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The bar comes even as IT firms in the US and India are demanding an increase in the H1-B visa, which is capped at 65,000 a year now.
Indians account for a majority of those with H1-B visa, issued to non-immigrant skilled workers for up to six years.
Restricting hiring of H1-B visa holders forms part of American Recovery and Reinvestment Act, widely known as the stimulus bill, that was passed by the Congress on Friday.
With thousands of jobs being cut by US companies almost daily over the past few months, there have been widespread apprehensions that these positions could go to low-cost foreign workers or might be outsourced to places like India.
The government data for 2008 shows that about 5.7 lakh Indians were issued H1-B and other non-immigrant visas.
Experts believe the Congress' move would certainly impact hiring of H1-B visa holders, thus affecting in a big way the engagement of Indian techies in the US, but might not affect outsourcing of jobs to places like India.
About two years ago, the US had cut down the H1-B visa limit to 65,000, from 1,95,000 a year previously.
IT firms, both Indian and American, have been asking to raise the cap to allow the companies in the US greater access to the growing talent pool across the world.
Senator Bernie Sanders, who along with another Senator Charles Grassley had moved the proposal for such restrictions, said that about a dozen banks which are getting over USD 150 billion as the bailout money have sought visas for over 21,800 foreign workers in past six years to replace sacked Americans.
These banks have announced at least one lakh job cuts in the recent months, Sanders noted.
Earlier this month, India-born international economist Jagdish Bhagwati also argued that the provision to restrict hiring of H1-B visaholders would deprive the US of the best global talent which comes in the form of highly trained and talented people.
"In terms of broader considerations like the people who are coming in on H1-B visas -- they're frequently highly trained and talented people and a lot of our progress and prosperity depend on having such people," Bhagwati, Professor of Economics at the Columbia University had said.
The American Immigration Lawyers Association, which also has been opposing the measure, described the Congress approval as ‘disappointing’ and argued that this would prove to be counterproductive as it prevents the US companies to hire the best available global talent.
The amended stimulus bill would require the banks receiving the bailout money to hire only Americans for two years unless they could prove they were not replacing laid-off Americans with guest workers, Sanders had said.
"With thousands of financial services workers unemployed, it is absurd for banks to claim they can't find qualified American workers," Sanders said.
"While we are suffering through the worst economic crisis since the Great Depression, the very least we can do is to make sure that banks receiving a taxpayer bailout are not allowed to import cheaper labour from overseas while they are throwing American workers out on the street," he said.
In addition to banks, the Sanders-Grassley provision also restricts hiring of guest workers at any other firm that receives funds under the Troubled Asset Relief Programme or from emergency loans made by the Federal Reserve.
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The IT business in India suffers from a serious inherent weakness: dependence on the US (and the West), chiefly, for bulk of its business. Thus Indian performance has been shortsightedly made to tie up with the fluctuations in the economic fortunes of the US. It is time, considering the huge reservoir of IT workers as well as the continuing attraction of this area for jobs, we introduce computerization and office and factory automation in all areas of economic and social life right in India. The potential for employment is tremendous. Indians, moreover, are in fact reluctant to go on H1 visas to stay in the largely distasteful cultural milieu for long periods, though they are game for short stays there for sight seeing, etc. Our culture manifested in our modes of food, behaviour, and other ways is what appeals to a preponderant proportion of ourselves, which fact is easily driven home strongly, only when we go to a contrasting environment.
I think it is perfectly appropriate to restrict companies from using H1-B workers if they are taking TARP / bailout money, laying off Americans and hiring foreign workers instead. Whilst we can open our arms for the world (I am a beneficiary too). It cannot be done at the cost of American citizens.... the some ones who are bailing out these companies. The hell with people who criticize us. Most of these countries don't have a fraction of free trade practices they enjoy from the US anyway! They are not qualified to complain!
Professor Bhagwati is an idiot. American firms hire foreigners not beacause they are higly talented. Foreigners are hired in USA beacuse they are willing to provide cheap labor and work hard without any complaints. Americans do reaonable amount of work for a reasonable salary but they are difficult to manage. Hence supervisors prefer foreigners, especially Chinese who work with their heads down for more than 10 hours a day. They are happy with whatever raises and bonuses they get. They are happy to live on noodles.
Just want to reiteriate that no body is indispensable in today's economy .I certainly agree with Senator Sanders that H1B visa should not be granted to American companies who have received Tax payers money . American workers are extremely talented people and they reserve the right to get a job. Companies have been misusing H1B visas and getting people in the country who could not properly communicate in the first place.Look at Satyam computers downfall .It is a wake up call for every American company before they plan offshoring Jobs
H1B visa was meant for US educated foreigners with advanced degrees to fill jobs which americans are in short supply -- but in the past 10 years Indian companies have misused H1B visas to bring cooks, servant maids, and other ordinary jobs that american scan easily do it is time H1B visas are issued only to PH.D and MS degree holding Indians - not for undergrads from India
The concept of H1B visas is to supplement shortage of skilled workers in the US. IT companies exploited this purely for cost arbitrage. Students who came to the US to study and learn new skills couldn’t enter the workforce as H1B visas were filled up by this body-shopping business. The US should create sub-categories by industry for H1B visa segment so that non-IT folks with higher degrees also get an equal opportunity. As the economy is in bad shape, it is perfectly legitimate for the US to stipulate that H1B visas shouldn’t be given as sufficient skilled workers are available in the US. Keep in mind, the H1B visa concept works as long as the local economy flourishes.On the other hand, the US should find a way to return the social security paid by H1B workers or be given a preference when they apply for green card if they decide to come back to the US. This is something the Indian Government/IT companies should lobby with the US.
By the way US Congress should know that first of all US Govt bail out money is taxpayers money, which was given to banks. Secondly during the last two - three decades when economy was good, it was partly due to H1B workers, who have paid taxes to US govt as well. Now when times are bad, US Govt don't want to part with the tax money collected from H1B, with the H1B's themselves. In what way this is fairness, I am not sure!!!.....US Govt needs to retrospect on this point as well, I believe...
Relevant article. Please go through it.
This decision should prove to be an eye-opener for those Indians who always kept praising U.S.(and blaming India)speaking of liberty and equity.It clearly shows that U.S.considers fiscal interests of her citizens supreme. All others are secondary citizens, at least in crisis.
I see nothing wrong with it. H1B workers are supposed to fill up unused or unavailable resources within USA. Having said that, its important that Social Security Money held up by US govt must be returned to H1B workers who have returned or returning. To encourage H1B workers to return, preferential Green cards should be offered to H1B workers who have returned on their own after putting more than 3 years.