Spotlight on IT companies as Trump imposes USD 100,000 fee for H1B visas

US President Donald Trump on Friday local time issued a new presidential proclamation titled Restriction on Entry of Certain Nonimmigrant Workers that introduces a major overhaul to the H1B visa programme imposing a steep USD 100000 annual fee on H1B visa applications raising fresh questions about whether this is a muchneeded correction or a potentially crippling blow to Americas tech talent pipelineSet to take effect on September 21 the proclamation represents one of the Trump administrations most aggressive efforts yet to overhaul the H1B visa programme Framed as a crackdown on systemic abuse it places strict financial and compliance burdens on companies seeking to hire skilled foreign workers especially in the technology and IT sectorsThe administration insists the intent is to restore integrity to a programme originally designed to bring in toptier global talent on a temporary basis Instead it argues the H1B system has been hijacked by outsourcing firms to displace American workers depress wages and even create national security risksData cited in the proclamation backs these claims the number of foreign workers in STEM science technology engineering and math fields more than doubled between 2000 and 2019 while total STEM job growth lagged In the computer and math sector alone the foreign workforce jumped from 177 per cent in 2000 to over 26 per cent by 2019 a rise the administration blames primarily on the H1B systemAccording to the order IT firms now dominate the programme with the share of H1B approvals going to tech workers rising from 32 per cent in FY 2003 to over 65 per cent in recent years Many of these firms the administration notes have simultaneously laid off American employees while ramping up their H1B hiringInformation technology IT firms in particular have prominently manipulated the H1B system significantly harming American workers in computerrelated fields The share of IT workers in the H1B program grew from 32 percent in Fiscal Year FY 2003 to an average of over 65 percent in the last 5 fiscal yearsIn addition some of the most prolific H1B employers are now consistently IT outsourcing companies Using these H 1Breliant IT outsourcing companies provides significant savings for employers one study of tech workers showed a 36 percent discount for H1B entrylevel positions as compared to fulltime traditional workers To take advantage of artificially low labor costs incentivized by the program companies close their IT divisions fire their American staff and outsource IT jobs to lowerpaid foreign workers the proclamation readThe proclamation also cites realworld cases where American workers were not just laid off but forced to train their foreign replacements and sign nondisclosure agreements as part of severance packages highlighting in the administrations view a systemic abuse of the visa systemThe high numbers of relatively lowwage workers in the H1B program undercut the integrity of the program and are detrimental to American workers wages and labor opportunities especially at the entry level in industries where such lowpaid H1B workers are concentrated These abuses also prevent American employers in other industries from utilizing the H1B program in the manner in which it was intended to fill jobs for which highly skilled and educated American workers are unavailable the order readFor American college graduates particularly in computer science and engineering the implications are grim Jobless rates in these fields reportedly exceed 6 per cent higher than many nonSTEM disciplines The administration argues that flooding the job market with cheaper foreign labour has discouraged Americans from pursuing careers in tech while also stifling wage growth and advancementBeyond the economic considerations the proclamation also addresses national security concerns It references investigations into H1Bheavy outsourcing firms for visa fraud money laundering and violations under the Racketeer Influenced and Corrupt Organisations RICO Act The administration warns that this reliance on lowwage foreign labour risks eroding Americas longterm technological leadership and national resilienceThe abuse of the H1B program is also a national security threat Domestic law enforcement agencies have identified and investigated H1Breliant outsourcing companies for engaging in visa fraud conspiracy to launder money conspiracy under the Racketeer Influenced and Corrupt Organisations Act and other illicit activities to encourage foreign workers to come to the United States it readUnder the new rules employers must show proof of payment of the USD 100000 fee when filing H1B petitionsBoth the US Department of Homeland Security and the State Department are tasked with enforcing compliance and denying entry to any H1B worker whose sponsor fails to payThe order also calls for future rulemaking to revise prevailing wage standards ensuring that only highskilled and highpaid individuals are prioritised for entry consistent the administration says with the programmes original intentHowever limited exemptions are possible The Secretary of Homeland Security may waive the restriction for individuals or companies where the employment of H1B workers is deemed to be in the national interest and poses no threat to US security Still such exceptions are expected to be rare and subject to strict scrutinyCritics of the proclamation warn that while efforts to eliminate fraud are welcome such sweeping financial barriers may deter legitimate talent and hinder innovation especially in industries where foreign expertise has been central to the USs technological dominanceWhether the measure delivers on its promises to protect American jobs or ends up driving talent and investment elsewhere remains to be seen But one thing is clear the Trump administration is betting that a more restrictive highcost immigration policy will force a reset in how the US balances foreign expertise with domestic job security