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US H-1B visa suspension could be a boon for Indian startup ecosystem

Historically, Indians have been the largest recipient of H-1B visa globally, constituting over 70% of the holders.

Image credit to Christian Rondeau.

In 2007, when Kunal Bahl—who had got a job offer at Microsoft’s Seattle headquarter after his graduation from the Wharton School—didn’t get the much-coveted H1-B visa that is used by American companies to hire foreign workers temporarily, he decided to return to his home country India, and then co-founded an e-commerce startup Snapdeal which would, later on, grow to be a leading player in the market.

Thirteen years later, Indian engineering and management graduates looking to work with top U.S. technology companies find themselves in a similar situation as the US President Donald Trump in June 2020 temporarily suspended issuing new H-1B visas, mostly for high-skilled alien workers, alongside other similar visas, until end of the year.

While the fresh graduates who had harbored their American dream for years, are in for a shock, India Inc. is ready to welcome them and the tech talents already working in the U.S. for a homecoming after all the years of brain drain and losing out talents to the U.S.

The visa restriction—estimated by officials to be able to “protect” 500,000 jobs for American citizens—has come under fierce criticism from Silicon Valley, which probably is the main beneficiary of H1-B visas. Over the years, technology talents around the world have applied for H-1B to work in the U.S. tech companies from Google, Amazon, Apple to a raft of startups. Their contribution has helped consolidate Silicon Valley’s position as a world tech leader.

While Trump’s call could deal a blow to America’s tech supremacy, India’s tech world is set to gain from the visa ban. Indians, historically, have been the largest recipients of H-1Bs, representing almost three-fourths of holders. Some of the most powerful tech companies on the planet, such as Google and Microsoft, are run by Indian CEOs. The new policy would lead them to go back to the home country, reversing India’s long-time brain drain, and boosting the local startup ecosystem.

Screenshot of a Tweet shared by Hemant Mohapatra from Lightspeed Venture Partners.

“India is the land of big opportunities. I didn’t know this 13 years ago when my H1B visa was rejected, but haven’t regretted a moment since,” Bahl tweeted a few days after Trump signed the executive order.

“This might look like a setback initially, but this is a blessing in disguise for everyone who was looking to work with a technology startup in the US,” Akshay Bhushan, Partner at Lightspeed Venture Partners, told KrASIA. Bhushan believes a lot of young talents would come back to India and build products from here for the global audience.

“The Indian technology ecosystem is totally different than what it was a decade ago. We have strong, cutting-edge product companies that need high-skilled talent that would have otherwise gone to the US startup ecosystem.” Bhushan said.

Although, people who currently hold a valid H-1B visa and are working at technology companies in the US need not to leave the country, they certainly feel uncomfortable about the new situation and have begun evaluating their options.

Some Indian nationals working in fast-paced startups in Silicon Valley have called up Bhushan to discuss opportunities in India. While he is helping them as much as he can in providing details about what they could do in India, he said Southeast Asian countries are also ripe with new opportunities.

“We need to wait and watch the impact on the senior folks who are already working with the quality startups and MNCs. My sense is that renewing their H-1B is not going to be trivial either,” he said.

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Talking about the growth trajectory Indian ecosystem has gone through, he said people with experience in the U.S. can definitely find their own space in India.

“Apart from consumer product startups, we are seeing massive surge in enterprise companies getting built out of India. Those opportunities are a good fit for people who have had years of experience in the US,” Bhushan said.

Although, this is a time when there is a hiring freeze, founders and VCs believe Indian startups are always in need of good talent in product development.

“It’s still very difficult to get the right talent beyond the top three to four startup hubs like Bengaluru, New Delhi, Mumbai, and to some extent, Chennai and Pune,” Madhusudanan R, co-founder and CEO of fintech company YAP, told KrASIA. According to him, the startup culture in India hasn’t seeped in beyond these cities and people still have the fear of company shutting. “Working in a startup is not their priority.”

“When people start coming to India from the other markets, especially a highly evolved tech ecosystem like in the U.S., that void would get filled in pretty rapidly,” Madhusudan said.

Bhushan doesn’t see any immediate influx of talent—at least from the experienced folks—but does believe this would be a catalyst for them to introspect where they want to be in the long term.

People who have been in the U.S. startup ecosystem for over two decades can come back and build their own startup here in India. “Although it’s forced now, but it’s an opportunity indeed. They can start building global products sitting here in India,” Madhusudan said.

However, it’s easier said than done. In the past, when Indian technology companies were at the peak of their growth stage, some of them hired Indian talents working in the U.S., it didn’t quite work as they expected. In 2014, food delivery major Zomato hired Namita Gupta who had worked with Facebook and Google. The next year, e-commerce giant Flipkart onboarded Google executive Punit Soni as its product head. From 2012-2015, there were multiple similar hires by Indian startups, but most of these people left their jobs within a year or so.

One of the reasons they left was they didn’t get the right kind of environment and work culture within the company. According to a Quartz story, there was a lot of cultural difference in their new roles compared to their previous position.

But this time, it might be different as the doors of the Silicon Valley is closing on them.