H-1B issue: Indian IT industry creates nearly half a million jobs in the US, says Nasscom president

Ramarko Sengupta March 16, 2017 15 min

Story Highlights

  • Though there is a lot of "negativity", US policymakers are willing to listen and look at data rather than get carried away by perceptions, says Chandrashekhar
  • About 75% of H-1B visas go to Indian nationals, but Indian IT companies account for just 20% of the number of visas issued — 85,000 last year
  • Whether you are in India or in the US, if you don't upgrade your skills at the pace of technology, you are going to be in trouble, he adds

IT industry body Nasscom president R Chandrashekhar is just back from the US. He was there to meet policymakers and legislators as part of an Indian delegation in the wake of concerns over the clampdown on the H-1B visa regime by the Donald Trump administration. The H-1B visa — an employment-based, non-immigrant visa — allows US employers to temporarily employ skilled foreign workers.

The visa has been used widely by India-based technology service providers to send workers on assignment to the US. According to US immigration data, Indians account for 70% of all H-1B applicants. The Indian IT and IT-enabled services industry employs some 3.7 million people — about three million serve overseas clients — and accounts for revenues of some $150 billion or 7.5% of the country’s GDP. No wonder then, that the Trump regime’s policies around visa restrictions are being watched very closely by the industry.

Nasscom president R Chandrashekhar is just back from the US after meeting policymakers over the clampdown on the H-1B visa

FactorDaily caught up with Chandrashekhar to discuss the current situation and mood in the US. “There is a lot of negativity building up,” he said. However, he did concede that, on the brighter side, the American policymakers are willing to listen and look at data rather than get carried away by perceptions. Edited excerpts from the interview:

You got back from a US trip recently? Where do we stand on the H-1B visa issue?

As all of us know, in the campaign in the run up to the presidential elections in the US there’s been a lot of negativity building up. Even otherwise in the US, a lot of negative and perceptional issues came up with regard to H-1B workers. In short, the story building up was that such workers are taking away jobs from qualified Americans and are a problem. And even when we visited this time, we found that negativity is very much there in the air.

At the same time, one redeeming factor is that some of the recent moves of the new government to impose travel bans on immigration have made people wake up and realise that there are two sides to the coin. It’s not something that’s a problem for America, (H1B workers are) also a resource for the US. The recent developments have stirred up the debate in a somewhat more informed fashion than the highly emotive and perceptional view of things in the past.

It’s not something that’s a problem for America, (H1B workers are) also a resource for the US. The recent developments have stirred up the debate in a somewhat more informed fashion than the highly emotive and perceptional view of things in the past  

Earlier, the negativity that was building up was based on anecdotal stories, perceptions and various individual opinions and not on sound data and statistics. For example, what are the issues regarding availability of qualified persons, what is the unemployment rate, are people with qualifications really unemployed in the US, and what is the percentage of American nationals in the universities which are creating STEM (science, technology, engineering, and math) skilled workers… all of these are the objective criteria on which one should form an opinion or a policy.

The technology companies in the US understand this. The countries on which the travel ban was imposed are not a major part of the technically skilled workforce, yet almost all the major technology companies in the US came together to fight the ban.

Were policymakers in the US receptive to the Indian side of the story?

During our visit, we found that there is a greater willingness to listen among lawmakers, people in the administration as well as in the media itself — the international and the American media. That is a positive aspect. I’m not saying that suddenly the entire opinion has shifted in a different direction, but the first part of the challenge is to get people to listen and understand the various dimensions. The fact of the matter is that the American government exists for the American people as the Indian government exists for the Indian people and its own interest, and that is the nature of the state.

We put across our position based on hard reality. This industry does not actually take away jobs from the US. On the contrary, it is a huge contributor to job creation in the US. As of 2015, the industry had created a 1,55,000 jobs in the US directly and about 1.6 times indirectly in terms of support jobs. Almost all the indirect jobs are filled by local people. That is, nearly half a million jobs is the contribution of this industry to the US system. The most important contribution of the Indian IT industry to job creation in the US is the impact of its services on businesses there. These businesses include 75% of the Fortune 500 companies and many other small companies and government bodies, NGOs and so on.

The myth that jobs are being taken away is actually not correct.

What about the notion there that the Indian IT industry is taking away jobs from qualified Americans?

