Impact of H1-B Visa Suspension

US President Donald Trump suspended H-1B and L visas, used by technology professionals, a move he says will protect local jobs. Trump, who is seeking a second term at the Oval Office, is facing an economic crisis as the lockout caused by Covid-19 has brought the nation to unprecedented levels of unemployment. Since March, when the US stepped into a lockdown to tackle the pandemic, more than 45 million people have filed for unemployment claims.According to the Migration Policy Institute, this move blocks the entry into the US of an approximate 219,000 citizens including 61,000 H1B and L1 visa holders and their H4 and L2 visa dependents. This is a look at who uses these visas and how the move would affect businesses that are sending employees to the US.

What are H-1B, H-2B, L and other work visas?

To fill a void with highly qualified low-cost workers in IT and other similar fields, the U.S. government issues a range of visas each year that enable businesses from outside the U.S. to send staff to work on company sites. The H-1B is the most common among Indian IT firms among such work visas. Per year, the US government has a quota of 85,000 H-1B total visas. Of that, 65,000 H-1B visas are issued to highly skilled foreign employees, while the remaining 20,000 can be distributed additionally to highly skilled foreign workers who hold an American university degree in higher education or master’s.

In addition to the H-1B visas, the US government also provides L1 visas allowing businesses to move highly qualified employees to the US for up to seven years. H-2B visas allow food and agricultural workers to obtain jobs in the US.

Why has the Trump suspended visas to non-immigrant workers?

After taking office as President of the United States in January 2017, Trump suggested that low-cost workers were hampering the economy and undermining citizens’ jobs. The US then suggested that the “broken” H-1B visa system be reformed. Trump exploited the opportunity posed by Covid-19’s economic downturn by first restricting the admission of non-immigrant workers until June 23, and then extending it to December 31. In his executive order extending the ban, Trump said that while under normal circumstances, “properly administered temporary worker programs can provide benefits to the economy,”, the extraordinary economic contraction created due to Covid-19 posed a threat to the US workers.

Impact on Indian IT companies?

Close to 70 per cent of the overall number of US-issued H-1B visas go to Indian nationals, a significant number of whom work in IT firms. The suspension of temporary work visa permits is bad news for India ‘s fresh engineering graduates seeking employment opportunities in the US. For the remainder of this year, they will not be able to secure a temporary US work visa license. We will have to consider other solutions in such a scenario, which have also been limited due to the current pandemic. This is worth noting that the lack of H-1B visas would also impact the American Indian development firms.

Indian IT companies like TCS , Infosys and others — which have US offices — will suffer as a result of the move, as they will now have to recruit staff at higher rates. Some reports indicated that Indian IT firms in the US will also reduce their project deliver-ability due to the move. This can result in rise of unemployment in India.