India's Anxiety Over U.S. Outsourcing
By Pamposh Raina | Contributor
July 10, 2017, at 12:01 a.m.
NEW DELHI — Until recently, Aman Kak worked as a deputy manager with Mahindra & Mahindra, the Indian multinational automobile giant headquartered in Mumbai. Soon, though, the 26-year-old engineer from the central Indian city of Bhopal will embark on a journey that he hopes will lead to the life in America he has dreamed of since childhood. Kak will board his first-ever flight to the U.S. to begin management studies at the College of William & Mary in Virginia.
The real challenge for Kak begins a year after he finishes school, when the grace period to receive practical training ends and his student visa runs out. He will have to compete for a job in the open market in the U.S., and more importantly, for the sponsorship of an H-1B work visa from an employer. The H-1B allows foreign workers with specialized skills to work for companies in the U.S. for at least three years.
Kak says he isn't worried about obtaining a visa, even though competition is intense and may become more so now that U.S. President Donald Trump signed in April an executive order that includes a review of employment immigration laws and the H-1B program. It's not yet known what will immediately change for the workers whose H-1B visa applications are currently being processed, or how future visa applicants may be affected.
"I was a little concerned, but I don't think it would impact me," Kak says, adding that his background in technology coupled with a MBA degree will make him a strong contender in the job market.
The order is stirring uncertainty and anxiety here in India, where the information technology sector is closely tied to the H-1B program. Some labor analysts see the Trump administration's effort to reduce the number of foreign workers and bring more American workers into the U.S. tech sector as a misjudgment of basic supply and demand.
"At a time when businesses are globally moving toward digitalization, steps to curtail the existing technical talent is like shooting a racing car," says DD Mishra, research director at Gartner, a technology research and advisory firm. "American universities cannot supply the skills that are needed to work the related jobs."
Criticism of a popular program
Introduced through the Immigration Act of 1990, the H-1B program became popular during the dot-com boom later that decade. Every April the U.S. government accepts applications for 65,000 H1-B visas for the upcoming fiscal year. Typically, the system is inundated with applications in the first few days of the acceptance period; a random, computer-based lottery system selects candidates.
An additional 20,000 H1-B visas are reserved for applicants with at least a master's degree from a U.S. institution. Once this category fills up, applicants are placed in the general lottery. A third category allows non-profit organizations, universities and government agencies to seek H1-B visas to hire temporary international workers.
Critics of the H-1B program have long complained that companies abuse the program, using it to hire cheaper foreign labor that undercuts American workers. Attempts at plugging the perceived loopholes through immigration reform have so far stalled in the U.S. Congress.
In a speech made ahead of his April executive order, Trump attacked the existing H1-B lottery system. "No one can compete with American workers when they're given a fair and level playing field, which has not happened for decades," he said. A senior White House staffer told reporters that other options, such as increasing the visa fee or mandating higher wages for H1-B workers, could also be on the table.
Close U.S.-India ties in the IT sector
Though Prime Minister Narendra Modi did not talk about the H1-B visa program when he traveled to the U.S. to meet Trump in June, any moves to alter the program will reverberate in India. The $154 billion IT services industry is India's largest private sector employer, according to the National Association of Software and Services Companies, or NASSCOM, India's technology industry trade body. Of the $116 billion the country earned in revenue during the 2016-17 financial year from IT services exports, 62 percent came from America, making it a key market for this South Asian economy.
Three leading Indian technology services companies – Wipro, Infosys and Tata Consultancy Services – declined to comment on how the Trump administration's order might impact their businesses. Vishal Sikka, the Indian-American chief executive officer of Infosys, recently told an Indian news agency that it is incorrect to assume that India's information technology industry is dependent on H-1B visas.
Still, any protectionist moves made by the U.S. or other countries will hurt India's efforts to attract greater foreign investment, analysts say. "If the mobility of highly skilled talent is impacted, it becomes a trade issue," says Shivendra Singh, NASSCOM's vice president for global trade development. "It is not an immigration issue," he says of the proposed changes to the H-1B program.
Indians are the beneficiaries of a bulk of the H-1B visas. "Indian nationals receive between 65-70 percent of the H-1B visas because of their relevant skillset," Singh says. "They are hired by American companies and other international companies with a presence in America."
A mandated increase in wages, as suggested by that White House official in April, could raise the costs for Indian companies sending local tech workers to work with clients in America, says Jignesh Thakkar of Ernst &Young India. Focusing on wages earned by H-1B visa holders, he adds, is a mistake. "It is a big misnomer that there is a huge pay gap between those hired on an H-1B and Americans working similar jobs as them."
Where will future innovation take place?
The U.S. demand for high-tech workers remains strong. The U.S. Bureau of Labor Statistics has predicted a 17 percent growth in the employment of software developers in a 10-year period starting in 2014. The agency described the growth rate as "much faster than the average for all occupations." In 2017 alone, Gartner expects $397 billion to be spent on IT services in the U.S.
In recent years, non-immigrant work visa applications have faced tighter scrutiny and higher costs, says Mishra, the research director at Gartner. Indian companies, adapting to a changing political climate in the U.S. as well as changing demand in the global tech industry, have reduced the number of workers deployed to clients.
