In what could come as another blow to Indian IT firms, the US Department of Labor has submitted a proposal seeking to increase the minimum wages of H-1B visa holders and those who hold other work permits including employment-based Green Card holders. The proposal, which was submitted to the Office of Management and Budget in the White House could have a significant impact on the H-1B visa programme, thereby impacting Indians who are the largest recipients of this non-immigrant work visa.
Increasing wage levels will increase costs for companies that hire H-1B workers, thereby dissuading them from outsourcing workforce.
Restructuring of wage levels has been proposed for the H-1B, H-1B1, E-3 and PERM (Employer Sponsored Green Cards) visa holders. It would make it even harder for mid-sized companies and startups to hire foreign workers.
Indian IT companies such as TCS, Infosys, Wipro, HCL Tech are likely to be hit by this move as increased wage levels would mean higher costs for these companies as they will have to pay H-1B workers more. These IT firms make up a lion share of visas applied for and issued every year
According to a Moneycontrol report, a level 2 employee would be paid around $120,000 a year in California, and $80,766 a year in Texas and IT firms reportedly comply with the wage requirements.
“An HDFC report shows that the average H-1B wages increased sharply over the last two years for IT services companies. From a median salary of $78,120 in FY17, it had increased to $90,730 in FY19,” the Moneycontrol report states.
Due to tightening immigration laws and increasing costs, IT firms have been ramping up their local hiring over the past year.
Infosys, while reporting its earnings for Q1 said that it has recruited more than 13,000 US nationals as part of its localisation drive with the idea of building local talent in all the geographies it operates in.
Meanwhile, an Al Jazeera report states the proposal is also looking to further toughen the process of hiring ‘skilled workers’ in a bid to improve local hiring. This is reportedly a fast-track regulation to narrow the definition of what a ‘specialty occupation’ eligibility is for skilled workers applying for H-1B visas.
While details of the proposal havent been made public yet, reports suggest that this proposal could be cleared by the Donald Trump administration before elections begin in November. “If given the go-ahead, it will be implemented immediately without public comment, unlike the case with most other rules,” an Economic Times report states.
The Department of Labour determines wage levels in every state for each occupation. For H-1B workers, there are four levels of wages from L1 to L4, with L1 being entry-level workers and L4 being those with a lot of experience.
