In today's Finshots brief, we will discuss
- The US government's latest ruling on H-1B Visas
- Disney's renewed focus on streaming
- Foreign bribery in India
More H-1B Visa problems
Last week, the US government announced significant changes to their H-1B visa program, which is used for hiring highly skilled foreign workers (mainly in the tech industry). Now, an H-1B visa allows workers to live in America, work in America and even apply for permanent residency there. Every year, the US issues 85,000 H-1B visas to immigrants. And it just so happens that more than 70% of the visas usually go to Indians.
But according to the new rules, workers under this visa will have to be paid more, their length of stay could be reduced, and the kind of credentials they need for their jobs will be tightened. These changes are expected to cut the number of applications for H-1B visas by one-third.
The new rules will increase foreign worker wages based on surveys of salaries in each profession. On the whole, companies will now have to pay entry-level foreign workers in the 45th percentile of their profession’s salary, compared to the current 17th percentile. Also, foreign workers can’t just come with any college degree now- it’ll have to be specialized to their occupation. Meaning, you can’t hope to secure a computer engineering job in the US if you hold a degree in Commerce.
These new rules are a part of a long-running debate on the damaging effects of the H1-B program on the US economy. Multiple policymakers have contented that tech companies have abused the program to replace Americans with foreigners — who are then employed at lower salaries. And now that the coronavirus is already causing widespread unemployment, this is unacceptable. As Patrick Pizzella, the deputy secretary of labor said, “With millions of Americans looking for work, and as the economy continues its recovery, immediate action is needed to guard against the risk lower-cost foreign labor can pose to the well-being of U.S. workers.”
Well, this move is definitely going to cause considerable distress to foreign professionals and the companies that rely on them. And it’s also going to affect business services companies that facilitate the movement of such labour.
Companies like Accenture, Cognizant and Infosys have relied on Indian employees to offer prospective clients better rates. However, with this move, they might have to change their model a bit.
As Brian Kropp, chief of research for Gartner’s human resources practice says, “This harms those organizations’ abilities to arbitrage labor costs. There will be net fewer projects. And the projects that get done will be at a higher price. It’s a drag on business.”
The coronavirus has taken a heavy toll on the entertainment industry - particularly on media and entertainment conglomerate Disney. Some of Disney’s theme parks still remain closed, others have been seeing below-par attendance, and its high-budget movies continue waiting for audiences that may never fully return to theatres.
But the company has one saving grace - streaming. As most consumers are still working remotely and not going out, they have a lot of extra time to consume content. And this has led to over 60 million worldwide subscribers for Disney+. At the same time, Disney’s legacy businesses, such as cable networks, are struggling. So it’s no surprise that the company is facing pressure from investors to focus their attention on streaming. And they’ve decided to comply.
Disney has announced a reorganization drive, which will prioritize its streaming-video services and make sure it gets the best content available to the company. Under this, Disney’s programming arms like movie and television studios, will start routing content to streaming services, not just traditional outlets like TV networks and cinema halls. The company will create different content groups for movies, general entertainment and sports. Additionally, it will also establish a distribution arm which will decide on the best platform for each piece of content.
These changes will push Disney’s streaming platforms, Disney+ and Hulu, closer to the centre of the company.
Rein in the Bribery
According to a Transparency International report, India has not published a single case of foreign bribery between 2016 and 2019. And this isn’t good news.
The thing is, we haven’t even investigated a single case due to the lack of a proper legal framework to prosecute the people involved. That’s right - a nation which accounts for 2.1% of the world’s exports does not criminalize foreign bribery and related money laundering. And this is deeply troublesome.
You see, by bribing foreign officials, large businesses skirt around regulations and get things done faster, unfairly impeding the growth of smaller firms. As the report says, corruption in foreign business transactions undermines government institutions, misdirects public resources, distorts cross-border investment, deters fair competition in international trade, and slows overall economic and social development.
With India, the problem is, that we don’t have the required number of trained officials who can investigate such cases. Since our nation is already bogged down by domestic bribery cases, focusing on foreign cases becomes a secondary concern. Bureaucracy and political interference pose further challenges.
But something has to be done and soon. As the world is trying to find its footing amidst the devastation of the pandemic, bribery among foreign officials has skyrocketed. In fact, cases of corruption are now popping up in the healthcare sector as well and we don’t have to tell you how dire the consequences can be.
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-Written by Vedika Agarwal and Akshay Tater.