Tech start ups to be impacted by Donald Trump new H1-B visa rules

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    It often pains me to see some Indian H-1B holders living in the US in cramped apartments, tolerating lower pay and discrimination by their employers just because their only aim in life is to get a residency status in the country.

    These young professionals on H-1B status are employed by smaller Indian or American companies who take advantage of the situation.

    What is more painful is the fact that these H1-B holders can’t change their employer whether it’s because of a bad boss, better opportunity elsewhere, low pay or non-conducive work environment.

    Many have migrated to the US either through sham universities, unranked colleges or with smaller obscure IT companies and shady HR consultants who sub-contract them illegally to tech companies. Often they perform work in domains which not be adding any value to their careers. The only thing they are after is the status of their passports.

    When these professionals see that their H1-B visa is not likely to be renewed they enroll themselves in another college, thus staying back on an F1 (student) visa status, and working side jobs to support.

    The new H1-B proposed rules

    Such crop of visa holders are never from the Ivy League. It’s the category of such students, IT and non-IT professionals that the new Trump administration seems to be after with its new proposed rules.

    While hiring a worker from a severe skill shortage list may not be unwarranted, hiring sales and marketing folks on H1-B visas when there is ample local talent available will be discriminatory even for a local employer in the US.

    Some tech startups bypass this tightening of H1B status by placing the candidate on a work visa in Canada and getting him or her to travel to the US on a tourist visa to attend meetings.

    How it will impact tech and non-tech companies?

    While H-1B workers form a very small part of the US employment. There is annual cap of 65,000 visas which gets filled in just one day.

    The proposed bill will now move the minimum salary requirements for applying for H-1B visa to USD 100,000. This might make the local hire cheaper even for an Indian startup or tech company. In non-tech professions, often there is ample supply of local talent. However, due to reluctance on part of the employer to pay more or take the pain to find the local talent, often local (American) graduates get by-passed.

    The tightening of the H1 rules will restrict its violation but also increase costs for IT companies who wish to get their staff to US shores to support their local operations, of course at a fraction of cost.

    Many small IT companies in last decade used to run complete shops based upon H-1B holders. The new Bill will prevent companies with more than 50 employees, of which at least half are H-1B holders from adding any more.

    Officials who do business for US-universities based out of India say that the student visa rejections for smaller colleges already started even before Donald Trump took oath. Immigration has tightened even as India is expected to see a new US Ambassador soon.

    An expensive college education also drives students in the US not to pursue higher education which leads the economy devoid of key skills. Those who pursue higher education whether visa holders or locals, often take expensive loans. A job becomes a must for anyone after a college education to pay back that loan.

    Overseas education business for the US bound students has dropped sharply over 50 percent for companies as non-tech students. Those wishing to enroll in courses such as humanities, finance, law and business has seen a sharp drop.

    For those businesses looking to expand over to the US market, expect to shelve more in hiring costs. Many tech product startups which sell their software to the US market, hire workers on H-1B to control costs. They will now have to hire locals.

    Profit margins of US businesses of IT companies will be eroded as they will have to spend more on salaries and visa costs as well. Clearly, as Trump looks to tighten immigration and envisage a protectionist era, it will impact globalisation of businesses.

    Whether it will increase local employment levels in the US, the coming months will tell.

    #BusinessMantraa