International Relations

Lay-off Indian techies jostling for options to stay in US

Thousands of Indian IT professionals in the United States who have lost their jobs as a result of recent layoffs at companies such as Google, Microsoft, and Amazon are now struggling to find new jobs within the time limits imposed by their work visas.

Recent layoff is US

  • Since November of last year, nearly 200,000 IT workers have been laid off, including some at record levels at Google, Microsoft, Facebook, and Amazon.
  • According to industry insiders, 30 to 40% of them are Indian IT professionals, with a significant number on H-1B and L1 visas.

What one means by Lay-Off?

  • A layoff is the temporary or permanent termination of employment by an employer for reasons unrelated to the employee’s performance.
  • Employees may be laid off when companies seek to reduce costs, as a result of a drop in demand for their products or services, a seasonal closure, or during an economic downturn.
  • Employees who are laid off lose all wages and company benefits but are eligible for unemployment insurance or compensation (typically in USA).

Why do businesses resort to layoffs?

  • Cost-cutting measures: One of the most common reasons for layoffs is that the company decides to cut costs in some way. The need may arise because the company is not making enough profits to cover its expenses or because it requires significant additional funds to address debt repayment.
  • Staffing redundancies: Layoffs can also occur when a company needs to eliminate some positions due to overstaffing, outsourcing, or role changes. A company may wish to eliminate redundant positions in order to improve the efficiency of its operations.
  • Relocation: Moving the company’s operations from one location to another may necessitate the layoff of some employees. The initial location’s closure will have an impact not only on the workers who are laid off, but also on the economy of the surrounding community.
  • Merger or buyout: If a business is bought out or decides to merge with another, the change might lead to a change in the company’s leadership and corporate direction. If there’s new management, the chances are that they’ll come up with new goals and plans, and this can lead to layoffs.
  • Immediate Causes of the Lay-Off Pandemic Boom: During the pandemic, demand increased because people were on lockdown and spending a lot of time on the internet. The overall consumption increased, prompting companies to increase output in order to meet market demands.
  • Overhiring during the pandemic: To meet the demand, many tech companies went on a hiring binge, expecting the boom to last even after the pandemic. However, as the restrictions were relaxed and people began to leave their homes, consumption fell, resulting in significant losses for these large technology companies. Because of the sudden increase in demand, some of these resources were hired at a higher cost.
  • Fear of recession: As demand returns to pre-Covid levels, and the debt bubble appears to be about to burst, these companies are cutting costs by closing low-performing projects and laying off the excess and high-cost resources they hired to accelerate growth.
  • The Russia-Ukraine war has also contributed to layoffs by making the market more volatile. The stock market’s volatility demonstrates this clearly.
  • Inflation: Rising inflation has had a significant impact on several global economies, resulting in a job market crisis. To overcome all of these ups and downs, the world is currently hitting the reset button.

Various US Visa Programs

1) H-1B visa

  • What exactly is it: Individuals who “work in a specialty occupation, participate in cooperative research and development projects administered by the US Department of Defense, or are fashion models with national or international acclaim and recognition” are eligible for the H-1B visa category.
  • Who is protected: The H-1B visa is best known as a visa for skilled tech workers, but it is also used in other industries such as health care and the media.

2) H-2B visa

  • What it is: The H-2B programme, according to USCIS, allows US employers or agents to “bring foreign nationals to the United States to fill temporary non-agricultural jobs.”
  • Who is protected: They are commonly used by seasonal workers in industries such as landscaping, forestry, hospitality, and construction.

3) J-1 visa

  • What it is: The J-1 visa is an exchange visitor visa for individuals who have been approved to participate in work-and-study programmes in the United States.
  • Who is protected: Interns, trainees, teachers, camp counsellors, au pairs, and participants in summer work travel programmes are among those affected.

4) L-1 visa

  • What it is: The L1 Visa is reserved for managerial or executive professionals transferring to the US from within the same company, or a subsidiary of it. The L1 Visa can also be used for a foreign company opening up US operations.
  • Who is protected: There are two subtypes of visas within the L1 Visa.
  • Managers and executives can apply for an L1A visa.
  • L1B visas are available for those with specialised knowledge.

Why is this important?

  • A significant number of Indian IT professionals on non-immigrant work visas such as H-1B are L1.
  • They are now scrambling for options to stay in the US and find a new job within the few months allowed under these foreign work visas after losing their jobs and changing their visa status.

Effects of Layoffs

  • Market competition is fierce: Layoffs are a painful but unavoidable fact of life in a market economy subject to competition and trade.
  • Massive loss for workers: Layoffs can be emotionally and financially damaging to affected workers, as well as their families, communities, colleagues, and other businesses.
  • Reduced customer loyalty: When a company fires employees, it sends a message to customers that the company is in trouble.
  • Emotional Distress: Although the person who is laid off suffers the most, remaining employees also suffer emotionally. Employees who work in fear are less likely to be productive.

India should learn from this.

  • Indian startups grew at a much faster rate than those in neighbouring regions.
  • However, the layoffs serve as a stark reminder that the larger the startups became, the harder they fell.
  • Just because a startup had a high valuation did not mean that its employees’ jobs were secure.

Way ahead

  • Voluntary retirement programme: This allows people to transition smoothly into retirement.
  • Reduce extras: If a company is laying off workers to cut costs, it can look for other ways to save money. For example, company executives can halt additional hiring or reduce or eliminate bonuses.
  • Consider establishing a virtual office: Another way to save money is to keep only the most important employees on-site and send the rest of the employees home to work remotely.
  • Increase unpaid time off: A business owner can save money by increasing unpaid time off rather than eliminating positions.
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