In today's newsletter, we talk about why there's been an uptick in H1B visa denial rates and Softbank's biggest loss in 14 years.
So, a recent study found out that denial rates for H-1B visas have been on a steady rise — from a mere 6% in 2015 to around 24% in recent times. And this has upset thousands of Indian tech workers.
Why? you ask.
Well, for the uninitiated, the H1B visa is a golden ticket to paradise. If you’re qualified enough and can get your hands on one of these bad boys, you can live in America, work in America and even apply for a green card (permanent residential status). However, of late, with denial rates picking up, Indian tech workers seem to be left behind.
So, what happened?
In the past, the allocation of H1B Visas was done based on a lottery system. Meaning if there were 85,000 visas for the taking, outsourcing companies like Infosys and TCS could theoretically game the system by flooding the immigration office with hundreds and thousands of applications on behalf of their employees. This way the odds of receiving a visa improves drastically and these companies end up taking most of the visas on offer.
So the US immigration arm has tweaked the system to prefer workers with a master's degree or higher from a US institution. And since most tech companies hire immigrants with a bachelor's or a master's degree from their country of origin there has been a dramatic uptick in denial rates.
The idea here is simple. Make it difficult for tech companies to hire immigrants at lower wages and you’ll immediately see them hiring more Americans at better wages. This has been a big campaign promise for Donald Trump i.e. ‘Buy American and Hire American’. And so, the story goes that there’s been a concerted effort to ensure tech workers are denied H1B visas without any regulatory change as such.
What regulatory change, you ask?
Well, to deny so many applications legally you will have to have some sort of new law/regulation in place. And so people have been trying to challenge visa denials in court contesting that they are discriminatory in nature.
Anyway, for now, it seems as if we have to just live with this arrangement. Although I feel for all the people who are currently in a state of limbo praying for a visa extension.
In other news, we look at how investing in loss-making startups caused Japanese giant SoftBank to report its biggest loss in 14 years.
Who would have thought eh?
For the July-September quarter, SoftBank recorded an operating loss of a whopping $6.5 billion- most notably due to an $8.9 billion hole in its $100 billion Vision Fund (set up to propel the future). And now its earnings are, as Chief Executive Masayoshi Son put it, “a mess.”
This gigantic loss could mostly be attributed to Masayoshi Son’s ‘error in judgement’ that caused him to invest considerable sums of money in, and then rescue US-based office-sharing start-up WeWork during the whole IPO fiasco.
This and other investments in startups like Uber have resulted in SoftBank amassing losses at an unprecedented scale.
So what does this woeful error in judgement mean for SoftBank?
While Son did admit that SoftBank’s earnings were pretty bad, he seemed determined not to let the stains of the past taint the future. He seemed confident that his investments still held great potential and would eventually bear fruit. He also went on to suggest that fundraising efforts for the second Vision Fund were still very much on track, and there was going to be no change in SoftBank’s journey going forward.
But can the same be said about Indian startups?
SoftBank’s massive power, position, and far-reaching tentacles have all meant that the effects here won’t be localised. Late-stage startups like Oyo and Grofers have been particularly dependant on Softbank for money. So if SoftBank is hit bad, it's likely these startups will also be neighing in pain.
So that’s about the gist of it. SoftBank has been dealt a hard blow, but whether it will be able to bounce back and fight remains to be seen.
Correction: In an earlier version of the article, we wrote that the US immigration arm has moved away from a lottery system to a manual approval process. However USCIS continues to use randomized draws as of today and there's been no change on this front. We apologize for the error.
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