Team Trump drafts order to restrict H1B visa

Reforms could impact how tech companies recruit employees

US President Donald Trump’s clash with Silicon Valley over immigration is about to become more contentious.

After the temporary ban on refugees and travellers from seven predominantly Muslim countries, Trump’s next move could strike closer to home. His administration has drafted an executive order aimed at overhauling the work-visa programmes information technology companies depend on to hire tens of thousands of employees each year. 

If implemented, the reforms could shift the way American companies like Microsoft, Amazon and Apple recruit talent and force wholesale changes at Indian companies such as Infosys and Wipro. Businesses would have to try to hire American first and if they recruit foreign workers, priority would be given to the most highly paid.

“Our country’s immigration policies should be designed and implemented to serve, first and foremost, the US national interest,” the draft proposal reads, according to a copy reviewed by Bloomberg. “Visa programmes for foreign workers … should be administered in a manner that protects the civil rights of American workers and current lawful residents, and that prioritises the protection of American workers — our forgotten working people — and the jobs they hold.”

The foreign work visas were originally established to help US companies recruit from abroad when they couldn’t find qualified local workers. 

In many cases, the companies are hiring for highly technical positions in the fields of science, technology, engineering and math, or STEM. But in recent years, there have been allegations the programmes have been abused to bring in cheaper workers from overseas to fill jobs that otherwise may go to Americans. The top recipients of the H1B visas are outsourcers, primarily from India, who run the technology departments of large corporations with largely imported staff.

“Immigrant STEM workers have contributed an outsize share to founding new companies, getting patents, and helping build up American companies, which in turn because of their success have created tens of thousands, hundreds of thousands of jobs,” said Gary Burtless, a senior fellow at the Brookings Institution who does research in labor markets. “Discouraging such people to apply for visas to enter the United States to work — I can’t imagine how that can be considered to be in the American national interest.”

The Trump administration did not respond to a request for comment on the draft. 

India’s technology companies, led by Tata Consultancy Services, Infosys and Wipro, have argued they are helping corporations become more competitive by handling their technology operations with specialised staff. They also contend the visa programmes allow them to keep jobs in the US and that if they have to pay more for staff, they will handle more of the work remotely from less expensive markets like India.

“Inspections and investigations in the past have shown no cases of wrongdoing by Indian IT services companies, which have always been fully compliant with the law,” said R Chandrashekhar, president of Nasscom. “The industry is open to any kind of checks in the system, but they should not cause any hindrance to the smooth operation of companies.” 

Wipro and TCS declined to comment. A spokesperson for Infosys said the company is monitoring the US visa proposals, but it is too early to assess their impact given the uncertainty of what will be approved.

“We continue to hire and invest locally,” the company said in an email. “However, given the skill shortages in the US and the availability of technically skilled workforce in various global markets, we also rely upon visa programmes to supplement these skills. For the long term, we are also exploring new operating models to ensure business continuity as we navigate this dynamic environment. This includes reducing our visa dependency and efforts towards making Infosys a preferred employer in the US.”

Whatever specific changes are implemented, they are likely to add to the expenses for India’s technology companies. That may accelerate a shift to new kinds of services, such as cloud computing and artificial intelligence, said Raja Lahiri, partner at the Mumbai-based partner at consultancy Grant Thornton India. “The visa challenges are not going to go away easily. They will continue to be a challenge for Indian IT companies.”

The draft of Trump’s executive order covers several visa programmes, including H1B, L-1, E-2 and B1. The first is a popular programme with technology companies and is aimed at allowing them to bring in high-skill workers when they can’t find local hires with the appropriate skills. The legislation caps the number of people who can enter the US annually at 85,000, including those with undergrad and master’s degrees.