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Indias Tech Hub Unshaken As H-1B Visa Fee Hike Fears Grow
The recent hike in H-1B visa fees has sparked a heated debate about its impact on the United States and India. Karnataka IT Minister Priyank Kharge believes that the sector’s resilience will help it thrive despite the changes, citing the state’s unique blend of talent, innovation, and global connectivity.
According to Wharton University research, for every 10 H-1B visas lost, nine jobs are created abroad. This has significant implications for the US labor market, suggesting that restrictive visa measures may not lead to the desired outcome of creating jobs for Americans.
In contrast, India is likely to feel the effects of the fee hike in a more limited way. Indian IT services firms have already seen a decline in H-1B filings by 50%, which represents a relatively small percentage of their overall workforce. The shift away from onshore hiring may actually accelerate offshoring and the expansion of global capability centers (GCCs) in India.
Karnataka is well-positioned to benefit from this trend, with nearly 40% of its GCCs based in the state and employing over 6 lakh professionals. The state’s IT ecosystem has a reputation for being highly skilled, innovative, and globally trusted, making it an attractive destination for companies looking to outsource their technology needs.
However, not everyone is optimistic about the impact of the H-1B fee hike on India. Telangana IT and industries minister Sridhar Babu warned that the state could be among the worst hit by this policy change, as it may affect Indian professionals and remittance flows. Remittances from Indians working abroad are a significant source of revenue for many states in India, and any disruption to this flow could have significant economic implications.
Some experts argue that the H-1B fee hike may actually accelerate the growth of GCCs in Karnataka. With the rise of digital transformation and the increasing demand for skilled technology professionals, India is likely to see a significant expansion of its GCCs in the coming years.
The H-1B visa program has been a major driver of this growth, with many Indian IT services firms using the program to hire top talent from around the world. However, the recent hike in fees may lead to a decline in filings by these firms, which could have significant implications for the state’s economy.
In contrast, the US is likely to feel the effects of the H-1B fee hike more strongly. With 66% of US companies outsourcing, nearly 3 lakh jobs leave the US each year, and the H-1B program has historically played a key role in keeping these roles onshore. Experts estimate that a 10% cut in high-skilled immigrant workers could shrink US GDP by $86 billion.
This is significant, as the US economy is already facing challenges related to immigration and labor shortages. The recent hike in H-1B fees may exacerbate these problems, leading to a shortage of skilled technology professionals in the country.
The impact of the H-1B fee hike will depend on various factors, including the response of Indian IT services firms and the growth of GCCs in Karnataka. However, one thing is clear: the US economy will likely feel the effects of this policy change more strongly than India.