President Donald Trump’s tough immigration policies aimed at limiting the flow of foreign professionals on H-1B visas, ostensibly to protect American workers, have hit Indians particularly hard. Regulatory changes and stricter enforcement of existing rules under Trump’s signature ‘Buy American Hire American’ agenda have led to higher rates of H-1B visa denials for Indian citizens as officials demand more evidence on qualifications, wages, educational degrees and whether the job requires a foreign worker at all.

Since Indians have historically been the largest users of H-1B visas, the changes in policy have impacted them more despite stated intentions not to specifically target any one country. But it is also true that over the years the H-1B visa has become identified with Indians and the both the legislative and executive branches of the U.S. government can’t be unaware of who would be most affected by their actions.

The Indian government has consistently raised the H-1B issue bilaterally with the U.S. government – sometimes more vehemently than others – arguing for a level playing field for Indian companies. But it has shied away from the kind of loud advocacy on behalf of industry that the U.S. government does, leaving most of the lobbying to NASSCOM, the trade association of Indian IT companies.

H-1B is defined by the U.S. Citizenship and Immigration Services or USCIS as a temporary, non-immigrant visa for ‘specialty occupations’ requiring at least a bachelor’s degree in fields such as engineering, mathematics and technology. It is initially granted for three years and may be extended for a total of six. An employer trying to hire a skilled foreign worker must get a certification from the Department of Labour that hiring an H-1B will not harm U.S. workers or their wages and file it with USCIS, an arm of the Department of Homeland Security that administers immigration policy in general.

 

The tightening of rules by the Trump administration has resulted in frustration all around. Employers who sponsor H-1B workers are spending more time on their petitions to avoid the dreaded ‘request for evidence’ or RFE. Enhanced scrutiny has caused delays in approvals, in turn impacting productivity. Filing the paperwork has become more onerous, dramatically raising associated legal costs. The rule tightening is expected to continue.

U.S. industry has been lobbying against the administration’s hardened stance and the message seems to be getting through, at least in part. In early January 2019, Trump promised procedural ‘simplicity and certainty’ to H-1B visa holders and a ‘potential path to citizenship’ in a tweet. His statement, while promising for H-1B seekers, was in line with the changes in rules already unveiled in December 2018, which were not seen as particularly friendly to those stuck in a limbo – living on H-1B while waiting for years for a green card.

The proposed new rules will introduce electronic registration to replace the current lottery system and change the procedures to favour those with a master’s degree from a U.S. university to a greater extent over those applying with Indian degrees. The changes are meant to ensure that the visa system benefits U.S. workers to the greatest extent possible while emphasizing the legal immigration process. By mid-January the new rules were still in the administrative process.

 

The path to citizenship for H-1Bs that Trump mentioned is riddled with delays. The U.S. grants 675,000 green cards annually while limiting all countries to a standard 7% cap, regardless of whether it is Slovenia or India. The idea is to prevent citizens of a few countries monopolizing the process. The cap also impacts Indians the most because more of them have sought a green card. As of April 2018, there were 631,219 Indians waiting for green cards – a step before citizenship. Under the current system they may have to wait for decades. The idea of lifting the 7% country caps has kicked around the U.S. Congress for a while but anti-immigrant and anti-H-1B groups have argued that prospective immigrants from India and China would move to the head of the queue at the expense of others and bag all green cards because of the backlog.

The impossible wait has led many Indian tech workers to go back home or move to Canada and other countries. As the U.S. has become more unfriendly, Canada decided to become friendlier, raising the number of visas for skilled workers from the existing 160,000 to 172,500 in 2017. Canada also announced a two-week fast track processing of applications for those employed in tech, a vast improvement over USCIS system which can take six months or longer.

