Indian IT to see little impact due to Donald Trump ban on H-1B workers in federal contracts

US President Donald Trump's ban on federal agencies employing H-1B visa holders will have little impact on India's IT industry, as most software services providers hire local employees to service government customers.

Agencies
US President Donald Trump's ban on federal agencies employing H-1B visa holders will have little impact on India's IT industry, as most software services providers hire local employees to service government customers, according to industry experts. Paul Herzog, an immigration attorney, tweeted on Tuesday that the order on H-1Bs was a “nonbinding recommendation to agencies to prioritise hiring of Americans when contracting, which they largely do anyways due to the plethora of rules and policies the agencies have to follow."

As of September last year, there were an estimated 583,420 H-1B authorised work permit holders in the United States, according to data released by the US immigration agency in June. A Bloomberg analysis of the data showed that just about 2,000 H-1B visa holders were employed by federal agencies. Indian nationals account for over 70% of H-1B recipients, but they are increasingly being sent to work there by American technology companies such as Google and Apple. “It is hard to estimate the exact impact on the Indian IT sector as some of these could be subcontractors to firms retained by the federal agency,” said Poorvi Chothani, managing partner at immigration law firm LawQuest.

This means that if the federal government has a contract with a company, which in turn has subcontracted work to an IT services firm that uses H-1B workers, then it might impact that firm’s contract with the federal contractor, she said. Trump’s decision came after federally owned Tennessee Valley Authority (TVA) said it would outsource 20% of its technology jobs to companies based in foreign countries. Around 200 American workers were to lose their jobs over the next five years due to the decision. French technology major Capgemini, Accenture and CGI had won the contract from TVA, according to TVA’s employees’ union. The companies did not respond to ET’s queries for comment.


Sanjay Jalona, CEO of mid-sized IT firm LTI, said it has been hiring local employees in the US to service corporate clients and has reduced the number of people it sends onsite on work visas. Stocks of IT services companies HCL Technologies (1.96%) and Tech Mahindra (3.07%) ended the day in the red, on a day when the Sensex was up about 2%. HCL provides software and services to the US federal government through partner ImmixGroup. Tech Mahindra, too, works with certain federal agencies. IT industry body Nasscom said Trump’s order appeared to be based on “misinformation and misperceptions.” It said the order was an extension of Trump’s previous rulings on H-1B visas and a move that would hurt US recovery from the Covid-19 pandemic.

“This underscores, and sets a timeline for, the agencies to finalize and publish some of the regulatory measures that have been discussed by the Administration and mentioned again in the June Proclamation. These may include the changes to the definitions of “specialty occupation”, “employer”, and “employer-employee relationship”,” Nasscom said in a statement. The US has a huge shortage of STEM (Science, Technology, Engineering and Mathematics) skills, which are bridged by workers on non-immigrant visas like H-1B and L-1, it said, adding that there were over 625,000 job vacancy postings for common computer occupations in the country.
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