The technology industry in the United States (US) is shrinking. According to Layoff.fyi, more than a quarter million professionals have lost their jobs since the beginning of 2022, with 95,000 job losses occurring in 2023. This reduction has occurred across the US, especially among the tech behemoths. Among those laid off are thousands — potentially tens of thousands — of Indian Americans and Indian nationals working on H-1B visas. The question becomes: What will be the short- and long-term impact for these workers? The antecedent question that must be addressed is, why is Big Tech downsizing, less than three years after companies went on a hiring spree? Nearly all those that laid off employees blamed macroeconomic factors, such as a decrease in revenue and a potential impending recession.
During the pandemic, while many sectors of the economy shrank, the tech industry went on a talent hunt that some analysts say might have resulted in as much as 20% excess workers. The industry used historically low interest rates to borrow and finance their miscalculated growth projections. Now with borrowing becoming costlier, growth and profitability are predicated on staff reductions, operational cost-cutting, and revenue generation. This need is also driven by the fact that many of these companies saw their market cap dwindle significantly last year. According to Statista, Nasdaq ended 2022 down more than 33%. Apple, Microsoft and Alphabet saw “their share price drop 27, 29 and 39%, respectively, versus 19% for the S&P 500, Amazon and Meta did even worse, as their valuations were cut in half (Amazon) or by almost two thirds (Meta),” it said.
While economic headwinds are there, it is worth noting that in January, the same month the US tech industry shed nearly 100,000 jobs, the economy added more than half-a-million jobs. And, days after releasing 10,000 employees, Microsoft announced a $14 billion investment in OpenAI, which developed ChatGPT. It appears that people are expendable, but robots and other investments are not.
The demographic group that is bearing the brunt of the layoffs, probably more than any other community, is Indian tech professionals who are working on H-1B visas. While there is no data on the number or percentage of H-1B holders who lost their jobs in the layoffs, news reports and social media posts indicate a significant number of them may have. In normal circumstances, in the tech industry, where jobs are plenty, laid-off workers get rehired typically within three months. But in the case of H-1B visa holders, there is an additional layer of complexity: Their stay in the US is linked to having a job with a visa. If an H-1B holder gets fired, they must land a job within 60 days, and the new employer must sponsor the visa. Otherwise, they will have to leave the country. This requirement causes anxiety to H-1B holders who receive pink slips. Many have spouses who do not have a job, and children who attend schools. On top of that, there are those who have home and car loans. With their future under a cloud, many end up working for anyone willing to sponsor a visa. This can be in much lower paying jobs, not related to their qualifications.
Another potential consequence of the layoffs is that it might make the H-1B programme, which has been a steady supplier of talent for the tech industry, more unpopular on Capitol Hill. Historically, Indian nationals have obtained a majority of H-1B visas. In 2021, nearly 75% of all H-1B visas went to Indians.
A standard defence offered by H-1B supporters has been that unemployment in the tech sector is far below the national average. But, in the face of retrenching, that argument might not hold water. This being the beginning of a presidential election cycle, lawmakers and candidates who oppose H-1B are likely to double down and push for more restrictions on the visa programme. Former President Donald Trump used his opposition to H-1B to garner the support of economic nationalists, nativists and anti-immigrant groups in 2015. Although he mostly kept mum on H-1B while in office, Trump, who has announced his candidacy for the presidency in 2024, is likely to revisit his old playbook again.
It is too early to predict what the full and permanent impact of these layoffs will be on the H-1B programme and the Indian economy. If the reading of the tea leaves by the US tech industry on recession turns out to be correct, its effect will be enormous. India should be prepared for that eventuality.
Frank F Islam is an entrepreneur, civic leader, and thought leader based in Washington DC
The views expressed are personal
