Wednesday, February 22, 2017

Why is the Indian government concerned over proposed H1-B visa changes?

My response to a recent question that came from a reader: 
Why is the Indian government concerned over proposed H1-B visa changes?

 
The Indian media, along with Indian Techies are closely watching the actions of Indian Government with regards H1. You are probably referring to the recent meeting between US Congressmen and Indian officials in India: “PM Narendra Modi counsels US Congressional delegation to rethink Fortress America - Times of India

I don’t wish to simplify an overly complex issue, but the reason for Indian government to be monitoring this closely is because it impacts people (jobs), remittances and taxes.

A basic 101 on the business model: India and Indian IT shares a 360 relationship with Americans and American IT. H1 Visas are a necessary tool for Indian service companies to operate. They send people on short and long-term deputation – to gather requirements, engage with clients, explore new business etc. The people sent onsite support the operations offshore.

A few reasons for Indian government to be concerned
  • Employment and remittances:
    • Indian IT employs 3-5 million professionals. Many are well paid (by Indian standards) and any external factor that will impact jobs in this sector is closely monitored by the government
    • By some accounts, Indians are issued the majority of H1 Visas. Visa holders travel overseas and contribute in remittances to India
  • Business and Tax revenue
    • Indian IT service firms contribute a sizeable amount in taxes (directly and indirectly) that benefits the Indian government
    • US market accounts for 50-60% of revenue generated by Indian IT Service firms. This is billions in revenue (across the industry).
Indian Government is not alone in voicing concerns lobbying foreign governments. American government regularly lobbies on behalf of its industry – for example, when Boeing has a deal to sell Dreamliner’s or when a country X is trying to establish nuclear power plants and is calling for bids from American and European suppliers.