Indian IT firms must ramp up salary structures
The odd thing about the H1-B reform Bill introduced in the US House of Representatives is the person who introduced it. Zoe lofgren is the Democratic Party Congresswoman representing California's 19th Congressional District, an area that covers most of the city of San Jose. As any visitor to the city can testify, it is not a white-majority constituency. Indeed, a majority of the population in the area is of Hispanic origin, but almost a quarter of the population is Asian. For the most part, those are Indians particularly from southern states. San Jose remains one of the most popular cities for Indians to settle in the United States. So the head-scratching question that some have asked is: Why would a representative from such an area propose a Bill that will impact some of her own constituentsIJ However, that misses one simple point.
Many of the Indians who settled in the United States between the 1970s and 1980s have children now who are effectively priced out of the market by newer waves of engineers and software writers from India, particularly those who travel on the H1-B work visa. The current salary cap on the H1-B work visa introduced in 1989 and unchanged since, is $60,000, which, thanks to the depreciation of the rupee since then, remains extremely attractive for Indian information technology workers who readily go for on-site projects to the US. The need to send lower-wage computer engineers to assist on on-site project implementation coupled with the lower costs of outsourced project development in India over the last two and a half decades has enabled the creation of Indian IT services giants. By keeping their costs a lot lower than their foreign competition while delivering attractive margins to investors, Indian IT services companies have for a while been eating their cake while having it.
However, while unemployment is not a problem in the United States, particularly in the IT industry, there was a growing clamour to plug this wage loophole for a while. Indian IT companies have by far and away been the biggest recipients of H1-B visa allocations through the ‘lottery' system. While American software and online firms such as Google, Microsoft, Amazon and Facebook have also been built on the backs of Indians — look no further than the fact that Sundar Pichai and Satya Nadella are also immigrants from India — they have tended to use Indian students who went to study in America rather than to take recourse to short-term employees.
The modifications to these Bills were a long time coming and while Indian IT firms have lobbied intensely on Capitol Hill to prevent this for a decade, in the Trump-age it is almost certain that there will be bipartisan support for the Bill. The higher salary cap will mean that while Indians will still go to the US to work, they will likely be more highly-skilled and thus better paid. Indian IT faces an existential crisis and to resolve that, they need to look inward.