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India's Outsourcers Adjust Strategy Ahead of Trump Visa Changes

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  • (Bloomberg) -- India’s technology outsourcing giants, unnerved by the administration of President Donald Trump, are changing their strategy on U.S. work visas even before new policies are implemented.

    While the White House has drafted an executive order that envisages changes to the way the H-1B program is administered, none have come into effect so far. With the application process kicking off next month, companies are preparing to face tougher new rules as they seek some of the 85,000 work permits allocated.

    “The key thing is that we will stop applying for H-1B visas for employees with lower levels of experience,” Krishnakumar Natarajan, executive chairman of IT services company Mindtree Ltd., told Bloomberg News. “Additionally, we will reduce the numbers of visa applications as a whole and I expect overall industry numbers to fall.”

    The H-1B program has drawn criticism for allowing companies to bring lower paid workers into the U.S. and take on jobs from American employees. Cutting back on visa applications for the least experienced workers may dampen those criticisms. Infosys Ltd. will also halt applications for employees with less than four years of experience, the Economic Times reported.

    The U.S. is the most important market for India’s $110-billion IT services export industry, with companies changing their strategy even as they aggressively ramp up operations and set up development centers.

    “We are going local and building recruitment to reduce dependencies on H-1B visas,” said Bangalore-based Natarajan, a former chairman of industry body Nasscom.

    Trump May Miss His First Chance to Reform Work Visas

    Until now, IT companies typically applied for multiples of the visas they expect to need because the system operates as a lottery. C.P. Gurnani, chief executive officer of Tech Mahindra Ltd., expects higher billing rates for customers as salaries for H-1B visa holders will probably rise, with the costs passed on to clients.

    “Tech Mahindra will apply for visas proportionate to our business needs,” said Gurnani, whose company is India’s fifth largest outsourcing company

    The top companies, which account for 90 percent of the H1-B visas that Indian outsourcers get, are keenly matching skill requirements to applications, said Shivendra Singh, vice president and head of global trade development at Nasscom. “IT services providers are doing skillset mapping,” said Singh, providing further indication that the visa applications will be much more targeted.

    Singh said Indian IT outsourcers operate in more than 80 countries and have provided services in the U.S. for decades. “We are fine with any moves to adjudicate and investigate H-1B visas as long as there is no undue harassment of Indian companies over others doing the same thing,” he said.