Skilled Talent Or Tariff Wars, America's H1B Dilemma
The H1B visa debate spotlights a clash between Trump’s policies, Silicon Valley’s talent needs, and India’s growing role in shaping America’s tech workforce.
Incoming US President-elect Donald Trump’s supporters and base are already split on the issue of H1B visas.
There is, however, a nuance to this debate, which some might have missed.
And that has to do with who is using up the H1B visas today and who is not. And equally, how India benefits either way.
Trump confidante Elon Musk is clear that he wants to use H1B visas to bring in talented people from outside the USA.
This, evidently, does not sit well with some of the Make America Great Again (MAGA) base that elected Trump, who want most, if not all, foreigners kept out—talented or not.
Musk himself is an import from South Africa and has consistently advocated for legal immigration and, by extension, H1B visas, which allow skilled workers into America.
These workers often stay on to acquire green cards and eventually citizenship.
On the other hand, the election was fought and won on a key plank of illegal immigrants flooding into America.
There is, of course, a distinction between illegal and legal immigrants, but it was not one that was made on the campaign trail, nor was it presumably expected to be.
The reason Musk is making a strong case is that technology entrepreneurs like him know exactly what drives bottom-up innovation in their companies.
That work is being driven by people, including those on H1B v...
Incoming US President-elect Donald Trump’s supporters and base are already split on the issue of H1B visas.
There is, however, a nuance to this debate, which some might have missed.
And that has to do with who is using up the H1B visas today and who is not. And equally, how India benefits either way.
Trump confidante Elon Musk is clear that he wants to use H1B visas to bring in talented people from outside the USA.
This, evidently, does not sit well with some of the Make America Great Again (MAGA) base that elected Trump, who want most, if not all, foreigners kept out—talented or not.
Musk himself is an import from South Africa and has consistently advocated for legal immigration and, by extension, H1B visas, which allow skilled workers into America.
These workers often stay on to acquire green cards and eventually citizenship.
On the other hand, the election was fought and won on a key plank of illegal immigrants flooding into America.
There is, of course, a distinction between illegal and legal immigrants, but it was not one that was made on the campaign trail, nor was it presumably expected to be.
The reason Musk is making a strong case is that technology entrepreneurs like him know exactly what drives bottom-up innovation in their companies.
That work is being driven by people, including those on H1B visas, who work for companies like his, rather than IT services companies like Tata Consultancy Services (TCS).
This is a fine but important distinction, particularly when viewed from India.
Rajesh Nambiar, the National Association of Software and Service Companies (Nasscom) president, told me in an interview two weeks ago that Indian IT services majors have steadily reduced their consumption of H1B visas by 60% over the past eight years.
This, of course, is due to a growing local presence and is perhaps more related to how different states and regions within America have stressed local hiring.
IT majors have also realised over the years the importance of culturally integrating into the local business and social landscape, rather than shipping everyone from India, even if they could.
This is not new.
What is new, as Nambiar tells me, is that H1B visa consumption by US corporations like Apple, Amazon, Google, Meta, Microsoft, and others is up 189% during this period.
So, seen once again through an Indian lens, while Indian engineers are still headed to the US, this is no longer the classic body shopping we have heard of.
To reiterate, Indians migrating to the US under the H1B visa are increasingly working for US corporations and not Indian companies performing outsourced work for them.
Musk’s defence of H1B visas must be seen in this context.
On the other hand, according to Nambiar, Indian IT companies have further reduced their onsite presence in recent years.
Covid, naturally, accelerated this trend, allowing companies to operate with fewer onsite employees and more offsite ones, based in cities like Bangalore, Hyderabad, Noida, and Mumbai.
Nambiar notes that what was once an 80:20 ratio, with 20% onshore, is now perhaps 90:10, with only 10% onshore.
This is good news for India, as it translates to more local job creation.
America, of course, faces a major shortage of engineers and Science, Technology, Engineering, and Maths (STEM) graduates—a challenge Silicon Valley and the tech giants are acutely aware of and grappling with.
India, on the other hand, has a surplus of engineers, though not all are immediately "go-to-market" upon graduating often requiring upskilling before moving from the bench to live projects.
Trump has so far focused his economic threats around trade and the import of goods.
He has threatened to impose heavy tariffs, ranging from 10% to 100%, on various countries, including India.
As things stand, he is clearly unhappy with the terms of trade with India—for instance, we export significantly more to America than they do to us, for example in drugs, jewellery, and apparel.
He has also repeatedly expressed displeasure over the high Indian import duties on certain products, such as Harley-Davidson bikes.
But on the import of people, thanks in part to repeated prodding by campaign backers like Musk, Trump appears favourably disposed.
This, of course, aligns with what India has been negotiating for—greater access for its skilled workforce overseas, including in countries like the United Kingdom, in exchange for opening up its markets further.
It turns out India might have a better chance at the negotiating table with America than previously thought.
