Staffing firms cornered 30-40% of H-1B visas: Indo-US forum chief Aghi

Aghi talks on the challenges and opportunities in business between the US and India

With US President-elect Donald Trump all set to take over for a second term, Dr Mukesh Aghi, president and chief executive officer (CEO) of Washington-headquartered US-India Strategic Partnership Forum, which has top companies from both the countries as its members, talks on the challenges and opportunities in business between the two nations in a video call with Surajeet Das Gupta. Edited excerpts:

 

There is a big battle brewing between Trump and his advisor Elon Musk, who support H-1B visas, and the MAGA (Make America Great Again) group that wants jobs to go to Americans. Will this mean that the visa programme will be adversely impacted? 

The whole H-1B visa was set up to bridge the gap between supply and demand of tech workers for US companies, that is highly skilled workers who could come in and be productive from day one. But as time went by, a substantial number of staffing companies started abusing the system by bringing in low-skilled workers and cornering permits. That sent a wrong message to local workers as, in some cases, they were laid off in lieu of H-1B workers, mainly due to cost. However, this has given ammunition to those who are opposed to illegal immigration and that has made it difficult for tech companies which want to be competitive. 

How serious is the issue? 

We reckon that as much as 30-40 per cent of the H-1B visas go to these staffing companies. And, on average, they offer salaries ranging from $80,000 to $100,000 per annum compared to global tech companies which offer wages from $120,000 to $150,000 per annum. So, the gaming has made it challenging for us to justify more and more legal immigration. 

But it is also true that most H-1B visa workers want to stay back and apply for green cards. Is that an area for concern for the MAGA group? 

We have over one million-plus Indians waiting to transit from H-1B visa to a green card, where there is a cap of 7 per cent every year. So, it will take a long time. However, the efforts to remove or relax that cap are also construed by those opposing illegal immigration as a move to inundating the US with low-level immigrant workers. We have 5.2 million Indian Americans and the number has gone up in the past few years, and with one million-plus waiting for green cards, it will go up again. H-1B visas have worked very well with 70 per cent of them being given to Indian workers. However, if the Trump administration decides to put guardrails, that will surely impact both US and Indian firms. 

In his first tenure as President, Trump tried to push tech firms to pay higher salaries to H-1B visa holders, but it did not work. Will this be tried again? And what is the solution firms are looking at? 

The new administration will surely push hard for it. It will certainly impact the staffing companies. But a fine balance in wages has to be made, because if you push it too high, tech firms will shift the jobs to other countries. What we need to do proactively is to look at some of these staffing companies and find out a way to ensure that gaming the system is minimised. If we don’t, the anti-immigration lobby will ask for reduction of the visas. 

What are US firms doing to mitigate the situation if H-1B is curtailed? 

Global tech companies are increasingly hiring more graduates from US universities because they (hirees) know the culture and it is easier to hire. About 70 per cent of the students in the graduate programmes are international students and majority of them are Indians and Koreans. 

Does cutting H-1B visas have an economic impact too? Has an impact assessment been done? 

A 10 per cent reduction in H-1B visas will have an impact of $86 billion on US GDP, and for every 10 denial of visas, nine of the jobs would move out of the country. 

Trump has called India “tariff king”, so do we see punitive duties on Indian exports coming? 

While tariff is important, it is a tool to negotiate other things — what US firms have put on the table before the Trump team is asking for a level playing field with Indian firms, more market access, and transparency in policymaking. 

Trump is also worried about US’s burgeoning trade deficit with many countries, including India. He has made it clear he will take action to reduce it. What do you think India should do? 

At an overall level, the US has a trade deficit of $45 billion with India. But this can be solved overnight if India imports more energy products from the US, which New Delhi had started doing during Trump’s first term. Afterall India spends $120 billion on energy, but the problem was that incumbent President Joe Biden stopped exports to India.

  The China-plus-one strategy has helped Vietnam far more than India. Do you see that change with Trump coming into power? 

Vietnam is a beneficiary because of the free trade agreement (FTA) with the US, but now they have a problem of scale and capacity as they do not have enough people. Also, they do not have a big domestic market like India’s. US companies are very positive on India. They expect stress points between the US and China to go up so they need to ensure their supply chain is undisturbed. Therefore, India becomes a pivotal part of US companies’ strategy.