That’s an issue we’ve addressed and there our position is that all the data clearly points to the fact that there is a substantial shortage of skilled workers in the US; by skilled, I mean technically qualified in the STEM area. The estimates are that by 2018, the number of unfilled STEM related jobs would touch 2.4 million in America, of which at least half are computer and IT related. So, over a million unfilled jobs because of lack of qualified people available in the country — that’s one data point and its US government data.

The unemployment percentage, if you take computer and IT-related people, is around 2%, and all experts reckon that anything below 4% indicates a shortage. (Editor’s note: the US Federal Reserve estimates the long run natural rate of unemployment at between 4.5% and 6%.)

Another important data point is that 75% of the enrolment in STEM programs in the US is by foreign nationals. The implication is that even if you want to hire from US universities you can’t do it without a visa  

Another important data point is that 75% of the enrolment in STEM programs in the US is by foreign nationals. The implication is that even if you want to hire from US universities you can’t do it without a visa. The other somewhat more subtle implication is that international students are the minority who pay a full fee to the universities and the health of US universities will also be impacted if foreign nationals who qualify through the American universities do not have access to the jobs.

Do you see enrolments by Indians in US colleges dropping?

Yes, it’s already happening. There is already a drop because of mere talk, so you can well imagine (what will happen) if the talk is followed by action.

So, (the visa issue) has a lot of ramifications, again emphasising the importance of taking all aspects into consideration before acting in haste and repenting at leisure. So, this was the essence of what we were putting across to lawmakers and policymakers in the US and to people in the media. There were two broad takeaways: that the atmosphere continues to be negative and that there is a push and a pressure for some action to put restrictions and bring in a much tighter regime. And, at the same time, because of other reasons, there was a willingness to listen. We have our work cut out and we have to continue to educate and make the people there aware of all of these ramifications.

Are Indian companies the worst hit by the restrictions that have been brought in?

Today, the restrictions that have been brought in are applicable only to a certain set of companies defined in terms of the so-called visa-dependent companies or 50-50 companies. And the definition is crafted in such a way that only Indian companies are impacted. The fact of the matter is that approximately 75% of H-1B visas go to Indian nationals, but Indian IT companies account for just about 20% of the total number of visas that are issued — 85,000 last year. The restrictions being applied to them means they are only applicable to 20% of the companies. What we are saying is if you want to protect US workers, by all means protect them, but protect them fully.

The fact of the matter is that approximately 75% of H-1B visas go to Indian nationals, but Indian IT companies account for just about 20% of the total number of visas that are issued — 85,000 last year  

What is the reason behind targeting Indian companies?

Because some people have a view that the purpose of the visa program was to enable American companies to have access to talent which they needed and which was not available in the US and that Indian companies are somehow using that channel to beat the system. I am just quoting what some people have said. Even though all Indian companies have found to be compliant with the law.

The H-4, which is the spouse visa for H-1B workers, has come under the scanner of the Trump administration. What sort of an impact is that likely to have?

During the Obama administration, an order was passed, allowing qualified spouses to take up work in the US. That has now been revoked, which means that the spouses of people who go on a n H-1B visa would not be entitled to get a work permit in the US. It is not guaranteed that it will be restored. While obviously it does not affect our industry directly, it makes the US less attractive for somebody (married) to go there because many of these families are double income families where both husband and wife are professionals. If going to the US means that the spouse has to give up her/his career, it obviously makes it less attractive for such families. So, it has an indirect impact, which, perhaps in the long run, is troublesome as much for the US as it is for India.

One grouse the Americans seem to have is that since getting skilled labour from India is much cheaper, it puts the US contemporaries in a spot. Your views?

This is a part of the perception problem I was talking about. The notion which has been created is that there is a set of people who are less skilled and lower paid who are coming in and replacing higher-skilled and higher-paid Americans, and thereby they’re depriving them of jobs and depressing their wages.

But it’s possible that an Indian may be replacing a similarly skilled but higher-paid American?

It may be happening at a certain level. But do you know how many Americans lose their job every year? 21 million every year, non-voluntarily… of a total workforce of around 180 million. (Editor’s note: The number of full-time employees in the US is around 124 million) Another 31 million lose their jobs voluntarily, they quit. That is the churn.

