Toronto is becoming a new superpower as Immigrants choose Canada over the US. Due to the new immigration laws of the US, the silicon valley’s undisputed stand as the number one tech hub might be in danger
In the past few years, thousands of workers are moving to Toronto. This has helped the city become one of the fastest-growing tech hubs. Most of the immigrants are avoiding the US to escape from the rules made by the trump’s administration
Recently, Trump also announces the temporary suspension of US visas. These visas are issued annually to the migrant workers. Every year, the US allocates 85000 visas for foreign skilled workers.
This year with the temporary suspension, Trump’s administration also says that this is indirectly a threat to local job opportunities. Meanwhile, Canada is taking this opportunity to welcome people across the world.
Since 2013, the number of jobs in Toronto is increased by 54%. Several Canadian companies are utilizing this opportunity very well. According to a study in 2016, 25% of the total workers in Canada are immigrant workers.
HCL Technologies says the US visa ban will have minimal impact on its operations. The CEO says that this is the trend they already been following and now others are following it.
He further says that the company has enough people abroad in the US to continue its operations without any halt. He also says that the new rules are unfortunate, but the company already is prepared to handle this situation not just in the US but across the globe.
If this situation continues in the long term, the company has to come up with a new idea to address the situation, according to the CEO. He also says that at present the company delivers from across the globe and that is the work model they are using
The company believes that although the situation can be controlled, there should be some tweaks to maintain to operate next year.
HCL currently has 1.5 lakh employees globally. In the recent quarter, 63% of HCL revenue is from the US region. The company also brought its stranded employees from the US but didn’t officially announce any numbers.
Similarly, Infosys and Tech Mahindra also brought some of their stranded employees to their respective nations via chartered flights
Recently, Trump’s government declared that non-immigrant students with F-1 and M-1 visas, who are taking online classes are not eligible to stay in the country. To oppose that a lawsuit filed against the US Visa policy by 17 U.S States.
Along with these states, the District of Columbia also filed a lawsuit, stating that this decision is unlawful. This lawsuit filed in the US District Court in Massachusets says that this decision should be reversed
This new policy also affects the students who are taking non-online classes as well. This prohibits such students to not take more than one class. Also, it prohibits taking three credit hours online to stay in the country.
According to a report, there were around 194556 Indian students in various academic institutions in the US until January.
Colorado, Connecticut, Delaware, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, and Wisconsin are some of the states filed against this newly changed policy
The Massachusets Attorney General says that Trump didn’t even try to explain this senseless change in the policy. This new policy also brings a dilemma for schools to select between keeping their international students enrolled or protecting the campus
Earlier, Harvard and MIT also filed against the policy that prevents students to stay in the country. Unless they take an in-person class, they should move out of the country.
The Tech giants started petitioning the US administration, especially Trump that H1B visas are integral for COVID recovery. Companies like Amazon, Google, Accenture, Facebook, IBM are some of the companies to start the petition.
These companies are asking to continue to allow them to hire these highly skilled people. They believe that they are an integral part of the COVID-19 recovery plan for the USA
Advocacy firm ITI, present in Washington said that these big companies are concerned about the news of the suspension of H1B visas. These non-immigrant work visas are in need in these dire times.
The CEO of ITI said that these firms are anxious to get their employees back and the labor market has already started working. He also re-iterated that foreign-born workers are crucial to recovery.
The CEO of the US Chamber of Commerce, Tom Donohue also pointed out to the US government that as the economy bounces back, the American firms need support to meet the needs of their workforce.
US-India business council that has members belonging to HCL, Citi India, Bharat Forge also agreed with Mr.Donohue on this. Mr.Oxman, the CEO of ITI said that the unemployment rate in the software side has decreased from 3% in January 2020, to 2.8% in April 2020
Who benefits from the H1B visas
Indians are the ones who are benefitting the most with the H1B visas. Recently Wall Street Journal published an article that Trump administration will suspend all the new H1B visas. The reasons for this are to control the coronavirus and increase the employment of US-based citizens.
Mr.Donohue says that if companies cannot hire H1B employees, productivity growth will deter. This is especially in the patent production sector. Ultimately this is a great cause for the economic slowdown
He further adds that these short-term restrictions of H1B and L1 visas will have a long term impact on the business plans of the company. Along with H1B visas, these restrictions might apply to H2B visas and J-1 visas which are for short-term seasonal workers and short-term camp counselors respectively.
What does White House think about this?
A White House spokesperson said that the administration is actively evaluating various options, especially to protect American workers. Although no decision is made.