In the past three years the H-1B visa petitions of the leading Indian tech companies have dropped considerably, as some of them have been hiring local American workers instead. Acquiring businesses in America and moving toward automation are among the other measures that Indian firms are likely to adopt to minimize their losses in the near future, Mishra says.
Still, outsourcing to non-U.S. workers with specialized skills will remain a necessary option, says Stuart Anderson, executive director of the National Foundation for American Policy, a public policy research organization. In a recent study he authored that analyzed the H-1B visa trends of Indian companies, Anderson found that among full-time graduate students at U.S. universities, 71 percent of computer science graduate majors and 77 percent of electrical engineering majors were international students.
"If you restrict higher skill immigration," Anderson warns, "you will see less high-tech innovation here and more job creation will be done outside the U.S."
Countries That Accept the Most Migrants
(Christopher Furlong/Getty)
The European Commission pledged $40 million on July 4 to help Italy manage the surge of migrants arriving from Africa. Since the beginning of 2017, more than 100,000 migrants have made the perilous journey across the Mediterranean Sea to seek refuge in Europe, with Italy initially receiving about 85 percent of migrants, according to the United Nations.
As thousands fleeing unrest in the Middle East and North Africa travel to the European Union, member nations have hesitated to create a quota system that would require each country to resettle a specified amount of people. Italy, struggling with the costs and logistics of housing thousands of refugees, has criticized other EU nations for refusing to shoulder their share of migrants and relieve some of its burden.
According to data from the Organization for Economic Cooperation and Development, the number of new asylum-seekers reached a record of about 1.6 million in 2015, with approximately 22 percent of refugees coming from Syria, by far the leading country of origin. Here is a look at the 10 countries in the 35-member organization that took in the most permanent residents – which includes foreign nationals moving to the country as well as those already there on a permanent basis. The most recent data, coming from 2015 and during the height of the refugee crisis, offers a portrait of global conditions as countries scrambled to handle the flood of migrants.
UPDATE: An earlier version of this list was published Sept. 25, 2015.
10. Switzerland
(Fabrice Coffrini/AFP/Getty)
Switzerland accepted 131,200 permanent immigrants in 2015. By the end of 2016, nearly 2 million foreigners were permanently living in Switzerland – about a quarter of the country’s population. Immigrants from EU or European Free Trade Association countries made up nearly 70 percent of the total, with Germans and Italians being the largest groups.
There were 27,200 applications for asylum in 2016, down about 31 percent from 2015 after authorities closed the Balkan land route taken by thousands fleeing war-torn countries in the Middle East, Asia and Africa. Other countries have also sealed off their routes in the past year. Just under half of applicants were granted either asylum or provisional admission in 2016, with the three main countries of origin being Eritrea, Afghanistan and Syria.
9. The Netherlands
(Valerie Kuypers/AFP/Getty)
The Netherland accepted 146,800 permanent immigrants in 2015. Countries sending the most immigrants to the Netherlands were Poland, Germany, the U.K., Italy, Bulgaria, Romania and Spain.
Requests for asylum rose dramatically between 2014 and 2015, from 24,500 to 45,000. About 43 percent – 8,700 – of asylum-seekers came from Syria in 2015, the rest from Eritrea, Iraq, Afghanistan and Iran. The number of asylum requests from unaccompanied minors quadrupled to 3,900 in 2015.
In the 2017 election, Dutch Prime Minister Mark Rutte soundly defeated the populist Geert Wilders, known for his anti-immigration and anti-Islam platform. Still, a Dutch court ruled in June that the government can’t be legally compelled to take in more migrants, as dictated by the 2015 EU agreement.
8. Italy
(Stefano Rellandini/Reuters)
Italy accepted 160,900 permanent immigrants in 2015, bringing the total number of foreign nationals living in Italy to about 5 million. A third were born in the EU, while the majority of non-EU nationals came from Romania, Albania, Morocco, China and Ukraine. After family reunification, humanitarian protection accounted for the greatest share of new permits granted, at 28 percent.
A frontline state for arriving refugees, Italy is struggling to care for refugees rescued in the Mediterranean and brought to its shores. There were more than 120,000 asylum applications in 2016, an increase of 47 percent since 2015. The country recognized 38 percent of applicants as refugees or granted them subsidiary or humanitarian protection.
7. Spain
(Francisco Seco/AP)
Spain accepted 194,900 permanent immigrants in 2015. Immigration to Spain increased 10 percent in 2015, and emigration from the country declined 20 percent in the first year of positive net migration in Spain since the onset of the global financial crisis. Still, emigration of Spaniards reached more than 99,000 in 2015. Of the 290,000 foreign nationals who entered Spain in 2015 – permanent immigrants as well as an additional 100,000 passing through – 10 percent were Romanian and nearly 8 percent Moroccan.
International protection applications reached 14,800 in 2015, a record figure that continued to climb in 2016 to 16,500. To handle the influx, the country has strengthened its asylum and reception system by increasing funding and facilities and reforming its system for handling unaccompanied foreign minors.
