H-1B Visa: Latest Developments

What is H-1B Visa?

The US H-1B visa is a non-immigrant visa for temporary workers in America. The H-1B visa allows US firms to employ graduate-level employees within specialty sectors with technical expertise such as medicine, accounting, engineering, finance, maths, science, IT, etc. Essentially any professional jobs which require a bachelor’s degree or higher meet the H-1B visa requirements.

It is an employer-sponsored visa therefore the employer must offer a job and petition for the H-1B visa with the US immigration department. US firms often use the H-1B visa to employ staff for long-term projects; however, due to the H-1B visa cap, there is limited availability. The H-1B visa cap is for every financial year, currently, the congressionally mandated cap is 65,000 H-1B visas for specialty occupations, there is an exemption for individuals who have earned a U.S. master’s degree or higher with an extra 20,000 H-1B visas.

Usually, the visa is granted for three years however, it can be extended up to six years.

How has the H-1B visa Program changed and why it matters?

The Trump administration announced they will be implementing significant changes to the H-1B visa program for foreign workers. There will be three major changes.

1. The definition of specialty occupation will become narrower, limiting the number of individuals that qualify for the H-1B visas.

2. Additional documentation will be needed by companies to prove that they need the H-1B workers to prevent them from displacing American workers, protecting the US domestic labor market.

3. The rule increases the Department of Homeland Security’s (DHS) power to enforce compliance via worksite inspections and monitor compliance before, during, and after the issuance of the H-1B visa petition.

This significant overhaul of the rules will make it harder to qualify for the visa. The rationality for these widespread changes was to protect American workers who are being undercut by the foreign workers on H-1B visas who receive lower wages to perform the same job. The policy changes have been expected since 2017 when the administration first announced there would widespread changes. Before any concrete policy changes, the Trump administration cut back on the issuance of H-1B visas, in 2019 15% of applicants were rejected compared to 6% in 2016.

Business groups and immigrant advocates have argued against changing the H-1B visa requirements stating only American firms will be negatively affected since they rely on high-skilled foreign workers to fill in essential roles to achieve domestic growth. With regard to the narrowing of the definition of specialty occupation, the Department of Homeland Security’s (DHS) rule will narrow who can get an H-1B visa based on their degree. Essentially individuals must have a college degree in the specific field they're working in. For example, a software engineer will not be given an H-1B visa if they have a degree in economics.

The rule changes aim to reduce H-1B workers employed at one firm working primarily at another. Workers on these contracts will receive greater scrutiny and will also have their visa cut short to only one year. This creates greater issues for technology firms that use H-1B workers from India and outsource their on-site IT staff. Economic analysis of all these increased wages and other costs estimates this will cost employers $4.3 billion over the next 10 years.

How will the new H-1B Visa (NYSE:V) Programme impact Indians?

Since April 2020, the US Citizenship and Immigration Services (USCIS) received 2.5 lakh H-1B work visa applications of which 67% were from Indians. Since the DHS has stated the narrowing of the definition of the 65,000 specialty occupations thus this number will decline significantly. This would mean global IT companies such as Infosys Ltd (NS:INFY) and Tata Consultancy Services Ltd. (NS:TCS) that have become overly reliant on H-1B visas employees would have to spend more money to hire local talent or pay existing H-1B visa employees more money.

US government’s official numbers indicate technology firms such as Amazon (NASDAQ:AMZN) hired up to 3000 H-1B work visa employees and Google (NASDAQ:GOOGL) hired up to 2,500 most of whom were Indian. As noted previously, the H-1B visas are valid for an initial three-year stay; however, many visa holders change employers to extend their stay leading to cheap labor in the US at the expense local workforce.

This has led to the criticism of the old relaxed rules regarding the H-1B visa regime and thus the proposed overhaul by the Trump administration.