The USA under Donald Trump plans to suspend new H1B visas. Suspension fo new H1B visas will affect the Indian firms in the USA. This could prevent people from coming into the country until the ban is lifted. The move could affect the Indian origin companies as well. In order to handle this, companies like TCS, Infosys will have to hire American citizens to fill the vacant positions.
The people who are already having visas will not be affected by this rule. The Indian IT firms use the H1B visas to send highly skilled people from India to the USA. According to the immigration data, India accounts for 70% of the 85,000 annual limits for the H1B visas issued.
Recently the rejection rates for the Indian firms for H1B visas have raised from 5% in 2015 to 24% in 2019. On Friday, NASSCOM said that they seek exemption for the technology workers from any restrictions being imposed.
For most companies, the US is the main market for its revenue. For example, TCS which operates in 50 countries, has the s their biggest revenue generator. Tata Sons chairman said during the annual shareholders meeting that these visa restrictions continue to evolve timely and TCS has the responsibility to comply with these situations.
For major IT companies, 60-65% of the total operating costs will be of staff costs only. If these companies are going to hire the local talent, who costs more than the H1B visa individuals, the company’s operating margin might decline by 30-80 points, according to a report by CRISIL.
In FY20, Infosys has hired around 78% of its senior management in the USA locally. In the Annual sustainability report, Infosys said that it is looking to strengthen the local hiring and continue to increase the senior management proportion with the local talent.
Also, several industry analysts feel that hiring local talent is one way to handle these H1B visas suspension. However, most of them believe that the ill always welcome great talent to come and work in their country.
Most of the companies feel that these new restrictions by the US government will bring their projects to a halt and affect their revenue if they couldn’t hire the local talent.
In the current situation, the US companies have reduced hiring to a greater extent. The officials who process visas are also being furloughed. Both these things can have adverse effects on the Indian techies who wants to go to the USA.
Previously, last week the American Federation of Government Employees which consists of 70,000 employees have pointed out that around 11,000 officials of USCIS will be part of the layoffs. Being a self-funded agency, the USCIS depends on the application fees for all its activities. The current fee schedule could bring an amount of $3.41 billion in the form of average annual revenue for USCIS, in FY20
An immigration lawyer said that if these layoffs indeed happen, this will delay the visa renewal process for people whose visas are set to expire in the near future.
Since the last decade, visa applications have consistently increased every year. This indicates the continued demand from the tech workers to go and work for US companies. In March 2020, the USCIS has received around 217,000 H1B-visa applications. In FY19, around 190,000 applications were received.
Every year around 65,000 H1B visas and 20,000 L1 visas are granted. This number includes the renewals as well. Also, the US government will give 60 days for the renewal of visas
USCIS have seen an increase in Visa applications each and every year since the last decade
With the widespread of coronavirus, most of the companies have stopped hiring. According to a survey by the US Labor Department, around 40 million Americans have lost jobs since March.
According to the 2016 census data, around 2.3 million immigrant workers are working in the US and 25% of them which is 5.75 lakh workers are from India. These people will be affected a lot if the extensions of visas are delayed.
In the worst-case scenario, for some of the individuals, it is taking 8-10 months for processing the visas. People are complaining that if these processing times increase further, the job vacancies will be filled by then.
Infosys has recently said that the business has been marginally impacted on profits due to the impact of coronavirus. It was also stated that the cash flows negatively for them, currently. According to the latest reports, the CEO drew a package of $6.15 million for the FY20. This has been mentioned in the regulatory filing by the Infosys
Infosys also said that the profits which are marginally impacted are due to most of their clients are asking for price reductions and discounts. In a 20-F submission to the US securities, Infosys has said that their cash flows are negatively impacted by the prolonged payment term requests from clients and low profitability. This may impact the payment of dividends to their stakeholders.
The company has also said that some of its clients have invoked the ‘Force Majeure’ clause in their contracts which is negatively impacting their business.
Not just Infosys, the corona outbreak has negatively impacted the global economy and all the businesses. Most of the companies, including Infosys has decided not to provide a revenue outlook for FY21 due to the impact of coronavirus
Pre-COVID, Infosys has said that there has been an increase in the number of rejections for visa and visa renewal from the United States and some other countries. Due to this, the company has to face the delay or bear the additional cost due to the uncertainty of whether the employee will join at the right time in the right project. The company also highlights that similar situation happened in Australia and the UK as well where the government will focus on “net migration”
Due to this crisis, the companies are preferring to employ local individuals and this could lead to an increase in the restrictions by the governments. The company also says that these extended restrictions will impact the overall cost and expenses for client delivery due to the additional costs in renewing the visas
In US Congress, a bill has been passed to introduce reforms in the H1B and L1B visas. The reforms are made during this crisis period in order to prevent the replacement of US workers. The main idea of these reforms is to give preference to the US-educated applicants
The Democratic Representative, Mr.Khanna who is of Indian descent has said that they want to make sure that talent will come to the USA and also to make sure that it is being done with proper compensation. They also want to protect all the workers from being exploited.
