What Trump’s H-1B visa order means for IT

H-1B visa applicants hoping to enter the U.S. to work will have to be patient, as President Donald Trump has extended an earlier 60-day ban on skilled foreign workers entering the country until the end of the year, at least.

The move is intended to protect the millions of U.S. workers who have lost their jobs in the economic slowdown caused by the response to the COVID-19 pandemic, according to the White House.

IT companies have relied heavily on the H-1B program to fill technology roles. Many released statements on social media denouncing the order yesterday, including Twitter, which quoted Jessica Herrera-Flanigan, its vice president of public policy and philanthropy for the Americas, saying, “This proclamation undermines America’s greatest economic asset: its diversity.”

Between February and April this year, “more than 20 million U.S. workers lost their jobs in key industries where employers are currently requesting H-1B and L workers to fill positions,” Trump wrote in a proclamation issued Monday, ordering that applicants for such visas be barred from entry to the U.S. until Dec. 31. The move extends a 60-day ban he signed in April.

H-1B visas are issued to skilled workers when employers can demonstrate that suitably qualified staff cannot be found locally. While the number of new H-1B visas is currently capped at 65,000 each year, plus an additional 20,000 for applicants with master’s degrees or higher from U.S. educational institutions, 188,123 were issued in 2019 including renewals, according to U.S. State Department figures. L-1 visas, meanwhile, can be granted to employees transferring to a U.S. company from a foreign subsidiary; 76,988 were issued in 2019, little changed from the year before.

No effect on applicants already in U.S.

Trump’s executive order will have little effect on the labor supply in the short term, as visa applicants already in the U.S. are unaffected.

“One thing that is often lost in these discussions is the distinction between a visa and a status. A visa is merely an entry document that is stamped into a passport — often called the visa stamp. A visa status is a legal right to be and work in the United States,” says Rebecca Bernhard, a partner the immigration and employment practices of international law firm Dorsey & Whitney.

“This executive order stops the Department of State from issuing certain new work visas to enter the U.S., but it does not cancel or affect the status of foreign workers already in the United States,” Bernhard says.

That means winners of this year’s H-1B lottery already in the U.S. are in the clear: Their H-1B status will still take effect on Oct. 1 as they will not need to travel abroad to obtain a visa, according to Bernhard. 

At least for now: Section 5 of the President’s proclamation, entitled “Additional Measures,” mandates the Secretary of Labor and the Secretary of Homeland Security to consider further action to ensure that H-1B visa applicants and holders already in the country do not disadvantage United States workers.

Tech leaders welcome immigration

Enterprises can employ foreign workers on H-1B visas only if they can demonstrate to the U.S. Department of Labor by filing a Labor Condition Application (LCA) that they cannot find U.S. workers with the necessary skills. DOL certified around 468,000 LCAs relating to new, existing or transferred H-1B visas in 2019. In that year, 188,123 three-year visas were issued or renewed, while the number of new H1-B visas remained capped at 65,000.

Across the U.S., around 117,000 IT layoffs followed in the wake of the COVID-19 pandemic, according to estimates published earlier this month.

While enterprises are likely to hire back that many, and more, before year-end, according to U.S. employment consultancy Janco, the net number of new jobs in IT this year will take a hit. Janco now expects 35,000 new U.S. IT jobs will be created this year, compared to the 94,500 it was forecasting before the pandemic hit. Last year, 90,200 new IT jobs were created in the U.S., it says.

Although not all H-1B visas will have been issued to IT workers, there’s a chance that H-1B holders already in the U.S. could weigh heavily on the shrunken IT jobs market.

That’s not a good reason to close the door to them, though, according to Twitter’s Herrera-Flanigan.

“People from all over the world come here to join our labor force, pay taxes, and contribute to our global competitiveness on the world stage. Unilaterally and unnecessarily stifling America’s attractiveness to global, high-skilled talent is short-sighted and deeply damaging to the economic strength of the United States,” she wrote on the company’s platform.

Sundar Pichai, CEO of Google’s parent company Alphabet, also took to Twitter to express his disappointment with the new visa policy, adding: “We’ll continue to stand with immigrants and work to expand opportunity for all.”

Microsoft’s President Brad Smith called out the vital role played by immigrants at the company, saying: “Now is not the time to cut our nation off from the world’s talent or create uncertainty and anxiety.”

Microsoft had 3,403 LCAs for H-1B visas certified last year, according to MyVisaJobs.com, about 88 percent of them for IT roles.

Google, meanwhile, had 7,317 H-1B LCAs certified in 2019. Only three employers were ahead of it: outsourcing firms Cognizant Technology Solutions, Infosys and Tata Consultancy Services (TCS).

Offshoring

The COVID-19 pandemic hasn’t just caused an economic slowdown, though: It’s also shown us that many more jobs than we suspected can be performed from home — or, really, from anywhere.

With so many U.S. businesses turning to outsourcing firms to meet their IT needs already, there’s a chance Trump’s strategy could backfire by encouraging U.S. firms to offshore those jobs instead of rehiring in the U.S.

While the new order affects foreign workers seeking entry to the U.S., it will have no effect on companies that employ IT staff in other countries.

“It is likely that this policy will adversely affect the U.S. economy because companies will employ people in other countries and there is no need for any U.S. visa to employ a worker outside the U.S.,” says Bernhard, adding that U.S. companies must, however, comply with the other countries’ employment laws in that case. 

Around two-thirds of H-1B applicants are from India, and two of the top three employers of visa applicants (Infosys and TCS) are also Indian. The third, Cognizant, is incorporated in the U.S. but over half its 290,000 staff are in India.

“Many companies are forgoing the U.S. immigration process and expanding their outsourced workforce,” concludes Bernhard.