Moreover, Indian IT companies such as Tata Consultancy Services, Infosys, Wipro, HCL and Tech Mahindra that use H-1B visas have become a focus of negative attention even though most of the H-1B visas go to American giants such as Google, Amazon, IBM, Facebook and others. Several lawsuits over the years have accused Indian companies of abusing the H-1B process and ‘displacing’ American workers. The Indian companies have won some cases and lost others but the stereotype has stuck. They are seen as the villain of the piece in U.S. media coverage with U.S. workers providing vivid testimony about being displaced.

The U.S. Congress has responded by writing legal provisions that specifically target Indian companies. For example, if a company has 50 or more employees and 15% of them are on H-1B visa, it is considered ‘H-1B-dependent’ and must pay an extra $4,000 in fees, provide more attestation to prove it is not displacing American workers and face more questions. This provision directly hits Indian IT companies.

 

Senior Trump administration officials have repeated the ‘displacement’ argument over the past two years. Kirstjen Nielsen, secretary of Homeland Security, told the U.S. Congress in December 2018: ‘Perhaps no other visa category has received as much attention in recent years as the H-1B, as reports of abuse of the programme have caused outrage among the public. No qualified, hard-working American should be forced to train their H-1B replacement, and then let go.’ She added that her department had stepped up measures to ‘detect employment based visa fraud and abuse.’ Francis Cissna, director of USCIS, has also expressed his frustration, saying the Congress should pass a one-sentence provision prohibiting American workers from being replaced by H-1Bs.

The biggest beneficiaries of H-1B visas are Indians, not Indian companies – U.S. corporations sponsor most of the Indian applicants. In 2016 India accounted for 74.2% of all H-1B visas and the figure rose to 75.6% a year later, but Indian IT companies claimed only about 12% of those. Latest figures show the number of H-1B visas awarded to Indian companies has fallen to new lows. In 2017, for example, they received only 8,468 visas, a decline of 43% over 2015, according to the National Foundation for American Policy (NFAP), a non-profit research organization.¹

 

The reasons for the drop are both the increasingly complex procedural hurdles and industry trends towards cloud computing and artificial intelligence, which require fewer workers. Indian companies are adapting their business model and moving away from backend operations for foreign clients. They are also hiring more Americans because the costs associated with H-1B have risen – as high as $7,000 per filing – as delays have become longer. In fact, the government of India filed a complaint in March 2016 with the World Trade Organization over the steep increases in filing fees for H-1B and L-1 visas, saying they violate the terms of the General Agreement on Trade in Services. The complaint remains at the consultation stage, the first phase in WTO disputes. The L-1 visa facilitates intra-company transfer of foreign workers and is also used by Indian IT companies.

NASSCOM, the Indian information technology trade association, says there are too many myths around H-1B, which must be separated from the facts. Indian IT companies have contributed immensely to the U.S. economy by helping U.S. businesses improve operations, create new products and services and increase market share – the same arguments made by American executives to protest Trump Administration’s moves to curtail H-1B visas. NASSCOM says that Indian tech industry invested over $2 billion in the US between 2011-15 and supported more than 410,000 jobs. In addition, it paid over $20 billion in state, federal and local taxes.

 

A fact often forgotten is that H-1B workers also pay into the U.S. social security system to the tune of billions but never receive the benefits when they retire. It is essentially a free contribution to the U.S. Treasury and yet Washington has stonewalled Indian government’s demand for a bilateral agreement so the H-1B workers can get their money back.

The crackdown on H-1B visa holders and seekers is part of the larger U.S. debate on immigration, a debate that has raged for some time under both Republican and Democratic presidents. It is widely accepted that the U.S. immigration system is broken with no real fix in sight. The quotas are static, new categories can’t be created without legislative action and the fate of an estimated 11 million illegal immigrants and their children currently living in the country remains uncertain.

The U.S. Congress has tackled the immigration problems in bits and pieces but has failed to pass a comprehensive reform bill. The last effort was in 1986 with the Immigration Reform and Control Act, which legalized 2.7 million undocumented immigrants and tightened border security. Three subsequent attempts to further streamline the system have died on the political battlefield with Republicans demanding more scrutiny, penalties and border control and no further legalization of illegal immigrants while the Democrats want a path to citizenship for some.

