Work visas versus protectionism: the winners and losers

At the beginning of May, Indian  IT giant Infosys announced that over the next several years it would open four tech hubs in the US, hiring some 10,000 Americans in the process. It was a startling concession from the company, which has long been accused of job-stealing by the US. Through it all, Infosys had never blinked, much less revealed country-specific hiring plans.

That changed with the US presidential candidacy of Donald Trump, who rode the job stealing theme to victory, and has recently called for Congress to tighten work visa requirements so that more Americans would get these valuable jobs.

Infosys blinked.

These are strange times for the business of global work visas. In the US and countries, such as Singapore, Australia, Switzerland and most notably the UK, the requirements for crossborder work visas have been tightening, or will tighten, making it difficult for companies, both foreign and domestic, to bring in foreign workers to fill the talent gaps in the local workforce.

At the same time, countries such as Canada and Ireland are going out of their way to promote their own open borders to foreign companies perhaps looking for a more favourable labour climate.

Bolstering borders

The narrative is becoming plain, according to Páraic Hayes, the senior vice-president for the US west coast at IDA Ireland. “Brexit has introduced a lot of uncertainty and now it seems around the world immigration is becoming stricter,” he says. “We are seeing companies really looking hard at migration and mobility as a challenge, and one that could get worse in time.”

This has been a trend brewing for at least a few years, long before Mr Trump arrived on the mainstream political scene or Brexit became a household word.

In Singapore, for example, there has been a steady reduction in work visas in recent years, according to Nasscom, India’s National Association of Software and Services Companies, but the environment has become particularly tough since 2016.

The Australian government recently moved to abolish the 457 visa, a programme that allowed businesses to hire foreign workers for skilled jobs.

Switzerland’s visa quotas have declined sharply since 2014 as part of the larger push against the free movement of workers from the EU. Although numbers have risen slightly so far in 2017 compared with 2016, they are below 2014’s level, the year the Swiss held a referendum to limit immigration.

US tinkering

Then there is the US, where both the H1-B visa and the L-1 visa are under threat. The H1-B visa is used for highly skilled foreign labour, but critics contend that it is being abused by foreign outsourcers such as Infosys to siphon off US jobs. Essentially, the accusation goes, these outsourcing firms gobble up as many H1-B visas as they can and then market their services to US firms that want to have IT staff on hand, only not as their own employees. There is some truth to these accusations. It is also true that many companies use the H1-B visa legitimately.

Potential restrictions around the L-1 visa, which have been proposed in Congress, could have an even more detrimental effect on companies, specifically global companies that have operations in the US, because this visa is what such companies must use to transfer overseas-based employees to their US offices.

Some restrictions are already in place on the L-1 visa from 2015, when the US Department of Homeland Security issued a memo stating that the visas were to be limited to employees in speciality occupations; that is, ones that no other worker in the US could do because of the specialist knowledge or skills the employee possesses.

The government did not give a precise definition of “speciality occupation”, which introduced some uncertainty into the process, according to Richard Green, a partner at US law firm Carothers DiSante & Freudenberger and chair of its immigration practice group.

“Now, when I craft a petition, I have to tell a story about why this employee is necessary to the US operation and try to convey the motives of the company,” he says. “It is no longer a cut-and-dried legal analysis. We go through a lot of hand-wringing when we put an L-1 petition in the mail, wondering what US customs will do with it.”

STEM cut

However, the crux of the problem is not the cumbersome and restrictive visa requirements but ultimately the US’s weakness in science, technology, engineering and maths (STEM) skills, according to Thiru Ganesan, founder of Detroit-based Kyyba, an international staffing company that works with both L-1 and H1-B visas in the US. “We are always looking for talent in high-end IT categories such as big data, infotainment and automotive IT,” he says.

The lack of STEM workers is also endemic in manufacturing. Indeed, for all the angst over the lost manufacturing jobs since the sector’s heyday in the 1970s, many US manufacturers now say they cannot find enough workers with the skills to operate the sophisticated machinery used in modern manufacturing.  

At a certain point, almost all companies turn to foreign talent pools. “Otherwise it’s hard for companies to stay competitive,” says Mr Ganesan.

Not surprisingly, countries with open-border labour policies are eager to present themselves to global companies that may be growing more frustrated with these policies.

“Even before the H1-B visa issue was splashed all over the front pages, we were already having discussions with companies having trouble finding talent in the US,” says Mr Hayes of IDA Ireland. He has been happy to tell them that Ireland saw a 20% increase in international visas – the Irish work permit – in 2016 alone. “Fifteen per cent of our workforce is from outside of Ireland,” he adds.