Global immigration backlash affects tech companies
July 24, 2018 | Expert Insights
Indian tech giants like Infosys are worried that tighter restrictions on foreign workers in some of the world’s biggest markets pose a major risk to its business.
A large number of the company's employees depend on visas to work on projects for clients in the United States, Europe and Australia.
Background
The pace of global immigration has accelerated since the 18th century. Manning distinguishes three major types of immigration as labor, refugee and urbanization. This phenomenon began in the Industrialization period in Britain and spread to rest of the world and continues to this day in many areas.
Since 1975, the United States has assisted in the resettlement of more than 3 million refugees. Illegal immigration was a signature issue of U.S. President Donald Trump's presidential campaign, and has continued to play a big role in his policies. He has repeatedly blamed immigrants for multiple problems within America.
Trump's proposals regarding H-1B visas frequently changed throughout his presidential campaign, but as of late July 2016, he appeared to oppose the H-1B visa program. After being sworn in, the US President initiated a travel ban, on entrants from a number of Muslim-majority countries. Trump recently also reversed the H-1B visa specification that allows the spouses of individuals to work.On May 7th, Attorney General Jeff Sessions announced a “zero tolerance” policy for immigration.
Established in 1981, Infosys is a NYSE listed global consulting and IT services company with more than 209,000 employees. From a capital of US$250, they have grown to become a US$11.12 billion company with a market capitalization of approximately US$ 42.4 billion. They have catalyzed some of the major changes that have led to India’s emergence as the global destination for software services talent.
Analysis
"An increase in anti-outsourcing sentiments in certain countries in which we operate, including the United States, United Kingdom, European Union and Australia have led and may in the future lead to the enactment of restrictive legislations," Infosys said in a filing with the Securities and Exchange Commission last week.
The US Citizenship and Immigration Services (USCIS) updated its policy earlier this month to make it easier to reject visa applications outright without giving applicants the chance to produce more documentation.The changes will take effect on September 11.
Legislations such as the one by USCIS could make it harder for Infosys to win customers and send workers to those countries, which "could hamper our growth or cause our revenues to decline and impact profitability," they added.
Infosys, which employs over 200,000 people worldwide, is a key player in India's outsourcing industry. They are also one of the top recipients of H-1B visas to the United States. More than 70% of H-1B visas have traditionally gone to Indians.Other big Indian tech companies have also been affected by US policy changes. Wipro warned last year that Trump was a risk to its business, while the industry's biggest player, TCS, has been cutting back on H-1B visas.
Infosys has pledged to take on more American workers, announcing last year that would hire 10,000 new people in the country. But the problem is that US does not produce enough professionals to fill all of the open high-tech jobs available around the country. There are almost five open jobs for every software developer who is looking for work, according to Yoh, a talent discovery company.
The tech sector has made good use of the H-1B visa, though the numbers have remained fairly steady since 2000. The 65% of H-1B petitions approved in FY 2014 were for workers in computer-related occupations. These jobs were relatively well paying, with a median salary of $75,000 in FY2014 — well above what many of these workers could have earned in their home countries.
More significantly, immigrants often become captains of innovation.Immigrants contributed to more than 60% of the patent filings at innovative companies such as Qualcomm, Merck, General Electric and Cisco Systems. About 24% of U.S. engineering and technology startup companies and 44% of those based in Silicon Valley were founded by immigrants, according to “America’s New Immigrant Entrepreneurs: Then and Now,” a paper co-authored by Wadhwa.
Counterpoint
Facing a crackdown on the H-1B visa, hundreds of wealthy Indians have turned to EB-5 visa as it fast tracks immigrants to a green card.
EB-5 visas gives immigrants a green card if they invest $500,000 and create 10 jobs in the US. The US government issued 174 such visas to Indians in the year ended September 2017, an increase of about 17% over the previous year, according to State Department data.
Assessment
Our assessment is that strict migration policies around the world affects business prospects of big tech companies and the economy of these countries. We feel that legal immigrants bring diversity, innovation and greater intellectual capabilities to countries like the US. We believe that the policy by the USCIS should have measures that ensure inflow of quality human resource and not mere arbitrary rejection of visa proposals.
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