FY 2018 will be tough for Indian IT sector. In fact, analysts are predicting that the next 12 months can be one of the worst for IT & ITeS sector, as both US and UK has introduced major changes in the work visa rules.
While 40-60% of all Indian techies working in the USA can get negatively impacted by the new H1-B visa rules announced this week, UK’s new visa rules are all set to hit 30,000 Indian techies working in the UK.
And, combined this with Singapore’s refusal to allocate work visas for Indians, this is indeed a bad start for the new financial year.
Will Govt. of India intervene to stop this mayhem?
UK’s New Visa Rule Will Decrease Profits of IT Firms
Effective today, UK will stop issuing short-term, temporary visas for all tech workers in their country. Termed as Tier 2 visa under the sub-category of short-term staff, this was a pretty popular visa option for Indian IT firms.
As per various estimates, around 30,000 Indian techies are right now in the UK on this short-term visa, and once their visa expires, it shall be never renewed.
Besides, for approving work visa, the minimum wage requirement has now been increased to £41,500, an increase of 61%. This was announced last year, and would be implemented from this month onwards.
Together, these two major visa changes are all set to change work visa related arrangements of Indian IT firms.
Industry experts are already terming it as a doomsday for Indian outsourcing industry.
Shivendra Singh, Vice-President and Head, Global Trade Development at Nasscom said, “High-skilled worker mobility should be de-linked from immigration because it is different from unskilled labour. We at Nasscom voiced concerns to the British government as well as the Indian government, but the UK decided to go ahead with its plans,”
Singh also said that the overall impact on European trade would also be huge. He said,
“Moreover, a lot of the Europe business also goes through the UK, as it acts as a bridge. The impact, therefore, will be significant,”
Pareekh Jain, Managing Director of HfS Research in India said, “The biggest impact will be on young IT professionals as on the one hand jobs are reducing because of automation and, on the other, their prospects of going on-site, whether to the US, the UK or Singapore (the three most popular destinations), are getting reduced,”
Note here, that business from the UK represents 17% of overall Indian IT industry.
40-60% Indian Techies Will Be Hit By New H1-B Visa Rules
Meanwhile, the new H1-B visa rules announced by US Govt. earlier this week will be impacting 40-60% of Indians working there.
As per the changes announced, entry level programmers would be no longer considered as ‘skilled professionals’, which means that thousands of such programmers who entered the US may be asked to leave.
And worst, programmers with less than 3 years of experience would be now literally out of contention for getting H1-B visa.
Domestic brokerage Nirmal Bang said in a report: “Renewals will feel the heat as those who had applied under lower skilled categories in the past will face greater scrutiny and possibly rejection.”, adding, “Applications for fresh H1-B visas will now be skewed towards higher-skilled categories – with higher wages,”
As per analysts from Nomura Research, this decision by US Govt. will impact 40-60% of all techies working in the US. As per their research findings, 40-60% of labour condition applications (LCAs) filed by Indian IT firms were in the category of L1 or entry level jobs, which has now been banned.
This data is for the period October 2105 until September 2016 and obtained from Foreign Labor Certification (FLC) Data Center.
It would be interesting to observe how Indian Govt. responds now: Will it ask US and UK Governments to reverse the changes? How will Indian IT industry recover from this double whammy?