Back in February, a leaked executive order (that Donald Trump has now signed) had Indian IT companies in a state of panic.

 

According to this article on Livemint, here’s how much the shares of prominent tech companies were expected to fall:

 

Tata Consultancy Services (TCS) Ltd - 2.71%

 

Infosys Ltd - 2.2%

 

Wipro Ltd - 1.5%

 

HCL Technologies Ltd - 3.4%

 

Tech Mahindra Ltd - 2.2%

 

The order seeks to first review what changes are needed to the H-1B program in order to give Americans precedence for employment. Trump claims that the old H-1B model resulted in the "theft of American prosperity" and a reduction in the wages of American employees.

 

This is in keeping with one of Trump’s most prominent campaign promises—to make America great again by bringing jobs to American citizens.

 

This move seeks to make it harder for companies in the US to hire overseas talent.

 

Why do we care? Well, to quote ToI,

 

“90% of Indian technology workers (in the US) use H1B visas.”

 

 

Source: Giphy

 

What Is the H-1B?

 

The H-1B visa is a temporary permit granted to people who move to the US for specialised jobs.

 

They’re allowed to take along their spouse and any children who are under the age of 21 for the duration of their permit.

 

 

Source: Twitter

 

The reason IT stocks fell after this document was leaked is that an overwhelming majority of Indian IT companies use this visa to send skilled professionals to America to work on-site with clients.

 

Right now, the visas are allocated in two rounds of lottery, in which students who hold Master’s degrees obtained in the US have a greater chance of being selected.

 

What Will This Mean for IT Companies?

 

This order means that companies will potentially have less incentive to go the cheap(er) labour route by hiring H-1B visa holders.

 

This increase will also eat into profit margins, because companies will have to shell out more for H-1B holders.To quote the initial leaked order, “A primary factor driving illegal immigration to the United States is the availability of jobs and benefits. Eliminating this jobs magnet will reduce the flow or illegal entries and visa overstays. The unlawful employment of aliens has had a devastating impact on the wages and jobs of American workers, especially low-skilled, teenage, and African-American and Hispanic workers.”

 

For more perspective on how this move will influence Indian H-1B aspirants and some of the biggest IT companies in the country, check out this informative video by Funda Curry.

 

 

Cover Image Source: Funda Curry | YouTube