Introduction

The recent changes in U.S. immigration policies, particularly the new H1B visa policy and the immigration ban, have sparked concern in the Indian IT industry. However, experts and industry insiders argue that the impact might be less significant than feared.

Impact on Indian IT Companies

Indian IT companies, which have benefitted significantly from the U.S. H-1B visa regime, are facing potential changes. As of April 1, 2020, the U.S. Citizenship and Immigration Services (USCIS) had received about 250,000 H-1B work visa applications. Indians made up nearly 67% of these applications, totaling 184,000.

The new H1B visa policy, signed by former President Donald Trump, has introduced significant changes to the visa norms. The old lottery system will no longer apply, and the new system emphasizes hiring highly skilled professionals who earn high wages. This shift could affect the margins and wages of Indian IT companies that rely on low-cost labor.

While some large Indian IT companies have started reducing their dependency on H-1B and other visas by hiring 50% of their staff locally, many still use these visas to control costs. Indian IT companies often subcontract work to Indian nationals already in the U.S. with valid H-1B visas. For instance, Wipro, a prominent Bangalore-based company, spends up to 20% of its revenue on such subcontracts.

Projections and Industry Views

Some industry experts and insiders believe that the impact of these policy changes might be overstated. They argue that large IT companies will adapt by hiring US citizens with Green Cards (GCs) at higher costs. According to one source, such adjustments might lead to a minor depreciation of the Indian rupee, about 1-2%, to cover the increased costs.

Another perspective is that customized officials worldwide cannot stop software or service exports. Monitoring and decrypting every data packet coming into the U.S. would be an enormous and impractical task. Therefore, there is no significant reason for concern.

Another argument posits that fears about job displacement due to cloud computing and AI are partly true. However, many large companies still rely on IT support, even if it's for managing cloud-based applications. This space provides numerous opportunities, and the industry is already expanding.

Conclusion

While there are valid concerns about the impact of these changes, the Indian IT industry has the flexibility to adapt and mitigate the potential negative effects. Large companies like Wipro, for instance, understand the implications and use media campaigns to pressure lower salary hikes and avoid giving increments, ensuring continued profitability.

In conclusion, the potential effects of these changes are not as severe as feared, and the Indian IT industry will continue to thrive by leveraging its strengths and adapting to new challenges.