The big chessboard of immigration has multiple pieces, each bearing its own political cost, making it one of the hardest domestic problems to solve. Members of Congress are pulled in different directions by different constituencies with no consensus on comprehensive reform. In the absence of Congressional action, the executive branch – in this case the Trump administration – is waging the battle through executive orders and policy memoranda. And it seems determined to stem all immigration – illegal and legal. The Democrats oppose Trump’s harsh tactics but depending on the state they come from, their positions range from liberal to hardline. On the H-1B issue, many key Democrats, like Trump, have criticized ‘outsourcing companies’ for stealing jobs from U.S. workers.

 

In his campaign for the presidency, Trump successfully used the loss of manufacturing jobs and discontent in the so-called ‘rust belt’ states to put the blame on illegal immigrants and foreigners on H-1B visas. Negative publicity from high profile court cases filed by U.S. workers against companies like Disney for replacing them with Indian workers only added to the narrative that cheap labour from India was undercutting Americans.

While Trump’s anti-immigrant rhetoric is incendiary, it’s important to remember that Barack Obama as a candidate also blamed highly skilled immigrants for taking jobs from American workers and gave only conditional support to the idea of H-1B visas. But as president, Obama took a different tack and wanted foreign talent to remain in the country, especially as the wait for a green card became interminable. In 2015, he issued an executive order, allowing the spouses of some H-1B visa holders, who come on H-4 or ‘dependent’ visas, to work in the US to ease the economic burden on families.

The H-4 work authorization for spouses is now under threat because of an ongoing court case filed by an anti-immigration group. The Trump administration is inclined to rescind the rule but has not done so yet. If it does, the move will overwhelmingly affect Indians. According to USCIS figures, of the 126,853 H-4 applications for work authorization approved by December 2017, 93% were issued to Indians, most of them women, while 5% went to Chinese citizens and the remaining 2% to all other countries.²

U.S. corporate leaders are also deeply concerned about the nature of changes made by the Trump administration. Members of the Business Roundtable, an influential trade association of top U.S. companies, sent a letter to Nielsen in August 2018, saying the changes in the H-1B process were affecting competitiveness. They called the new rules ‘arbitrary and inconsistent’ and accused the administration of threatening the livelihood of thousands of foreign workers and disrupting business operations. The 60 business executives who signed the letter included Apple’s Tim Cook, Salesforce’s Marc Benioff, Chuck Robbins of Cisco Systems, Doug Parker of American Airlines, James Quincey of Coca Cola and Jamie Dimon of JP Morgan Chase among others.

 

But Trump is doing what he said he would – curb illegal immigration while pushing to make legal immigration more merit based. Over the past two years his administration has pursued these twin objectives with determination. Trump ordered a comprehensive review of the H-1B programme with an executive order on ‘Buy American and Hire American’ issued on 18 April 2017. The order asked heads of relevant agencies to ensure that only the most skilled and highest paid petitioners benefit – a broad enough mandate to overhaul the system. New ideas include raising the base salary an H-1B worker must be paid from $60,000 to $100,000 a year – a move that will once again hit Indian profit margins.

 

Since the H-1B category was created in 1990 when President George H.W. Bush signed the Immigration Reform and Control Act of 1990, the U.S. Congress has put a cap on the number of visas available each year. The limit is 65,000 visas with 20,000 additional visas for foreigners who graduate with a master’s degree from a U.S. university. The cap has generally stayed at 65,000 annually but was lifted temporarily in the late 1990s because of labour shortages and reinstated in 2004.

