New H1b Immigration Rule – Impact on It Sector

The rumor has it that the rules pertaining to H1B immigrants are going to be modified to become further stringent. As expected it came to live, only a bit earlier than anticipated in the middle of the pandemic. On 06-Oct-2020, the US Department of Labor(DOL) had issued a rule to increase the existing wages of H1B employees by as much as 40% on an average, for all level 1 to level 5 employments
Below is an example supporting the same:
Level 1 Software developer was previously paid 61,900 dollars annually and now
the new H1B up takings or the ones being renewed has to be paid 91,600 approximately
Likewise, it is going to impact employment on all the levels

Now let us see the impact of this on the IT sector as classified below:

  1. Impact on the Global IT industry
  2. Impact on Indian IT industry
  3. Impact on the US IT industry

Impact on Global IT industry:

Without further ado, let’s first understand how an immigrant actually drives business to the IT sector. H1B immigrants are proven professionals who actively boost the income of the corporate in terms of delivery, research, and development, thereby creating more employment opportunities.
Apart from their proven work record, their current pay scale is less than what the local professional of the same cadre may demand. So, the companies encourage this model to the core to get the proven benefits
However, with these new wage hikes, the IT companies are at risk of compromising their profit margin if they want the immigrant system to continue. The small and medium IT sector is most adversely impacted and this will force the companies to hire local employees in place of immigrants which more or less puts their business at risk. This change could impact global IT companies which hire H1B workers on a great scale

Impact on Indian IT:

As many 400K Indian H1B holders and applicants, considering both the current applicants as well as the renewals, are at risk of layoff.
The Indian IT giants like TCS, Wipro who have their long-standing presence abroad are cornered as well in this aspect. They have to either let go of their immigrants and hire local force or to comprise their profit margin in the middle of the pandemic. Hence, the Indian IT sector would be badly hit in terms of business.

Impact on the US IT industry:

The already badly hit economy of the US due to corona further sees a downfall with this move as it is said that “Immigrants can create America more jobs and they play a major role in the country’s growth”. The layoff of immigrants which; if happens, may further cause unemployment and the fall of the economy.

Putting all the above-stated facts together, one can say that this will have a bad impact on the IT industry as a whole. The final word by the IT Serve, an association of IT organizations is that this move is pointless and random without any proper logic.
The immigration attorneys have gone a step further and filed a lawsuit against the Department of Labor (DOL) for this decision.

Leave a Reply

Your email address will not be published. Required fields are marked *