The curb on H-1B visas by the US has for long been seen as a move that ‘saves’ jobs for the American citizens. However, in what suggests that the move by successive regimes in the United States to impose restrictions on the H-1B visa has not made a substantial difference in the US, and a research study has claimed that due to such curbs, the US based multinationals have been setting up operations to countries with a highly skilled work-force such as India and China.
The research paper written by Britta Glennon, an assistant professor at the Wharton School of Business at the University of Pennsylvania, has revealed that for every three visas which are rejected, the US companies moved one job offshore over the last one and a half decade, as such companies continue to look for highly qualified and skilled individuals.
Glennon told Economic Times, “Limiting skilled immigration — through restrictions on H-1B visas — prompted US multinational firms to go offshore; when these firms couldn’t hire the skilled workers they needed at home, they simply hired them at their foreign affiliates instead.” He added, “They also opened more foreign affiliate offices abroad in response to the H-1B restrictions.” The research study also added, “The effect is strongest among R&Dintensive firms in industries where services could more easily be offshored.”
It must be noted that Indian citizens constitute 70% of the work permits issued by the United States to high technology professionals. Therefore, the Indian techies were seen as the biggest losers as the US placed stringent curbs on H-1B visas ever since the Donald Trump administration came at the helm of affairs. India has expressed concerns in the past about the imposition of restrictions on H-1B visas and PM Modi had even urged the United States to keep an open mind about admitting skilled Indian workers.
However, in what comes as an upside of these curbs on visas to Indian techies is the phenomenal rise in the global in-house centres (GICs) in India and the number of people employed by them. This rise has coincided with the policy of stringent curbs on H-1B visas. The rise in GICs seems to have largely offset the loss of jobs due to denial of work permits to the US. It is largely a result of the US based companies finding themselves compelled to move work offshore towards countries boasting of highly skilled techies. It must be noted that more than one-third of India’s $136-billion IT service exports come from MNCs with such global in-house centres (GICs).
According to data from Nasscom, the number of GICs in India has gone up from about 1,000 in 2015 to over 1,250 in 2019- a growth of almost 25%. Moreover, the number of people employed by GICs in India has also witnessed a sharp rise of around 2.5 lakhs. In 2015, GICs employed 7.45 lakh people in India. This year the figure has gone up around 1 million.
Speaking about this recent phenomenon of multinationals expanding their offshore operations, Sukanya Roy, director at Zinnov, said, “Limitations in visas and travel constraints within service providers and partners make it difficult for the larger set of team members to travel and create this domain expertise… This has created a situation where global companies are realising that offshore centres not only enable them to nurture the talent and ensure retention, but also retain core work in-house.” In an interview with Knowledge@Wharton, Glennon opined, “I suspect that even firms who haven’t offshored yet are now considering doing so as H-1B policies get more and more restrictive. And under the current administration they have gotten much more restrictive.”
H-1B visas have been highly instrumental in making USA a tech giant. Highly trained professionals from India working on H-1B visas have been instrumental behind exponential growth of several tech companies. From Microsoft CEO, Satya Nadela to Google CEO, Sundar Pichai, Indians have dominated the tech space in USA. It has long been pointed out by India that the steps to limit contribution by Indian professionals to the American tech industry would have adverse effect on the United States itself and the recent study confirms it. The US based multinationals expanding their offshore operations in search of highly talented individuals creating jobs for Indian techies in India itself. Hence, India may have benefited immensely from this phenomenon that has largely set off the losses that they suffered due to rejection of work permits ever since the Trump administration brought in a stringent H-1B visa policy.