But do you know how many Americans lose their job every year? 21 million every year, non-voluntarily… of a total workforce of around 180 million  

Now, the reason for this churn is two-fold — business changes and technology induced changes. This is happening at an incredible pace every day. And it is because of this that the US economy is still so strong and the businesses are strong, because they’re always under pressure to become more efficient, to become more productive, to use more technology and so on. And the reason this churn doesn’t cause much pain is because while 21 million jobs are destroyed, 23 million get created. But, it’s not one to one, the 23 million jobs that get created… require a different set of skills, where again the deficiency comes in. The moral of the story is whether you are sitting in India or in the US, if you are not upgrading your skills at the pace at which technology change requires, you are going to be in trouble.

Have the hate crimes against Indians in the US come to your table as a matter of concern?

I don’t think there is any question of it coming to your table, it’s in your face. I think it’s a very disturbing trend; it is alarming that such hate crimes are happening. It first started against the Jewish community in the US and then it spread to the Indian community as well. While the number of incidents have been few — three or four incidents in the last three or four weeks — even incident is one too many of something like this. But, the most worrisome aspect is what it is telling us about the changing mindset in the US. The US is a country of immigrants, there are hardly any (indigenous) people in the US. The only difference is when people immigrated into that country — is it one day ago, one year ago, 10 years ago, 100 years ago or 200 years ago.

The moral of the story is whether you are sitting in India or in the US, if you are not upgrading your skills at the pace at which technology change requires, you are going to be in trouble  

But while this type of xenophobia is on the rise and such crimes are happening, there are many people in the US who are deeply troubled by it. Almost all the people we met on our US trip started off by expressing deep regret at what has happened. They took great pain to explain that this was not the way America looked at people or issues.

In the larger immigration debate, where does the H-1B issue fit in terms of priority for the US?

We don’t expect any legislative action, it’s not imminent. It’s a very long process and there are many factors involved in that. There are other issues involved in immigration that have nothing to do with us, which are far more important at present, like undocumented immigrants, illegal immigrants, and unskilled workers coming in, the border wall, so on. Skilled (talent) is a very small number and a miniscule part of it, so let us face it, we are not the most important part of the immigration debate. It’s the tail and not the dog. We must keep that sense of proportion in mind as to how important this issue is for them as well as for us. For us, it is not the be all and end all of the industry. It makes life a little more difficult if unreasonable restrictions are brought in, but it’s not as if it’s going to be a showstopper for the industry.

Moving on to a broader issue, how do things like automation, big data and AI change things for the Indian IT industry?

This is an important issue and is forcing a lot more changes than the visa issue. The visa issue is a relatively smaller one and the changes that are being driven or necessitated or may arise on account of the visa issue are much smaller than the changes on account of the technology paradigm and consequently the shift in business paradigm. The advent of digital technologies, social media, mobility, cloud, analytics, machine to machine communication, artificial intelligence and so on — all of these are driving change at an incredible pace and this has huge ramifications for the industry. The industry is scrambling to keep pace with this change.

There are other issues involved in immigration that have nothing to do with us, which are far more important at present… Skilled (talent) is a very small number and a miniscule part of it, so let us face it, we are not the most important part of the immigration debate  

If you look at the technology level, then productivity has gone up because you can do more with a fewer number of people. The first $100 billion turnover of this industry required about three million people, the next $100 billion is only going to require half that number. There is a gradual but continuous shift that’s happening and one might even argue that it’s accelerating, but it’s not exponential.

The second thing is that the rapid pace of change has meant that (client companies) are no longer talking just about getting technology services. Now it’s about a technology enabled outcome, whether it’s speeding up inventory or the turnround time for the customer, or increasing the productivity of my employees… all these kind of things. Increasingly, contracting is moving towards an outcome-based approach. The implication is that you have to understand the business of the customer far better so that means greater domain knowledge is required. Then you have to look at how technology can be used to transform the business. It requires a more consulting-type of skill set.

The first $100 billion turnover of this industry required about three million people, the next $100 billion is only going to require half that number  

And, if the company says it’s not just about us becoming more efficient and more productive, but we want to be a step ahead of our competitors, then over and above, it requires innovation too. So, (IT) companies are now being asked to deliver a mix of all of these — technology, domain, consulting, innovation. And the better you can offer this whole mix, the more sought after your services will be.

Lead visual: Nikhil Raj

Inside photograph of R Chandrashekhar: Nasscom