Will the US move to train local workforce in H-1B skills change the Indian IT talent landscape?

© Faizan Javed
Will the US move to train local workforce in H-1B skills change the Indian IT talent landscape?

The US government recently announced a $150-million programme funding to train the local workforce in highly skilled sectors such as Information Technology.

Named H-1B One Workforce Grant Program, the funding comes from the fees companies pay for H-1B petitions, and, hence, the name.

This raises two questions:

1. What does this mean for the Indian IT sector, which is the largest beneficiary of the highly skilled H-1B visas?

2. Can the IT industry attract talent, minus onsite opportunity?

Before answering the questions, let us look a little more into what this programme attempts to do.

The programme aims to upskill the workforce in the areas of information technology and cybersecurity, and advanced manufacturing and transportation, which is the future workforce.

This is in a bid to address the changing workforce dynamics that is now tilted towards emerging technologies.

For the funding, the Department of Labor will tap into the fees paid by the companies sponsoring H-1B petitions.

Shivendra Singh, Vice President and Head of Global Trade Development, National Association of Software and Service Companies (NASSCOM), said: “Under this program, a series of grants will be made available to select organisations for qualified local workforce training and skills development initiative. It is meant to help US citizens.”

What does it mean for the IT sector?

According to Singh, there is no direct benefit for the IT sector since the idea is to impart skill to the local workforce. “For Indian IT companies in the US, this could potentially mean a likely increase in technical talent/ STEM (Science, Technology, Engineering and Mathematics) qualified workers available locally in the US,” he added.

This also means that with more talents likely to come into the workforce in the US, IT firms will be encouraged to hire Americans than bring more Indians to the US through the H-1B route.

This also addresses concerns of IT services firms that there is a talent crunch, and, hence, they are using H-1B visas to bridge the gap, which the latest announcement is looking to fix to some extent.

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Sure, bridging the talent gap will not happen overnight. But this fits well into the narrative of stepping up local hiring, which most of the IT firms have done over the last few years and the reducing demand for H-1B visas.

Visa dependency for IT firms came down by 40-60 percent over the last three years. Infosys recently said that it would hire 12,000 more locals in the US by 2022. TCS already has hired close to 20,000 Americans in the US. More than 60 percent of Wipro and HCL Tech employees in the US are Americans.

Attracting talent

This brings us to the second question about attracting talent.

Yugal Joshi, Vice President, Everest Group, an IT consultancy firm, has said in an earlier interaction: “Onshore deployment is a major attraction for employees and if that reduces, it will impact the IT industry positioning as an employer.”

Unlike multinational firms in India, Indian IT services firms offer more opportunities to travel to the US, given that the country accounts for about 60 percent of their revenue. Of the 85,000 H-1B visas issued every year, Indian IT services firms accounted for a significant share.

This was an attractive proposition of techies in the country and an incentive to join IT companies.

Pareekh Jain, founder, Pareekh Consulting, said that without the incentive of onsite opportunities and higher salary than multinationals, Indian IT services might have difficulty attracting good talent, if not now, post the pandemic.

“IT firms were already finding it difficult to attract good talent in the last few years as they were competing with startups, and multinationals that have set up offices in India,” he pointed out.

These companies were offering attractive packages compared to IT firms. Lack of onsite opportunity, Jain said, has created a level-playing field and IT firms will have to bring in innovative hiring strategies to be an attractive employer.

Some of the IT firms have introduced multiple salary structures while hiring in colleges. For instance, product arms in IT firms could hire separately as the type of talent and salary needed are different.