Chennai: US President Donald Trump’s tough stance on immigration laws, especially H-1B visas, and outsourcing can potentially restrict the American dreams of Indian professionals while impacting costs and growth of Indian IT companies.
Stricter policies on outsourcing and possible restrictions on H-1B visas could disrupt India’s IT sector, which relies heavily on the US market. Over 80 per cent of India’s IT export earnings come from the US.
In his previous term, Trump’s policy of “Buy American and Hire American” saw H-1B visa approvals falling to 84.5 per cent during the Trump tenure between 2017 and 2021 from 88 per cent in the Obama regime.
Between 2016 and 2020, H-1B denial rates averaged around 18 per cent, compared to only 3.2 per cent under the Biden administration. Similarly, the rate of Request For Evidences nearly tripled under Trump, from around 12 per cent to 34 per cent, finds Prabhudas Lilladher.
Indians make up a large proportion of the recipients of H-1B and other work visas granted to skilled foreign workers, especially in the tech industry.
According to Nasscom, the US is the largest market for India’s $254 billion tech sector and its overall contribution is $80 bn to US GDP. Indian companies in the US account for a smaller share of H-1B visas in comparison with US companies, said Sangeeta Gupta, senior vice president of Nasscom.
Trump’s shift toward a merit-based system for family visas, which stresses on skills over family ties, restricts immigration of spouses and minor children.
Further, as part of his protectionist policies, Trump may also push US companies to reduce outsourcing. “Reduced outsourcing may affect earnings for Indian firms and complicate hiring skilled talent,” said Ajay Srivastava, founder of GTRI.
Reduced outsourcing and visa restrictions may limit opportunities for Indian firms in the US. If Indian companies in the US are forced to hire native talent, it would escalate their costs. In his previous term, the US labour department had proposed a new rule to raise the minimum wage of a H-1B visa holder to that of the standard US worker. Such a move will cut the margins and growth of Indian IT companies. This could in turn hit India’s services trade.