The latest bill was introduced in both Senate and House of Representatives by a group of seven legislators from both parties. This comes as an amendment to the Immigration and Naturalisation Act which comes during the unemployment rate in the country is at a record high of 23% with around 39 million people are jobless in the country.
Although, the chance of this bill passing is very low due to the current congressional session, which has lots of limitations related to the corona virus. One of the most important elements of the bill is that it prohibits the explicit replacement of the American workers with the holders of H1B or L1 visas. The agenda is also to make sure that their working conditions are not adversely affected.
For the candidates who move to the USA temporarily, the H1B and L-1 visas are issued. The Democrat Representative, Mr.Pallone had said that this amendment would require a good effort to recruit American individuals and also to make sure that foreign workers are not exploited
One other key element of the bill is to give priority to the individuals who completed their education in the USA, for H1B visas. This bill will stop companies from having more than half of the workforce with H1B visa holders. The companies would also be controlled to have H1B or L-1 visa employees to receive training in the USA and send back home to do the same type of work.
However, all the sponsors have acknowledged the impact of foreign individuals in building up Silicon Valley. Mr.Khanna said that immigrants come to the USA with innovative ideas that transform the world. In order to protect their creativity and stop exploiting their efforts these efforts are necessary.
On Tuesday, the government of Karnataka has renewed its request to the US government to set up a visa center in Bangalore. The Karnataka government also promised to provide its support to implement fresh investments in the state. This happened during the video conference between the Deputy Chief Minister of Karnataka, Dr. CN Ashwath Narayan, and the US Consulate General in Chennai.
Dr. Narayan has spoken to the press by saying that nearly 70% of the South Indian people who are traveling to the USA are from Karnataka. He said that he made it clear about this situation to the Consulate and has renewed the interest to set up the Visa center
He also assured that the state government will provide any kind of support to the companies which are planning to move their base to Karnataka or set up their branches in the Karnataka, post-COVID scenario.
Further, he added that Information Technology, Biotechnology, etc departments have started talks with several countries in order to improve the relations. He said that Chief Minister Yediyurappa is also keen on this. He also announced that the government is looking to help the companies which are planning to shift from China, through Investment Promotion Taskforce.
It was also told that the government has already done several land reforms and modified labor laws in order to smoothen the experience for any company planning to set up its branch in Karnataka. He finally concluded by saying that the US Consulate General had appreciated the government of Karnataka in its efforts for setting up a Visa center.
Not so long ago, in the past period, UBER was more ambitious and clear about what they want to achieve in the industry. At Uber, the main goal was to introduce the self-driving revolution in the world. The situation has turned quite opposite since the spread of Coronavirus. In order to survive this situation, the company has to cut 3000 more jobs, which increases the total layoffs tally to 6700. Also, the company has announced that it is sidelining the projects which were not mainstream.
Most of the employees who were laid off belong to HR, Customer Support. In a recent email to the employees, the CEO has said that jobs will be the last casualties in this crisis. He also said that the company would stick to the two core agendas, which are rides and food-delivery. He further added that several out of the box units like Uber incubator, AI labs, Uber works, etc. will be shut down. 45 offices globally are being closed in order to survive in this crisis situation.
He also clarified that these decisions were taken not to impress the investors and also he urges that the company should be self-reliant, should not depend on the new investors for capital. On Monday, initially, Uber shares have risen about 9% before falling off to less than 4% by the end of the day. The planned cuts and other decisions taken by the company will cost them around $175 to $220 million.
Several experts predict that Uber has transformed itself into a cost focus company and in order for it to survive, the measures which are already taken might not be enough.
Earlier this month, Uber has announced a gradual decline in the gross bookings for the first time. Hence they had to push back the goal of being profitable to next year, instead of by the end of this year. Right now, Uber is in discussions with Grubhub, which could potentially make Uber a dominant player in the food market. This deal could also make enough savings for the company. Recently, Uber borrowed $100 million which adds to the $900 million bond sale priced last week,