U.S. tightens H-1B approval process, IT firms worried

Why in news

The U.S on Thursday announced fresh measures to tighten the scrutiny of H-1B visa petitions, mandating fresh documentary requirements for workers at third-party worksites.


  • The move will impact Indian IT services providers that place employees with H-1B visas at American companies that contract them, by imposing more paper work and processing hurdles.
  • The company’s filing H-1B petitions for their employees will have to associate a particular project to the individual visa, which could be approved only for the duration of the project.
  • The measures are intended to bring the client-vendor -employee relations in business models based on bringing high skilled H-1B workers to America under closer scrutiny.
  • Industry insiders said the scrutiny of this model had been increasingly stringent in recent years, and that the requirements included in Thursday’s announcement represent a further tightening of the screws. Vendors that get contracts from American companies often subcontract the job to other companies or hire H-1B employees brought by other companies, creating multilevel structures, a practice that immigration authorities have been monitoring more closely and trying to curb. Industry insiders said lower level jobs would be hit harder under the new regulations.
  • In order for a H-1B petition involving a third-party worksite to be approved, the petitioner must show by a “preponderance of evidence that, among other things: the beneficiary will be employed in a specialty occupation; the employer will maintain an employer-employee relationship with the beneficiary for the duration of the requested validity period,” the U.S Citizenship and Immigration Services (USCIS) said in a statement.

 H1B visa

The H1B visa is a non-immigrant visa that allows companies to employ foreigners for a period of up to six years. This visa is aimed at helping companies employ foreigners in positions for which they have been unable to find American employees. The minimum salary for an employee holding the H1B visa is set at $60,000 per year. H1B visa holders are allowed to apply for permanent residency in the US as well as buy or sell property in the country.

How it will the affect India

  • If the reform goes through, the resultant increase in employee wages will be a cost worry for the IT industry.
  • For the Indian firms, the challenge would be more on increased local hiring. Such wage hikes may hit their margins initially but going forward they will have to rethink over more local hiring.
  • Indian IT stocks today fell by as much as 4 per cent after the re-introduction of the bill. The top four companies — TCS, Infosys, Wipro and HCL Tech — together lost over Rs 22,000 crore in market valuation.
  • “This has just been introduced in the house, we have to still see what the new president does. If the bill passes we will have to adapt. The industry has already started hiring onshore so that will increase,” an executive with a large IT company said.
  • Apart from the visa curbs, the U.S. had also recently hiked the visa fee for certain categories of the H1-B and L1 visas which has had an impact on Indian companies.

Q.1 Consider the following statements with respect to H1B Visa

  1. H1-B Visa is a multiple entry non-immigrant visa which allows foreign workers employed by US companies to work in the United States.
  2. Currently, H-1Bs are issued for six years
  3. To become eligible for getting H1-B visa, Workers should be on the payroll of A US based company

Choose the correct answer from the above

  1. 1 only
  2. 2 and 3 only
  3. 1 and 3 only
  4. All of the above

Answer: c.) 1 and 3 only

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