Suspension on expedited H-1B visa to affect IT cos: Nasscom

Industry body Nasscom today said that US' decision to temporarily suspend the expedited premium processing of H-1B visas will lead to process delays for Indian IT firms too. However, Nasscom feels that the move will not be a “significant impediment” for the over USD 110 billion outsourcing industry.

The US has announced that from April 3, it would temporarily suspend the 'premium processing' of H-1B visas that allowed some companies to jump the queue, as part of overall efforts to clear the backlog. The suspension came even as New Delhi pressed for a fair and rational approach on the matter from a trade and business perspective.

"The current issue of the temporary suspension of premium H-1B processing will create some process delays for the companies – Indian and American -- but is not a significant impediment," Nasscom said in an emailed statement. By paying an additional premium of USD 1,225, companies could get an H-1B application processed within 15 days, whereas a standard process takes 3-6 months. The temporary suspension of the fast-track processing of the H-1B visas – widely used by the Indian IT industry – may last six months.

The decision was announced just hours after top Indian officials -- Foreign Secretary S Jaishankar and Commerce Secretary Rita Teotia -- held meetings with officials and lawmakers in the US to view the H1-B visa issue as a trade and services matter, and not an immigration one. It also puts pressure on Indian IT companies as any changes in visa regime may result in higher operational costs and shortage of skilled workers for the Indian outsourcing industry.

In the past few weeks, there have been proposals to overhaul the popular H-1B visa regime through various legislations which have added to the worries of the Indian IT sector that is battling slower growth, currency fluctuation and cautious client spending. The US accounts for over 60 per cent of the Indian IT export revenues. Nasscom said it will work with the US Embassy in India to ensure that movement of professionals is not hit by such process issues.

"This has happened in the past for a couple of months to clear the backlog and we will work with the US Embassy in India to enable mobility of skilled talent is not impacted due to process issues," Nasscom added. Gartner Research Director DD Mishra, however, said the move will have an immediate impact on the capability of Indian IT companies to respond to urgency, thereby impacting some agility and speed.

"There are many projects which often require IT companies to address the requirement immediately and some of them are often planned or unplanned or due to a certain situation very specific to the account or project.

"Sometimes to address this requirement, Indian IT companies may have to hire expensive resources onsite or it can delay certain time sensitive initiatives driven by urgency," Mishra told PTI.

He added that uncertainties surrounding visas is emerging as a risk and may gradually become an inhibitor of growth for US-based customers who look at this as more of a threat and tend to move their business to US-based IT companies.

Greyhound Research Chief Analyst and CEO Sanchit Vir Gogia said that while the change by the Trump Administration has taken most by surprise, it shouldn’t be viewed as a "conclusive outcome" from their end.

"While the loss on the back of this change will be felt maximum by US companies in need for skills in urgent projects, it will also rightfully be a step in stopping abuse of the H-1B visa programme that is currently rampant," he said.

Gogia added that while the Trump administration has taken the right approach to talk about a merit-based system overall, the next step ideally should be to hold an open dialogue with both those who use skills and others who supply them.

Nasscom had recently taken a delegation to Washington DC in a bid to engage with members of the new US administration on issues like clampdown on work visas and flow of skilled manpower between the two nations.

Concerns around a proposed overhaul of the visa regime by the US has prompted Nasscom to postpone its annual forecast -- for the first time -- till May. The US Citizenship and Immigration Services (USCIS) announced that it would start accepting the H-1B visa applications for the FY18 beginning October 1, 2017, from April 3. It also announced the temporary suspension of the premium processing of H-1B visas beginning April 3.

"This temporary suspension will help us to reduce overall H-1B processing time," the USCIS said. By temporarily suspending premium processing, the USCIS has said it will be able to process long-pending petitions, which they have currently been unable to do due to high volume of petitions and a significant surge in premium processing requests. It will also help prioritise adjudication of H-1B extension of status cases that are nearing the 240-day mark.

For Silicon Valley companies as well of Indian IT firms like TCS, Infosys and Wipro, which employ large number of H-1B holders, the move signals longer wait for visa approvals. Under the current system, companies can expedite their H-1B visa request by paying an extra USD 1,225 fee. This compresses their response time on applications to 15 days against a regular review period of three and six months.

H-1B visas -- meant for highly-skilled workers in specialised fields like technology and engineering –- has a cap of 65,000 per year, while an additional 20,000 applications are permitted for those with advanced college degrees in the US.

The nixing of the fast-track process for H1-B visa comes barely months after a US legislation (Lofgren Bill) has been introduced that proposed doubling of the minimum wages of H-1B visa holders to USD 130,000.