Indian firms face shifting landscape as Trump cracks down on immigration
As US President Donald Trump tightens restrictions on immigration, Indian outsourcers are applying for fewer US work visas, bringing employees home and trying to automate much of what they do.
Trump last month said he wants to alter rules for accepting high-skilled foreign workers under the H-1B visa program, which he said is a victim of “widespread abuse,” signing an executive order calling for a governmentwide review aimed at stricter immigration enforcement and closing loopholes that undermine his “Buy American” initiatives.
The visas should only be granted to the “most-skilled and highest-paid applicants,” he said. Indian outsourcing companies are the largest employers of H-1B holders, while US technology companies such as Microsoft Corp. and Alphabet Inc.’s Google also use the visas but usually to recruit employees with rare skills that attract higher wages.
Indian companies that send tens of thousands of workers to the US annually applied for fewer visas this year “due to the fear and uncertainty surrounding the Trump administration’s stance on immigration,” said Shanon Stevenson, who works with large Indian information-technology firms as an immigration attorney for Fisher & Phillips, an Atlanta-based law firm.
Some of the firms, which she declined to name, are sending home Indian recruits who are already in America.
The number of H-1B applications fell 16% this year, the first decline in five years. About 85,000 of the visas are allotted each year by US Citizenship and Immigration Services, with many going to Indians in lotteries triggered by overwhelming demand. The visas are good for three years and can be extended, meaning like- ly more than half a million H-1B holders are now in the US, according to analysts’ estimates.
Meanwhile the volume of applications from US tech companies, both large and small, appears to be holding steady, immigration attorneys said.
In another example of how Indian firms are reacting to potential immigration changes, Infosys Ltd., India’s secondlargest outsourcer by sales, on Tuesday said it is opening a new development center in Indiana in August where it hopes to create some 2,000 jobs for Americans by 2021.
However, skeptics say Indian firms have long said they are trying to hire more Americans while still overwhelmingly employing Indians.
Some Indian firms see opportunities from immigration restrictions. If Indian workers are forced to return home, outsourcing firms “are not going to be able to go out and suddenly replace all those people,” so the tech work will be forced offshore to India, said Anand Mahindra, chairman of Tech Mahindra Ltd., one of India’s largest IT companies. “It is a chance for Indian software companies to change the model,” which has long depended on sending armies of Indians to America, he said.
While Indian outsourcers say they can’t find the talent they need with the right skills in the US, some activists and analysts say they aren’t really trying to do so, driven instead by a desire to pay lower wages, and that new restrictions could force them and other tech firms to hire more Americans.
“The Indian firms at the end of the day are a labor arbitrage business,” said Rod Bourgeois, who studies outsourcing trends as head of research at Old Greenwich, Conn.-based DeepDive Equity Research. “They use low-cost labor to solve technology problems.”
Indian companies have in recent years stressed they are working to provide not just routine technical work but more sophisticated services, such as cloud technologies and artificial intelligence, though such work now makes up a small portion of what they do.
Scrutiny under Trump is just the latest challenge facing Indian firms. Artificial intelligence, cloud technologies and bots now allow computers to do many of the routine tasks traditionally done by low-level IT workers such as monitoring servers, resetting passwords, fixing basic computer problems and providing tech support.
The trend toward doing more offshore and through automation has been emerging slowly in recent years but is now accelerating thanks to Trump’s tough stance, analysts say.
Visa requests from Indian firms “will likely drop further,” said David Rutchik, executive managing director at Vienna, Va.-based Pace Harmon, which helps companies pick outsourcers. “We expect to see accelerated automation to help them deliver client work.”
Outsourcing companies had been reluctant to embrace the changes until now because sending people to companies in the US is a high-profile business, and their clients often request having employees on-site, analysts said.
The White House singled out India’s two largest IT firms by sales, Tata Consultancy Services Ltd. and Infosys, along with Teaneck, N.J.-based Cognizant Technology Solutions Corp. — which has most of its employees in India—last month as potential targets of the crackdown.
The companies pay their employees wages that are well below average levels in the US and flood the government with applications to “get the lion’s share of visas,” said a senior administration official last month in a press briefing.
TCS and Infosys declined to comment on their plans to deal with more onerous visa regulations. A Cognizant spokesman pointed to comments Friday from company President Rajeev Mehta, who said on a call with analysts that the company is applying for fewer H-1B visas and aiming to ramp up hiring in the US.
Most Indian firms have been reluctant to speak in public about their use of H-1B visas for fear of drawing unwanted attention, but their recent outlooks suggest they anticipate a slowdown.
Infosys last month lowered its growth projection for the coming year. India’s tech-industry lobby, the National Association of Software and Services Companies, after Trump’s election in November cut its growth forecast for the sector.
R. Chandrashekhar, Nasscom’s president, said the industry is doing its best to find more potential employees in the US Indian firms are trying to hire more Americans, holding job fairs in the US, and increasing automation and offshore work.
The industry “realizes change is happening not slower, but faster than was expected,” he said.