Nearshore Americas
US H-1B visa regulations

H-1B Visa: IT Staffing Companies at Risk and Premium Suspension Extended

As the Trump administration plows ahead with its H-1B visa reform, small to mid-sized IT subcontracting companies that rely on the system are now up in arms, as new requirements could negatively impact their business models.

In February this year, the US Citizenship and Immigration Services (USCIS) issued a policy memo to IT subcontracting companies, requiring them to provide more information about their visa holders. Companies must now outline specific work requirements for applicants, providing proof that they will work in a specialty occupation and have the same contract until the visa expires.

Critics of the H-1B say that subcontracting firms are more likely to bend the rules of the visa, perhaps by paying less than the federal wage. IT staffing companies say that these new requirements make the visa unusable, crippling their business model.

Suing the Government

In May, three stakeholders in IT staffing – NAM Info, Derex Technologies, and the Small and Medium Enterprise Consortium, a trade agency – filed a lawsuit against the USCIS for this very reason, with hopes of blocking the requirements of the memo.

“Congress has consistently shown the public policy is to increase access to IT professionals, and not increase burdens on US companies to retain this resource,” said the suit. “Without sufficient employees to meet their clients’ needs, Plaintiffs will suffer irreparable harm to reputation and ability to compete.”

In other words, if they are unable to hire enough workers, it will ruin their business.

“They see that this policy has the really real likelihood of ending their business model — it is do or die,” said Jonathan Wasden, the companies’ lead attorney, as cited by the San Francisco Chronicle.

Nearshore Americas made numerous attempts to reach the three companies, but found them to be unresponsive or unwilling to discuss the case.

Reportedly, large Indian tech companies are much less likely to see an impact from the new requirements, as they hire permanent workers, not subcontractors.

This was in fact the second lawsuit filed against the immigration authority in May, after non-profit Federation for American Immigration Reform (FAIR) sued it for withholding information on employees and employers using the H-1B visa program.

Premium Processing Suspended until 2019

More recently, the USCIS extended its temporary suspension of premium H-1B visa processing for another five months in order to “clear the backlog”, with plans to resume in February, 2019.

The move could cause major delays for companies and applicants seeking the visa, according to immigration experts.

“There is no way that you can do an emergency filing now and get an approval; and companies have learnt to live with it,” said Sangeeta Gupta, SVP at Nasscom, India’s industry body for tech services companies, as cited by the India Economic Times.

Premium processing is when companies pay an additional fee to finalize an H-1B application that is not adjudicated by the deadline of September 19. With this service on suspension, applicants cannot take that route, resulting in a reduction of approvals for the fiscal year.

The US government had hoped this suspension would lower the volume of applications, and it seems to be working – in April, there was a decline in the amount of visa petitions for the second year running.

Furthermore, large Indian IT services companies like Wipro, Tata Consultancy Services, and Infosys have increased their hiring rates in the US, with the latter announcing 4,700 American hires since early 2017.

The original suspension was due to end this month, under the premise that it would “help reduce overall H1B visa processing times”, according to the USCIS. With news of this extended suspension, the opposite seems to be true.

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Matt Kendall

During his 2+ years as Chief Editor at Nearshore Americas, Matt Kendall operated at the heart of both the Nearshore BPO and IT services industries, reporting on the most impactful stories and trends in the sector.

1 comment

  • Hmm.. yes, with the new H1B visa rules, there might be bit of an affect on the IT staffing firms.. but guess, things should start looking good in coming year for tech and recruitment consultancies..