Trump’s H-1B Chaos Is Fueling an AI Boom in Indian Tech Industry

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1:30Carol Massar:Do that, do that, do that with Acrobat. Learn more at adobe.com slash do that with Acrobat. Bloomberg Audio Studios, podcasts, radio, news. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. For decades, Indian engineers in particular have seen the H-1B visa program as a golden ticket, offering a gateway to Silicon Valley, Wall Street, and the uppermost echelons of corporate America. That has changed in the last few months. The Trump administration has pushed a sweeping policy agenda intended to hinder immigration. It's included a move just a few months ago.

2:11Carol Massar:You remember seeing the chaotic videos from the airplanes when people found out about this? Increased the fees on H1B visa applications to$100 ,000 apiece. It's a staggering tenfold hike, along with other changes that have made the program less desirable to employers. Saritha Rai is Bloomberg News Asia AI reporter. And for Bloomberg Businessweek, she writes about how the president's H-1B chaos is fueling an AI boom in the Indian tech industry. There's always different forces at play. She's usually back in Bangalore, but she joins us here in our Bloomberg Interactive Broker Studio. It is really a treat for us to have you here.

2:45Carol Massar:Welcome, welcome. So tell us a little bit about what's going on. Tim mentioned these chaos of, you know, videos on airplanes when news broke of the increase in the H-1B visa fee, if you will. But give us an idea of how this is impacting those who maybe got an education in the U.S., expected to get a job in the U.S. Is it not the case anymore? So this is part of Trump administration's sweeping reforms of immigration. and the H-1B visa is at the heart of it. And that is causing massive anxiety back in India where tens of thousands of people come to the U.S. to study and to work. And all of that could change with the new set of reforms, particularly the H-1B reforms.

3:40Every year, about 65 ,000 of these visas are handed out in a lottery. And a lot of the visas, about 70 % of them, go to Indians. Another further 20 ,000 of these visas are handed to people with advanced degrees. And again, about 70 % of that goes to Indians. So that is an influx of Indian professionals coming into the U.S. and into the workforce.

4:13Carol Massar:Satya Nadella from Microsoft, Sundar Pichai from Alphabet. These are past H-1B visa holders. Now they're the heads of their companies. There are critics of the program out there, though. And we're going to get to the story about what it means for AI and what it means for tech in India. But here in the U.S., what do the critics say about the H-1B visa program? Definitely that these are the visas that are being misused or abused by many companies, particularly Indian outsourcers, to bring in employees that are not necessarily the best and brightest, which is what the U.S. had envisaged the visa program to be.

4:56So the criticism against a lot of these outsourcers is that they bring in cheaper employees from India and, you know, put them to work here in the U.S. And that, the critics say, deprives a lot of Americans from getting access to these jobs.

5:11Carol Massar:Is that true? Like, I don't know. Has anybody done the deep dive in saying, all right, let's look at applicants for a job? And do we have any indication? Because that is sad. Well, because isn't it the whole point to bring in people who have, sorry to cut you off. No, no, no, no. To bring in people who have skills that Americans don't necessarily have. Like, isn't that the point of the program? That is really the point of the program, but it not necessarily always is the fact. Yeah. There have been instances where Indians have been brought in or people from other countries have been brought in to, you know, to displace Americans from the job.

5:51And sometimes it has been the case that Americans have taught these people how to do the work, and then those people are doing the work for way cheaper salaries. So it has been the case. Yeah, for sure. I mean, it is not necessarily true in all the cases, but there have been instances of that happening.

6:11Carol Massar:So what's going on? I mean, I'm just curious about are Indians saying, OK, I'm not going to get an education in the United States if I can't necessarily assume I'm going to get this visa? Like what's happening that's changing as a result of this? So these visas were really the inducement for a lot of Indians to come and study here in the U.S., paying massive fees. In fact, a lot of the universities in the U.S., the fees of these Indians bankroll these universities. So it's a massive. They often pay full, right? They always pay full fees. So there's no free right there. And so a lot of Indians are questioning the economics of that, you know, of that education.

6:58because if you study here paying hundreds of thousands of dollars and then at the end of it you don't have a job waiting for you or you have no access to a job, then it just turns the economics on its head.

7:13Carol Massar:So a big part of your story is what this means for India and for Indian tech companies. If the H-1B visa holders can't work here or if those people who typically would have been qualified and sought after here in the United States don't work in the U.S. A huge win for India? I would think a huge win for the country, for sure. It's a 4.3 trillion economy, the world's fourth largest, the world's fastest growing large economy. There is a massive push to drive AI use in a lot of sectors and a lot of industries. There's a huge rash of AI startups coming up. So a lot of this could mean a windfall in terms of AI startups and an AI ecosystem growing faster than it ever would have because all of these talented people are staying home and setting up these startups.

