Lower H1-B Visa approvals might be responsible for higher attrition rate in IT sector

IT service sector is known to be very competitive in general. Known for its large campus intakes, majority of employees in this sector hold bachelor's degrees. Multnational Corporations become attractive to junior employees if they see a possibility of small hikes and an opportunity to work overseas.

Shraddha Sharma

September 21, 2019 / 07:49 PM IST

live

bselive
nselive

Volume

Todays L/H

Stricter H-1B Visa approval requirements could be linked to the increased attrition rate of Indian Information Technology (IT) companies after 2017, as per industry experts.

IT firms in India were known to claim the highest H-1B visas in the cap that stands at 65,000 by the US Citizenship and Immigration Services. Due to increased rate rejection of these visas after President Donald Trump’s "Buy American, Hire American" executive order in 2017, IT firms have felt the brunt of this order.

Between January 2007 and June 2017, there were 34 lakh applications for H-1B visas out of which 21 lakh applications were from India as per a report by India Today. In fiscal year 2014, Indian IT companies claimed around 21,750 visa approvals out of 65,000. In the first quarter of 2019, the denial rate of this temporary work visa has increased to 32 percent.

Among Indian IT companies, Infosys has topped the number of visa rejections with the highest attrition rate with 26 percent rejections at 2,122 non-acceptance for its H-1B visa as per Financial Express. Also, Infosys' annualised consolidated attrition stood at 23.4 percent, up 3 percent from the quarter ended March 2019.

IT service sector is known to be very competitive in general. Known for its large campus intakes, majority of employees in this sector hold bachelor's degrees. Multnational Corporations become attractive to junior employees if they see a possibility of small hikes and an opportunity to work overseas. But a number of these rejections come from the inability of the employer to prove that the job is a specialty occupation, which compels them to hire locally in America and increases costs for the company.

Denial Rate of Continuing H-1B Petition (Data via USCIS H-1B Employer Data Hub, National Foundation for American Policy)

Fiscal Year	Denial Rate
FY19 (Q1)	18%
FY18	12%
FY17	5%
FY16	4%
FY15	3%
FY14	3%
FY12	3%
FY10	5%
FY09	6%

If we see the trend of H1-B applications after the tightened regime, there was a 6 percent rejection in FY 2015 which increased to 32 percent in the first quarter of FY 2019 as per Forbes. And since IT firms were the highest claimant in the past, they are heavily impacted. Cognizant recorded 4,338 denials between 2017 and 2018, which accounted for 32 percent of the applications .

This scrutiny is seen in both first-time applications and applications by continuing employees that look to renew their visas.

Another hurdle for the companies is issuance of requirement for evidence or RFE. Since the visa is only for skilled professionals for a tenure of three to six years, employing companies have to furnish proofs. It includes employer-employee relationship, duration with nature of work and employee’ qualification.

Data for the first quarter of US fiscal 2019 shows that 60 percent of all completed H-1B cases had been issued RFEs. Of these cases, 39 percent were rejected. It is a significant increase from 38 percent RFEs during FY 2018 as per a report by Economic Times.

Out of the top-30 IT companies, Cognizant, Tata, and Infosys are among the biggest. These companies teamed up small salary hikes with opportunity to work overseas as employee retention methods. More than salary requirements, studies show that Indians aspire to move abroad.

India has the highest Mobility Index with 17 million Indians living abroad in 2017. This made India the largest source country seeing 143 percent in mobility from 1990.

Infosys COO UB Pravin Rao was recently quoted in ToI report saying, "We can arrest attrition from expense management but to a large extent, we believe it's more about giving them opportunities, more about a new narrative around some of these initiatives that we are doing, enabling them on their career progression and so on." He further went on to say that this matter will not be solved by just giving raises or increments.

Indian IT firms have moved from Indian employees to local American employees wherever possible. They might have also planned to offshore most of their activities to India to reduce costs.

There were several petitions against these spate of rejections. But the US court had upheld that visa scrutiny is required citing misuse of the terms for issuing an H1-B Visa. No comprehensive changes have been made to the H-1B visa programme so far.

Shraddha Sharma

Tags: #Cognizant #H-1B work visa #Infosys #IT #TCS

first published: Sep 21, 2019 06:22 pm

Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!