through comprehensive measures a way to address immigration as a whole and the visa programme,” White House press secretary Sean Spicer told reporters at his daily news conference in Washington.

Within 90 days of the signing of the executive order, the secretary of homeland security would have to review all regulations that allow foreign nationals to work in the United States and determine which of those regulations violate the immigration laws or are not in America’s national interest.

The draft order seeks the administration to “consider ways to make the process of allocating visas more efficient and ensure that beneficiaries of the programmes are the best and the brightest.”

It also proposes to establish a commission or advisory committee to analyse the nation’s current immigration policies and their impact on the American society, economy, work force, and the foreign policy and national security interest of the United States.