6. Australia
(Daniel Munoz/Getty)
Australia accepted 226,200 permanent immigrants in 2015. Permanent migration increased marginally during the country’s 2015 to 2016 immigration program, primarily driven by a 28 percent increase in the country’s humanitarian intake. For the fifth consecutive year, most immigrants came from India, followed by China and the U.K.
During the country’s 2015 to 2016 Humanitarian Program, Australia granted 17,555 visas, primarily to asylum-seekers and refugees from Iraq, Syria, Myanmar, Afghanistan and the Democratic Republic of the Congo. More than 15,500 of these visas were granted under the offshore resettlement program; Australia’s controversial refugee policy involves paying small island states Nauru and Papua New Guinea to house migrants in conditions condemned by human rights groups.
Australia refuses to settle asylum-seekers who attempt to arrive by boat. Last year, in a deal struck by former President Barack Obama, Australia announced it would accept an unspecified number of refugees from a U.S.-led program in Costa Rica, and the U.S. said it would take up to 1,250 refugees rejected by Australia for trying to arrive by boat. U.S. President Donald Trump initially called the plan "dumb," but U.S. officials later said the arrangement will be honored.
5. France
(Romain Lafabregue/AFP/Getty)
France received 256,500 permanent immigrants in 2015. The country granted 217,500 new residence permits to non-EU nationals. A third were North African, and more than a fifth sub-Saharan African. Though just 20,500 new residence permits were issued for work reasons, labor migration increased 8 percent in 2015.
The 2017 presidential election pitted the anti-immigration, anti-EU. Marine Le Pen against the progressive Emmanuel Macron in a race that resembled the recent elections in the U.S. and the U.K. In the end, Macron’s pro-immigration party won out, though his stance on the importance of refugee aid has been less firm. France received about 75,000 applications for asylum in 2015, up nearly 26 percent from the previous year. The trend continued in 2016, reaching 78,000 applicants – the most in French history. Most applications came from Sudan, Afghanistan and Haiti. France accepted 29 percent of the 70,000 applications it considered in 2016, compared with the EU’s 62 percent.
4. Canada
(Dan Kitwood/Getty)
Canada accepted 271,800 permanent immigrants in 2015, more than any year since 2010. More than 170,000 were admitted under the economic category, including skilled workers and caregivers.
Refugees made up the the largest increase in permanent migration in 2016; the 58,000 admissions nearly doubled the number of refugees entering the country in 2015. Canada resettled more than 40,000 Syrian refugees between November 2015 and January 2017. The influx has put a strain on authorities, though Prime Minister Justin Trudeau insists refugees will remain welcome in Canada.
3. The United Kingdom
(Kirsty Wigglesworth/AP)
The U.K. took 378,800 permanent immigrants in 2015, and with fewer citizens emigrating from the country, the U.K. had a record year for net migration. Most immigrants were from EU countries, followed by Bulgarians. For the first time, Romanians accounted for 10 percent of the U.K.’s foreign-born population. The major U.K. policy issue in 2016 was the vote to leave the EU – a decision known as Brexit – in which concerns over immigration played a key role.
Despite more net migration, 12.7 percent fewer settlement grants were given in 2015 than in 2014, and in 2016 the figure dropped a further 35 percent to 59,000 grants, primarily due to fewer work, family and asylum-related grants. In 2016, 30,600 people filed for asylum in the U.K., the first year of falling asylum applications since 2010. The U.K. has been somewhat insulated from the migrant crisis enveloping Europe because it is separated from the rest of Europe’s land mass by the English Channel.
2. Germany
(Sean Gallup/Getty)
In 2015, Germany accepted 686,000 permanent immigrants, 82,400 of whom came to Germany for family reunification. A 30 percent jump from 2014, most immigrants who came to reunite with their families came from Syria, Turkey and Russia. Net migration nearly doubled in Germany in 2015, largely due to the high number of people seeking asylum there, and decreased considerably the following year.
In 2016, there were 722,000 first-time asylum applications – compared with 442,000 in 2015 – and applicants came mainly from Syria, Afghanistan and Iraq. That accounts for about 44 percent of all asylum applications in the OECD’s 35 countries. Approximately 59 percent of the 696,000 processed applications were granted either refugee status or subsidiary protection in 2016.
Many migrants currently traveling to and through Europe hope to reach Germany because of its wealth and job opportunities. Germany has tried to make it easier for asylum-seekers to enter the workforce as its native population ages, with the lowest unemployment rate since reunification in 1990.
1. The United States
(Julio Cortez/AP)
The U.S. accepted 1,051,000 permanent migrants in 2015, remaining the top country for immigration. This number measures lawful permanent resident status granted and does not include migration to the U.S. by other means. These new immigrants brought the entire U.S. foreign-born population to 13.3 percent of the total population.
The U.S. is also the top refugee resettlement country, with most refugees coming from Myanmar, Iraq, Somalia, the Democratic Republic of Congo and Bhutan. In 2015, the U.S. admitted 69,920 refugees, unchanged from the previous year. President Donald Trump has issued a number of executive orders affecting immigration policy in recent months, including orders aimed at strengthening border security and immigration law enforcement, and improving screenings of those seeking admission to the U.S.
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