8:09But at the same time, it's not easy. I mean, India definitely has its challenges. The tax regime, for instance, is very challenging for startups. You know, not everything is smooth sailing. So not necessarily the same opportunities for these individuals.

8:25Carol Massar:If they go, the opportunities that they might have had in terms of an American company or in a U.S.-based company versus a startup or an AI-related company, not the same opportunities, maybe not the same salary? Like, I'm just curious, the contrast. The salaries will definitely be lower than what is being offered in the Valley or Wall Street. But certainly, the opportunities are growing for people to start up on their own. And there is definitely an economic payoff for those kinds of entrepreneurial opportunities. Saritha, one of the things I think about that's happened over the last few years, maybe even coming off the pandemic and certainly with the AI craze, is that every government seems to be looking like, what is their position in the world on this?

9:06Carol Massar:How do we make sure we're not out of the AI race or even the tech race over there? is some of this in terms of the Indian government, you know, taking advantage or saying, wait, this is an open space for us and maybe working on kind of a brain game for AI workers and for AI companies or for the AI industry in India. So India has definitely been somewhat left behind in the US-China AI race. And so this might be an opportunity, the government thinks, for India to catch up on a lot of lost ground. So there is a huge push to bring talent back home. India hasn't been as forward thinking as China has been.

9:46China for years increased talent to come back home. India is just beginning to do that. So I think, you know, the government will push further into bringing talent back home and drive those reforms that will help entrepreneurs get on the ground running.

10:02Carol Massar:We're speaking with Saritha Rai, Bloomberg News Asia AI reporter, usually in Bangalore, but here in New York in the Bloomberg Interactive Brokers Studio. You spoke to quite a few people for this story, including people getting their MBAs, recent MBA grads. Kunal Bal, also who's H1BB's application, that was rejected like close to 20 years ago. At this point, he returned to India. What did you hear from all of them? So Kunal is, you know, an outlier, I would say. back when in the 2000s, a lot of Indians came to the U.S., studied, got, you know, for example, Kunal himself got his master's and then he got a Wharton MBA when Microsoft, as an intern, got a job offer at Microsoft, you know, went and dined with Bill Gates, as he recalled.

10:51And then... You got to feel pretty good, right? And even he can't get the visa for... Yeah, this is a cream of the cream and he got rejected. And that was, you know, that was in 2007. He was 23 years old. He went back to India and set up one of the leading e-commerce startups in India, SnapDeal, and then went on to build it, got softback funding, and then did very well for himself. And he said, when this happened last year in September, he said, he wants to encourage other Indians to come back home and do what he did, which is set up startups.

11:24Carol Massar:You know, I think it's interesting. You go back, that's 20 years ago. Yeah. What was going on? I mean, that was the financial crisis. I mean, yes, I'm just curious about the rejection back then, because I'm just, you know, we're thinking a lot about this administration and the moves and the pushback against, it feels like, all kinds of immigrants who possibly come in and want to work. So I'm just curious, has this, you know, that it happened back then, too? It was, I think, one of the unusual examples that happened back then. There wasn't a pattern to it. You know, Kunal, as I said earlier, he was an outlier.

11:57Okay.

11:58Carol Massar:But he showed what you can do, right? Yes, exactly. And he wants now to fund other people and other startup entrepreneurs. You know, as you look at the world and kind of, I feel like, the jockeying for position that so much is going on and the domestic focus that is going on, certainly in the United States, but other countries, as a result of this kind of, it seems, pushback against globalization, but maybe that's not happening everywhere. How do you look at it in the context of this story and what it might mean for India going forward? Well, a lot of Indians now look at this as another way of tariffing the world.

12:35You know, some places it's products. This, in fact, is a tariff in the labor market. Some people are saying that this is going to be a big negative for the U.S. on the American side because a lot of these companies look at these Indians as speeding up product development, innovation, services.

12:57Carol Massar:Or creating incredible companies that we talk about on a daily basis if you think about it. Thank you so much. So glad you were here. I know you're headed back home, but thanks for being with us. It's been a pleasure, Carol and Tim. Thank you. Saritha Rye, Bloomberg News, Asia AI reporter, joining us right here in our Bloomberg Interactive Broker Studio.

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