In his so-called fight to save jobs for his citizens, U.S. President Donald Trump has proposed major reforms to its visa programs.
One of the key changes proposed includes doubling the minimum salaries of H1B visa holders to $130,000.
The reforms, if become a reality, are feared to kill H1B programs as it will raise operating costs to companies. It would also impact the business visitor visas, investor visas and work visas.
Higher demand for H1B visa comes from the tech world as it is a popular way for professionals to work in U.S. companies.
Also, foreign companies prefer H1B visa to send their employees to work in their U.S. branches and projects. The reforms, if passed, will force IT companies to make fundamental changes to business strategies.
Therefore, the tech world is cautiously watching every development on this topic. Still, they are hopeful that the bill may not go through the senate.
Experts believe that Trump’s protectionist policies would lead to job losses as companies use machines instead of manpower to reduce operating costs.
Automation vs. employment
Doubling the minimum salary will put pressure on many IT companies operating in the U.S. and increase their operating costs. So, the best and cheaper option for them is to automate low-skill work with machines like robts.
This trend is expected to leave thousands unemployed, which is contradictory to Trump’s vision to “Make America Great Again.”
According to a survey of chief executives by PwC, as automation and the use of Artificial Intelligence (AI) increases, more jobs will be lost. To that point, one in eight CEOs is already set to reduce headcount due to automation.
However, hopes are still there with 52 percent of surveyed CEOs still have plans to increase headcount in the coming 12 months.
Top of CEOs’ talent wish list are those skills that can’t be replicated by machines; innovation and creativity, adaptability, emotional intelligence and leadership.
Impacts on India
The U.S. Citizenship and Immigration Services (USCIS) issues around 85,000 H1B visas every year. Employees of major Indian tech firms show higher demand for this visa.
India’s IT industry body Nasscom says that 65 percent of India’s IT revenues originate from the U.S. it is forecast to hit $250 billion by 2025.
An employment website for immigrants called myvisajobs.com says that Tata Consultancy Services (TCS) has roughly 13,000 H-1B visa holders working in the U.S., at an average salary of around $76,000.
Given TCS’ heavy visa usage, one could expect proposed changes to the existing program would have a drastic impact on labor arbitrage benefits and thus hinder the company’s ability to meet its target operating margin of between 26 percent and 28 percent, says research firm TBR.
In the larger context, 13,000 employees are a slight fraction of TCS’ 350,000-plus workforce. While those employees may be necessary for delivering services on-site in the U.S., a doubling of their salaries (to meet a Trump-proposed higher minimum wage for H-1B visa holders) would impact operating margin, and TCS is already shifting a large portion of that work back to India delivery centers, TBR notes.
If media reports are to be believed, companies like Infosys are developing automation enabled solutions portfolio to offset higher onshore hiring costs or additional visa fees.