Beyond $100,000, Trump's New H-1B Rules Come at Much Bigger Cost for Indian's Middle Class

Last year, I went to a wedding of an ex-colleague’s son. It was clear that the boy was a prize catch. He worked for a top IT firm – a household name – and his employers had just got him an H-1B visa to work in the US.Yesterday, I heard the young man has decided to quit his job and come home. Apparently, the great uncertainty about H-1B visa rules – even before US President Donald Trump’s new fee regime came into effect – had already given him high blood pressure. The $100,000 fee announcement proved to be the proverbial final straw.I asked his father why he was quitting, given that the new visa rules don’t affect those who are already working in the US with valid H-1B visas. “Who knows what Trump will do tomorrow?” he replied. “Why take the risk of suddenly being asked to leave?”That seems to be the nature of the beast called the Trump administration. Its policy flip-flops have made it the most unreliable government in the world now.The H-1B fee proclamation is a typical case in point. Howard Lutnik – Trump’s main man on all things commerce – had announced that the fee would have to be paid every year. The official proclamation seemed to say that even those with valid work visas would not be allowed to enter after 12:01 EST on 21 September.Later, the White House spokesperson clarified that the $100,000 visa fee was only applicable on new H-1B applications, and not on renewals. Also, that it would be a one-time fee and not charged every year. Also, those who already have H-1B visas are allowed to travel in and out of the US without paying anything extra.But that is just a temporary reprieve for India’s IT giants, who account for the lion’s share of H-1B visas. This is an essential tool for them to service their American clients. When a foreign company outsources its tech systems and maintenance to an Indian IT major, most of the work is handled ‘offshore,’ in the back offices in Hyderabad and Bengaluru. However, some of it has to be done ‘onsite’ – fixing bugs on systems that cannot be remote linked, ‘tech support’ in the office, customising software systems for local users, etc.This is a cost that IT companies happily bore till now, since they could charge more for onsite work. Currently, an entry level H-1B worker from India is paid $60,000-85,000. The Trump administration claims that such workers are paid 36 percent less than a regular local worker. That means, if a US firm had to hire a local worker to replace them, they would have to shell out $93,000-135,000 per year for the same work. They save money, even if they are charged an average of $90,000-100,000 dollars per onsite worker. At the same time, Indian IT firms end up making a ‘margin’ of $15,000-30,000 on each worker.An H-1B visa is issued for three years, and can be renewed for another three years. Till now, it cost roughly $5,000, including all sundry costs. Now, they will have to shell out 20 times that amount. Even if it is a one-time expense, it will add about $33,000 annually to each H-1B worker. At current rates, that will raise the cost of each entry-level worker to $93,000 to $118,000. Suddenly, they will not be competitive enough for onsite work.The only way to counter that would be for IT majors to pay less to their H-1B workers and reduce overall costs. Most market watchers doubt whether that would be possible. It is more likely that the new H-1B visa fee will eat into onsite margins, and reduce overall margins for Indian IT majors.There are about 11-12 lakh Indians currently in the H-1B visa queue. Obviously, not all of them expect to get it. Among those who do, many won't be sent anymore since their sponsors will not be willing to shell out $100,000 (roughly Rs 88 lakh) to send them to the US.Trump’s Sudden H-1B Move Was a Recipe for Chaos. Clarity Came Far Too LateThis is not just a matter of business. The restrictions on H-1B visas will have a profound social impact on the Indian middle class, especially aspirants from the nation’s smaller towns. A computer science degree, followed by an IT job, has turned out to be a passport to a better life for millions of young people, over the past three decades. And the H-1B used to be the golden ticket to affluence. If you worked hard and impressed your bosses, you would be put on the list of those who were to be sent abroad for onsite work. It wasn’t immediately an easy life.People who went on H-1B visas often lived together in cramped quarters, cooking their own food, washing clothes on weekends, working long hours, and missing their families. Yet, they managed to send more money back home, which raised the living standards of their parents.Those who were married gradually brought their spouses (usually wives) to the US on H4 visas. And those who weren’t, saw their value rise in the marriage market. They got six years in which to save in dollars and build a nest egg for themselves.It is true that the H-1B worker, sent by an Indian IT firm, was rarely assimilated into American society. They usually socialised with people like themselves, and stuck to geographies where there are a lot of Indians. This made them culturally very different from those who had gone to college in the US, and then got an OPT (optional practical training) visa to work in an American-owned company. The latter would be quickly sponsored for Green Cards and then, five years later, apply for US citizenship.But back home, those who went to the US for tech work were treated with much greater respect. The H-1B has acted as a conveyor belt of sorts, for moving hard-working, smart young people out of their immediate social milieu, into the elite classes in India.This was one of the key attractions of an IT job. It not only provided affluence, but also gave people added social capital.That is already unravelling as the Trump administration is cracking down on Indians violating H-1B norms. There are many YouTube livestreams and reddit posts about how Indians are being targeted by the authorities. This is at a time when there is growing anti-Indian feeling in the US, which is being furthered fuelled by right-wing influencers.This is why a large number of Indians – like my ex-colleagues’ son – are already planning to return. But they know they will be giving up their dreams of improving their social and economic status. It is the beginning of the end of a project of social engineering that began three decades ago. And the new H-1B rules will only hasten that process.(The author was Senior Managing Editor, NDTV India & NDTV Profit. He tweets @Aunindyo2023. This is an opinion piece and the views expressed are the author's. The Quint neither endorses nor is responsible for the same.)The H1B Backlash Spells Big Trouble for India's Middle-Class

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Beyond $100,000, Trump's New H-1B Rules Come at Much Bigger Cost for Indians

The H-1B propelled smart, young Indians out of their immediate social milieu into the elite classes. What now?

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Topics: H1B Visa Immigration Indian Immigrants in US