25th October 2020

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H-1B Visa Paused

The US administration has extended the 60-day ban on immigration and non-immigrant worker visas until the end of 2020. These Popular work visas, including the coveted H-1B and H-2B, and certain categories of H- 4, J and L will also remain suspended until December 31. The measure, said United States President Donald Trump, aimed to protect domestic workers who had been affected by a downturn in the economy following the Covid-19 pandemic.

H-1B, H-2B, L and other work visas

To fill a void of highly-skilled, low-cost employees in IT and other related fields, the U.S. administration issues a series of visas each year, allowing companies outside the United States to ”send employees to work on customer sites. Of these work visas, the H-1B remains the most popular among Indian IT companies.

The United States government has a limit of 85,000 H-1B visas in total per year. Of this number, 65,000 H-1B visas are awarded to highly-skilled foreign workers, while the remaining 20,000 can be granted to highly-skilled foreign workers who have a higher education or a master’s degree from a U.S. university.

In addition to H-1B visas, the US government also issues L1 visas that allow companies to transfer highly skilled workers to the US up to seven years. H-2B visas allow food and agricultural workers to seek employment in the United States.

Background of US suspension of non-immigrant worker visas

Since its inception in 1952, the H-1 visa regime has undergone numerous changes and revisions to allow or reject certain categories of skilled workers in the United States, depending on the economic situation of the country.

The rise of technology, coupled with the advent of the Internet and low-cost computers in developing countries like India and China, has seen a large number of graduates willing to work at relatively low costs to United States. A beneficial situation for both the employer and the employer and the employee since then.

However, it has been criticized for sending low-cost workers to the United States at the expense of domestic workers. In January 2017, after taking office as President of the United States. In the United States, Trump had suggested that low-cost workers were hurting the economy and sinking jobs for citizens.

The United States then alluded to the reform of the H-1B “broken” visa system. Trump took advantage of the opportunity offered by the economic contraction due to Covid-19 by first prohibiting the entry of non-immigrant workers until June 23, and then extending it until December 31.

In his executive order which extended the ban, Trump said that even if it happened under normal circumstances. In these circumstances, “properly managed temporary worker programs can bring benefits to the economy.” The extraordinary economic contraction created by Covid-19 posed a threat. for American workers.

What does it mean?

Since the ban takes effect immediately, processing of all new categories of H-1B, H-2B, J, and L visas is suspended. This means that those who do not have a valid nonimmigrant visa by 23 June and who are outside the United States may not enter the country until December 31, and your entry is decided by the consular officer of the immigration services. Holders of H-1B, H-2B, J, and L visas, as well as their spouse or children already present in the United States will not be affected by the new worker visa ban.

Its impact on Indian IT companies

Indian IT companies are among the main beneficiaries of the US H-1B visa regime of United States since 1990, they have captured a large part of the total number of visas issued each year.

As of April 1, 2020, the U.S. Citizenship and Immigration Services. United States (USCIS) had received approximately 2.5 lakh H-1B work visa applications, according to official data.

The Indians had requested up to 1.84 lakh or 67% of the total H-1B work visas for the current fiscal year ending in March 2021. In addition to the suspension of these work visas, the decree signed by Trump has also made radical changes.

The H-1B work visa rules, which will no longer be decided by the lottery system currently in force. The new rules will now favor highly skilled workers for whom their respective companies pay the highest wages.

This could have a significant impact on the margins and wages of workers at Indian IT companies who send thousands of low-cost workers to work on customer sites in the United States.

Although large Indian IT companies have reduced their dependence on H-1B visas and other worker visas by hiring up to 50% of local staff, they still rely on these visas to control costs. Indian IT companies also offer subcontracts to Indian citizens already in the United States with valid H-1B visas. Bangalore-based Wipro spends up to 20% of its revenue on outsourcing Indian workers with valid H-1B visas.

Affected visa categories

  • H-1B: The United States grants 85,000 H-1B visas every year to ‘high-skilled’ workers, often in the technology industry. They are generally valid for up to six years. In fiscal year 2019, the Department of State issued 188,123 H-1B visas for both new applicants and renewals. Some 131,549 were for Indian citizens, followed by 28,483 for mainland Chinese citizens. Only 143 H-1B visas were issued in May 2020, compared with 13,678 in May 2019, according to Department data.
  • H-2B: H-2B visas are for seasonal non-agricultural labor. The United States issues 66,000 per year, although it sometimes grants additional visas based on demand. They are generally valid for up to three years and are popular in industries like food processing, hotel work, and landscaping. In fiscal year 2019, the Department of State issued 97,623 H-2B visas for both new applicants and renewals. Some 72,339 were for Mexican citizens.
  • H-4: H-4 visas are for the spouses and children of H-1B and H-2B holders. The proclamation does not explicitly address them, but does restrict entry for “any alien accompanying or following to join” restricted categories. They are valid for the duration of the H-1B visa. In fiscal year 2019, the Department of State issued 125,999 H-4 visas. Some 106,162 were for Indian citizens, followed by 5,701 for mainland Chinese citizens.
  • J-1: J-1 visas are for cultural and educational exchange. The order applies to J-1 holders “participating in an intern, trainee, teacher, camp counselor, au pair, or summer work travel program.” They are valid for up to seven years, depending on program type, and there is no annual cap. In fiscal year 2019, the Department of State issued 353,279 J-1 visas for both new applicants and renewals. Some 39,920 were for mainland Chinese citizens, followed by 18,349 for citizens of Great Britain and Northern Ireland, and 17,591 for German citizens.
  • J-2: J-2 visas are for the spouses and dependents of J-1 holders. It is valid for the duration of the J-1 visa. The Department of State issued 38,282 J-2 visas in fiscal year 2019, with 10,228 going to mainland Chinese citizens.
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