Competitive edge

Gaurav Khanna, an Indian American post-doctoral fellow at the Center for Global Development, is the co-author of the research paper. (CGD photo)

WASHINGTON — A clampdown on the H-1B visa program will make it difficult for the U.S. IT sector to attract open talent from countries like India and America might lose its competitive edge, a top American think-tank has said.

As the Trump administration is carrying out a review of non-immigrant visas, the Center for Global Development in a report said that the H-1B visa, the most sought after by Indian IT professionals, is beneficial for both India and the U.S.

"It is really important to make sure that the I-T sectors from both countries are allowed to attract the right kind of people, because they really allow for innovation and growth in both the countries," said Gaurav Khanna, an Indian American post-doctoral fellow at the CGD and co-author of the research paper.

The report, titled “The IT Boom and Other Unintended Consequences of Chasing the American Dream,” takes an in-depth look at how the H-1B visa program affects both the U.S. and Indian economies.

"Both the economies have really benefited from the H-1B program," he told PTI.

"What our paper is really trying to stress, is that on average the U.S. is better off because of the H-1B program. So, clamping down on the H-1B program will basically not allow the U.S .IT sector to attract the open talent from places like India. The U.S. might then lose its competitive edge in IT production," he warned, adding that IT companies might move to countries like Canada in the event of a large scale clampdown on H-1B visas.

Khanna said the research has shown that India has been a beneficiary of brain-gain, rather than brain drain due to the visa program.

"If you think about what happens in India, you know the prospect of migrating to the U.S. and earning such a high wage seemed they really encouraged certain students and workers to acquire skills that would be valued by the H-1B program," he said.

The research, which examines the relationship between migration and the outsourcing of IT production to India since the early 2000s, found that U.S. workers are, on average, better off by about $431 million or $1,345 per additional migrant in 2010 because of the H-1B program.

The study incorporates crucial mechanisms like innovation by businesses, trade with other countries, and the choices made by students and workers to become computer scientists.

While there are some negative impacts for a subset of U.S. workers, the overall gains outweigh the losses as the combined incomes of the U.S. and India both rise under the H-1B program by about $17.3 billion or 0.36 percent. And total IT output from both nations rose steadily under the H-1B regime by about 0.45 pe cent in 2010, the CGD research said.

It also found out that better technology, as a by-product of this immigration of tech workers, increased the overall productivity of other sectors as well, and consumers of computer-related goods enjoyed better software and lower prices.

The study found a one percent decrease in price for U.S. IT products and a 7.4 percent fall in Indian IT products.

"The average worker in each country is better off because of immigration, and U.S. native workers have made big gains because of the H-1B visa program," Khanna said.

"Yes, there may be things that can be done to blunt distributional impacts that affect a subset of workers, but overall, this policy has been a net-positive for the U.S. economy and workers," he asserted.

The research found that those who migrated to the U.S. acquired skills, technical know-how and established networks with U.S. companies. After their visas expired, they returned with these acquired human capital and technology skills and contributed to the growing tech-workforce in India.

"Together, the brain-gain to India under the H-1B program outweighs any brain drain," it said.

According to Khanna, the increase in IT sector productivity, because of the additional knowledge and skilled workers spurred by the H-1B visa program, allowed India to eventually surpass the U.S. in software exports. Over time, some IT production begins to be outsourced from the U.S. to India.

The H-1B visa is a non-immigrant visa that allows U.S. companies to employ foreign workers in specialty occupations that require theoretical or technical expertise in specialized fields.

Khanna, who received his Ph.D. in economics from the University of Michigan, will be joining the Public Policy faculty at the University of California-San Diego this fall.

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