The 10 Implications of the New H-1B Quota Increase

Last week the US Congress passed a bill hiking the number of visas from 115,000 to 195,000. Following are the implications for the H-1B Aspirant, Holder, the Consulting Firms and End Clients.

1. Sanity in Recruitment – More Time and higher fees will mean more quality recruitment. The 195,000 would bring about a method in the mad frenzy to recruit sheer numbers on the fear that the quota will get exhausted. It is hard to say if the 195,000 quota will even get exhausted this year. As there will be a lot of time until September 2001, both consulting firms and job seekers will now get very picky about each other.

2. Curbing of speculative buying of Visas: The $ 500 increase in the INS application fees to $1000 will mean only the serious consulting firms will sponsor the candidates. The fee hike will probably succeed in curbing the speculative buying of visas that occurs at the beginning of each year, induced by the fear of exhaustion of visa quota.

Because of this speculation, the annual quota of visas actually gets used within the first 6-8 months. A fee increase could get rid of a large element of this speculative buying.

3. Loosening the short-term crunch in the tight labor market – An addition of 200,000 new workers into the economy is a welcome input at this time. It is not clear if the supply crunch is in the full-time jobs or contract positions. The US employers will be in a bargaining position as they now have a wider choice in the contractors available through consulting firms.

4. Contract rates may fall marginally. Will consulting firms be effected by the increase of programmers? Will their margins be sacrificed for an increased revenue is yet to be seen.

5. Compromise on quality – expertise will be loosely worded and mediocrity will reign. Where in the world are all these programmers going to come from? India can afford to supply 60,000 programmers per year. As it normally supplies 50% of the quota, an additional 40,000 programmers will be expected to come from India.

6. Countries like Germany and Canada who were dependent on tight US immigration laws will now loose their edge.

7. IT industries in countries like India will loose their labor. India would stand to loose at least 40,000 more consultants this year. Training institutes in India will need to train far more people than before. Does the entry of US professionals into the US postpone offshore projects coming to India or does it increase the chances as more Indians become insiders in US hi-tech firms?

8. The Job switch will be much easier. A portability provision in the bill gives H-1B holders an easier way to change jobs in pursuit of higher wages. In the past, H1B holders were dissuaded from switching jobs because of due delay in processing their visa papers with the INS which took between 3-6 weeks. The new legislation provides H1B workers to join new jobs without having to wait for INS to formally approve their applications. The bill will make it far too easy for US end clients like Microsoft to lure H-1B holders from consulting firms. Consulting Firms will now add stricter clauses in the employment contracts with their H-1B employees.

9. The H-1B Increase will put pressure on the Green Card Country Limit, which is not in sync with the number of H1B issued. There are far lesser Green Cards issued to Indians than the H1B visas every year. With more Indians with H1B Visas the US will be forced to increase the Green Cards for Indians. The law already allows H-1B holders to stay in the U.S. for up to seven years if they have a pending application for a green card, the employment-based permanent visa

10. The probability of Indians being further entrenched in the US economy and its domination in world IT is established. Indian software exports to the United States would touch $ 3.7 billion during 2000-01 against $ 2 billion in the previous year if Washington approves the proposal to hike the H1-B visa limit to nearly 600,000 people for next three years. “If the proposal to hike the H1-B visa limit to nearly 600,000 people over the next three yeas is approved, software exports to the US would touch $ 3.7 billion of the total $ 6.3 billion software export during 2000-01” said Dewang Mehta, President, National Association of Software and Services Companies (Nasscom)


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