NEW DELHI — Until recently, Aman Kak worked as a deputy manager with Mahindra & Mahindra, the Indian multinational automobile giant headquartered in Mumbai. Soon, though, the 26-year-old engineer from the central Indian city of Bhopal will embark on a journey that he hopes will lead to the life in America he has dreamed of since childhood. Kak will board his first-ever flight to the U.S. to begin management studies at the College of William & Mary in Virginia.

The real challenge for Kak begins a year after he finishes school, when the grace period to receive practical training ends and his student visa runs out. He will have to compete for a job in the open market in the U.S., and more importantly, for the sponsorship of an H-1B work visa from an employer. The H-1B allows foreign workers with specialized skills to work for companies in the U.S. for at least three years.

Kak says he isn't worried about obtaining a visa, even though competition is intense and may become more so now that U.S. President Donald Trump signed in April an executive order that includes a review of employment immigration laws and the H-1B program. It's not yet known what will immediately change for the workers whose H-1B visa applications are currently being processed, or how future visa applicants may be affected.

"I was a little concerned, but I don't think it would impact me," Kak says, adding that his background in technology coupled with a MBA degree will make him a strong contender in the job market.

The order is stirring uncertainty and anxiety here in India, where the information technology sector is closely tied to the H-1B program. Some labor analysts see the Trump administration's effort to reduce the number of foreign workers and bring more American workers into the U.S. tech sector as a misjudgment of basic supply and demand.

"At a time when businesses are globally moving toward digitalization, steps to curtail the existing technical talent is like shooting a racing car," says DD Mishra, research director at Gartner, a technology research and advisory firm. "American universities cannot supply the skills that are needed to work the related jobs."

Criticism of a popular program

Introduced through the Immigration Act of 1990, the H-1B program became popular during the dot-com boom later that decade. Every April the U.S. government accepts applications for 65,000 H1-B visas for the upcoming fiscal year. Typically, the system is inundated with applications in the first few days of the acceptance period; a random, computer-based lottery system selects candidates.

An additional 20,000 H1-B visas are reserved for applicants with at least a master's degree from a U.S. institution. Once this category fills up, applicants are placed in the general lottery. A third category allows non-profit organizations, universities and government agencies to seek H1-B visas to hire temporary international workers.

Critics of the H-1B program have long complained that companies abuse the program, using it to hire cheaper foreign labor that undercuts American workers. Attempts at plugging the perceived loopholes through immigration reform have so far stalled in the U.S. Congress.

In a speech made ahead of his April executive order, Trump attacked the existing H1-B lottery system. "No one can compete with American workers when they're given a fair and level playing field, which has not happened for decades," he said. A senior White House staffer told reporters that other options, such as increasing the visa fee or mandating higher wages for H1-B workers, could also be on the table.

Close U.S.-India ties in the IT sector

Though Prime Minister Narendra Modi did not talk about the H1-B visa program when he traveled to the U.S. to meet Trump in June, any moves to alter the program will reverberate in India. The $154 billion IT services industry is India's largest private sector employer, according to the National Association of Software and Services Companies, or NASSCOM, India's technology industry trade body. Of the $116 billion the country earned in revenue during the 2016-17 financial year from IT services exports, 62 percent came from America, making it a key market for this South Asian economy.

Three leading Indian technology services companies – Wipro, Infosys and Tata Consultancy Services – declined to comment on how the Trump administration's order might impact their businesses. Vishal Sikka, the Indian-American chief executive officer of Infosys, recently told an Indian news agency that it is incorrect to assume that India's information technology industry is dependent on H-1B visas.

Still, any protectionist moves made by the U.S. or other countries will hurt India's efforts to attract greater foreign investment, analysts say. "If the mobility of highly skilled talent is impacted, it becomes a trade issue," says Shivendra Singh, NASSCOM's vice president for global trade development. "It is not an immigration issue," he says of the proposed changes to the H-1B program.

Indians are the beneficiaries of a bulk of the H-1B visas. "Indian nationals receive between 65-70 percent of the H-1B visas because of their relevant skillset," Singh says. "They are hired by American companies and other international companies with a presence in America."

A mandated increase in wages, as suggested by that White House official in April, could raise the costs for Indian companies sending local tech workers to work with clients in America, says Jignesh Thakkar of Ernst &Young India. Focusing on wages earned by H-1B visa holders, he adds, is a mistake. "It is a big misnomer that there is a huge pay gap between those hired on an H-1B and Americans working similar jobs as them."

Where will future innovation take place?

The U.S. demand for high-tech workers remains strong. The U.S. Bureau of Labor Statistics has predicted a 17 percent growth in the employment of software developers in a 10-year period starting in 2014. The agency described the growth rate as "much faster than the average for all occupations." In 2017 alone, Gartner expects $397 billion to be spent on IT services in the U.S.

In recent years, non-immigrant work visa applications have faced tighter scrutiny and higher costs, says Mishra, the research director at Gartner. Indian companies, adapting to a changing political climate in the U.S. as well as changing demand in the global tech industry, have reduced the number of workers deployed to clients.

In the past three years the H-1B visa petitions of the leading Indian tech companies have dropped considerably, as some of them have been hiring local American workers instead. Acquiring businesses in America and moving toward automation are among the other measures that Indian firms are likely to adopt to minimize their losses in the near future, Mishra says.

Still, outsourcing to non-U.S. workers with specialized skills will remain a necessary option, says Stuart Anderson, executive director of the National Foundation for American Policy, a public policy research organization. In a recent study he authored that analyzed the H-1B visa trends of Indian companies, Anderson found that among full-time graduate students at U.S. universities, 71 percent of computer science graduate majors and 77 percent of electrical engineering majors were international students.