The United States senate on Friday passed an immigration reform Bill that makes it harder and costlier for Indian tech firms to use H-1B workers at their US operations.
But the Bill is not law yet, and it may never become one in its present form because the House of Representatives, the other chamber of US Congress, is considering its own set of bills.
And they don’t tally with the senate version.
In its present shape, the bill is bad news for India. And not only because of its impact on firms such as Infosys, Wipro and TCS. But also because it may trigger brain drain from India.
The passage by the senate was a significant achievement due to the failure of previous attempts to reform the immigration system widely considered broken from a log time.
Vice-president Joe Biden, who is also the president of the Senate, presided at the voting, signaling the Bill’s importance to the Obama administration.
“Today, the Senate did its job,” said US President Barack Obama, who is currently touring Africa, in a statement. “It’s now up to the House to do the same,” he added.
The bill has three central themes: strengthening border security, citizenship for 11 million illegals, and legal immigration revamp to expand talent pool and keep American jobs home.
The third part, which seeks to overhaul the H-1B and L-1 visa programmes for highly skilled foreign workers, hits Indian tech firms such as Infosys, TCS and Wipro directly.
They depend heavily on foreign workers, mostly from India. But they will find it increasingly difficult and costlier. And from 2016, they will have to maintain a 50-50 balance.
The bill also seeks to fast-track permanent residency -- Green Card -- for foreign students in Science, Technology, Engineering and Math courses to keep them in the US.
This will, one, encourage Indian students, who are the second largest component of foreign students in the US, to come to the US and stay, depriving India of their skills.
And, two, discourage those in the US from thinking of returning home, a trend that had begun picking up recently specially for those stuck in the immigrations system.
“It is a highly imperfect bill and not good for India in many ways,” said Vivek Wadhwa, a leading advocate of smart immigration laws.
“But it is good for Indian immigrants and students and for the US economy. It will slow the brain drain from the US to India.” Wadhwa wrote about returning Indians in a recent book.
Targeting Indian Companies
* Any company with more than 15% of its workforce on H-1B visas would be barred from placing those workers at client sites
* No more than 75% of workforce can be on H-1B visas, effective 2014. In 2015, this goes down to 65%; and 50% beginning 2016
* Tighter financial fees for H-1B and L-1 visas . H -1B workers will get lower than mean wages for the occupation in question
* Tough government checks on companies with more than 15% workers on L-1.
Impact on Indian tech firms
* Indian IT firms may be forced to hire more workers locally, at higher wages, which may neutralise their cost advantage. They can hire from India only after proving such workers are not available in the US.
* Indian students, especially in science, technology, engineering and math courses, will find it easier to settle in the US. The bill proposes fast-tracking permanent residency for them.
* Indian IT professionals hoping to work in the US may find other employers willing to take them on board if Indian IT firms curtail their US hiring.