IT firms in trouble as US halts premium H1B visa processing for 6 months

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Uncertainty for the Indian information technology (IT) sector worsened, with the US suspending the processing of premium H1B visas citing a backlog of applications.

The move would adversely impact domestic software exporters such as Tata Consultancy Services (Tcs) and Infosys as well as multinational firms such as IBM and Google, who send engineers to work on projects in the US. 

Even as the US Citizenship and Immigration Services made this announcement, Indian Foreign Secretary S Jaishankar was in the US to engage with President Donald Trump’s administration, asking it to not impose restrictions on the entry of engineers. This suspension might last six months.

“Tier-I Indian IT services firms largely use the premium processing category for H1B visa for their employees, since they can easily afford the additional $1,225 fee. But, there will be uncertainty, as they will have to wait even for ongoing projects,” said Pareekh Jain of HfS Research India.

"Even if this suspension might have a short-term impact, this clearly hinted at a tougher immigration policy in the US, the biggest market for Indian IT companies," added Jain.

This means the IT services firms cannot send their employees on urgent projects after April 3, thereby impacting their quarterly business numbers. This delay would add to the existing uncertainties of pricing pressure for the large Indian IT services players. They will now have to plan at least three months in advance to send employees abroad, instead of a week as they now do.

“With this, all employers who want to send employees on H1B visas have to plan for even longer ahead,” said Poorvi Chothani of LawQuest, a global immigration and employment law firm. Thousand of IT sector employees go to the US on premium H1B visas.

IT Industry body Nasscom says the suspension of visa procesing will cause some temporary impediment, but it is unlikely to be a major issue. “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. 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”.

While US President Trump had called for tougher immigration laws for technology companies, and had threatened to impose taxes on companies that moved work offshore, in his first State of the Union address to a joint session of the US Congress last week, he proposed having a merit-based immigration system like in Canada, Australia and other nations.

Those meeting emergency criteria might, however, still apply for a visa. 

“While premium processing is suspended, petitioners may submit a request to expedite an H1B petition if they meet the Expedite Criteria. It is the petitioner’s responsibility to demonstrate that they meet at least one of the expedite criteria, and we encourage petitioners to submit documentary evidence to support their expedite request,” said USCIS.

Industry analysts say given the backlog of petitions with the USCIS, the leeway though Expedite Criteria might not prove to be effective. 

T V Mohandas Pai, an IT industry veteran and former board member of Infosys, said this would not have much impact as the US government might resume this service soon.  

“This is a common thing and has happened before also. Applications for new visas though premium category usually submitted before April and the petitions sent after that are mostly for renewal,” said Pai.

On hold

The suspension of H1B visas, which might last six months, will adversely affect the IT sector

2015: Indians got nearly 69% of H1B visas issued

On the ground

Nasscom, the representative body for the Indian IT sector, says the US faces a serious shortage of computer science engineers 

Worrying matters

USCIS to suspend processing premium H1B  visas from April 3