For the last six years the annual limit of 65,000 has been reached within five days of 1 April when companies begin filing petitions, triggering the use of a lottery to determine whose H-1B petition will be processed. The computer generated selection process has added another layer of uncertainty for both employers and potential employees. Tech CEOs in Silicon Valley say there is a talent shortage with more jobs than graduates available in the STEM (science, technology, engineering and mathematics) fields and H-1B visa holders fill a crucial gap. But critics counter there is no shortage and what the CEOs want is talent at the price they want to pay. They prefer H-1B workers because they are tied to the companies that sponsor them and can’t change jobs because of the conditions of the visa.

Since Indian workers form the largest chunk of H-1B visa holders, they are also impacted in greater numbers by changes in policy. According to a NFAP report, Indian applicants had a higher rate of visa refusals at the end of 2017 compared to citizens of other countries. The rejection rate for Indian H-1B applicants jumped from 16.6% in the third quarter to 23.6% in the fourth – a 42% increase. Similarly, Indian born workers were more likely to face a request for evidence than people from other countries. In the 4th quarter of 2017, 72% of Indian H-1B petitions received such requests for additional information compared to 61% from other countries. The trend continued in 2018.

 

This is the new normal for Indian IT companies and they are dealing with it by keeping a low profile and highlighting their contribution to the U.S. economy. The spotlight has been a source of agony and even violence for H-1Bs. In February 2017, Srinivas Kuchibhotla, who was on an H-1B visa, was fatally shot in Kansas by a white gunman who yelled ‘get out of my country.’ The gunman, Adam Purinton, was charged with murder and later also with a hate crime.

Trump’s political appointees, strategically placed in various departments, are at the forefront of the visa crackdown. Led by Stephen Miller, a controversial senior policy adviser in the White House, they are the main architects and executors of Trump’s immigration policy. Miller and associates have issued a flurry of policy memoranda to increase the burden of process on H-1B applicants. A policy memorandum issued in June 2018 on Notices to Appear (NTA) is one of the harshest measures. It empowers USCIS to place a legal immigrant in deportation proceedings if his or her application to change or extend his H-1B status is denied and if the person does not have another legal way to stay in the country.

In essence a person can be caught in a legal web despite having complied with the law. Earlier, if an application was denied, a foreign worker could leave the U.S. and try again from abroad but now if an NTA is issued, the applicant is obliged to stay and appear before an immigration judge or be barred from re-entry for five years. The process is time consuming – immigration courts are clogged with more than 700,000 cases.

The Trump administration is also trying to revise the definition of what constitutes a ‘specialty occupation’ for which H-1B visas are given, striking at the very heart of the programme. The definition will likely become more restrictive and rarified, once again impacting Indians who want to work in the U.S. Also in play is an attempt to revise the definition of employment and employer-employee relationship to restrict outsourcing to Indian IT companies. It would mean large US corporations must hire directly rather than going through Indian IT companies. Google, Microsoft, Facebook and others already file their own H-1B petitions but in the future they may have to prove they have a unique relationship with each employee before bringing them to the U.S. The proposal had not fructified by early 2019.

Indian tech companies have managed to weather the storm thus far, tweaking their business model and moving higher up the value chain. They are also more focused on developing links with U.S. communities they work in to counter the negative image. The Indian government routinely raises the issue of H-1Bs in bilateral talks with the U.S. but more as a talking point than an issue of contention. Disputing domestic visa policies of another country beyond a certain point can become counter-productive, especially in the current climate in the U.S. In the matrix of the overall India-U.S. strategic relationship, the H-1B is a small element even if it looms large for middle class Indians.

 

Footnotes:

1. https://nfap.com/wp-content/uploads/2018/04/H-1B-Visas-By-The-Number-FY-2017.NFAP-Policy-Brief.April-2018.pdf

2. Jill H. Wilson, ‘World Authorization for H-4 Spouses of H-1B Temporary Workers: Frequently Asked Questions’, Congressional Research Service, April 2018, p. 6 https://fas.org/sgp/crs/homesec/R45176.pdf