New H1B reform Bill discriminates against Indian IT firms: Chandrashekhar

The proposed Immigration Innovation (I-Squared) Act, a Bill introduced in the US Senate, advocates increasing the cap for H1B visas to 85,000, more liberal policies for the US green card, and allowing people with H4 visas (spouses and children of H1B holders) to work in the US. While these provisions make it attractive for Indian workers to migrate to the US on work visas, the Bill, which has support of Microsoft and Facebook, if passed in the current format discriminates against Indian information technology (IT) service firms, R CHANDRASHEKHAR, president of Nasscom, the apex association of the industry, tells Raghu Krishnan. Edited excerpts:

What is Nasscom’s view on the Bill?

There are positive and negative aspects.  First, it clearly recognises a substantial skill shortage in the US, which requires urgent and substantive steps. Second, an acknowledgement of the value provided to the US economy by IT services companies that employ H1B visa holders.

This is very much in sync with what Nasscom has been saying. We have always advocated the need to ensure availability of needed technical skills in the US economy, both by supporting skill development there and employment of such workers, as well as supplementing that with the entry of foreign skill workers. These are positive aspects.

The negative ones?

The unnecessary and counter-intuitive provisions that target the so-called H1B-dependent companies. Any measures that make it harder and expensive for US companies to fill their skills gap weakens their economy and puts American jobs at risk. In fact, it creates pressure to send more IT work out of the country. This is something on which we will continue to work with the authorities in the US, including the champions of this Bill.

The other thing is the number of new restrictions being put on H1B visa holders. There is a discriminatory thing against India-centric IT firms by persisting with the language of H1B-dependent companies, based solely on arbitrary distinctions that have no impact on US jobs or on employment opportunities. We have maintained, while we understand the objective of ensuring jobs for skilled Americans, any restrictive measures that don't apply uniformly doesn’t protect any American worker.

The US customs and immigration services data clearly provides evidence that  the number of H1B visa petitions filed by the top seven India-centric IT firms dropped 37 per cent in a year and 50 per cent in two years, whereas the petitions by US-centric firms is increasing.

Indian IT service firms are increasingly committed to hire local workers in the US and investing in STEM (science, technology, engineering, mathematics) education in the US to address skill gaps. With this, it makes very little sense to impose restrictions which only apply to dependent companies.

Firms such as Facebook and Microsoft are backing this Bill. Is it actually counter-productive for Indian companies?

Yes, because of the artificial distinction being drawn (in the Bill). There is no logic for this whole category of dependent companies and super-dependent companies. Our view is there should no discrimination. The overall increase in H1B visas, eliminating the country cap for green cards, making statutory provision  for employment for dependents on H4 visas — these are all positives. Selective application of new restrictions on dependent firms nullify some of the beneficial impact of the proposed reform.

Changes in the lottery system might have the unintended consequence of constraining access to the best and the brightest in the world, by assigning the overriding priority to US education. For example, a person with a bachelor’s degree from a US university, irrespective of where he has finished in the class, could be assigned higher ranking than a topper from an IIT in India. Essentially, the US might not get access to the best in the world. We are engaging with the relevant parties.

Would this make captives expand more or create new captives in India for talent?

If you restrict talent coming in, it provides an incentive for jobs going out. From that point of view, the (case for) captives expanding becomes stronger. However, the tax changes in (the US) now disincentivises outsourcing to a related party. That, in a sense, is a counter. If talent is not there, companies have to pay whatever extra cost is involved. We have to see the combined effects of all of these.

Indian IT firms have struggled to transition to getting into digital in the past 12-18 months. Most top companies say they are positive of growth coming back.

The industry has shown that firms have necessary resilience, as well as capacity, to meet challenges and take global competition head on. It is also a good indication of the confidence they have been able to build in their clients that even when it comes to enabling their clients to undertake the digital transition, they are not saying it was IT, digital transformation, and so we are going to somebody else. On the contrary, they say Indian IT firms have helped us in our IT efforts, they understand our business completely, they're our right partners to undergo the digital transformation. 

Does that indicate there will also be growth in jobs?

As long as the percentage of revenue grows significantly higher than the improvement in productivity, employment will continue at the same pace, with a slightly reduced ratio. This we have been saying for many years. In 2017-18, too, many adjustments were to be made abruptly — getting rid of the bench (workers not on a project), improve utilisation of 89-90 per cent, getting more digital people on board. All these adjustments would have happened normally over 4-5 years, considering the nature of the industry. All had to happen in a year. That had a disproportionate impact on employment. 

In the past 12-18 months, we have passed the hump. From this year, we can look at the return to the regular trend we had seen earlier. We had forecast 7-8 per cent growth in revenue, which we continue to say will be in that range. Things are moving (in a) positive direction, not negative. We will release our guidance (forecast) in February. The general indications are positive. The hlobal economy and US economy are growing, spending on IT is growing . So, while the industry is growing at eight per cent (annually), productivity is not growing that dramatically but at a much slower pace. In a sense, that tells you the story — employment would return to a more positive direction.