Relief for Infosys, TCS, Wipro on H1B, L-1 visas; here’s why

The $100-billion Indian IT services export industry is unlikely to see a major impact from the new Bill proposed by two US lawmakers seeking further restrictions on H-1B and L-1 visas as the planned legislation is not expected to pass in the current form even as India centric technology companies have increased their hiring of American citizens.

The H-1B and L-1 Visa Reform Act of 2016 introduced by Democratic Congressman Bill Pascrell from New Jersey and Republican Dana Rohrabacher from California would prohibit companies from hiring H-1B employees if they employ more than 50 people and if more than 50% of their employees are H-1B and L-1 visa holders.

Indian IT companies are heavily dependent on the H-1B and L-1 visas to carry out their business functions in the US as this geography contributes around 60% of the sector’s revenue. The general perception in the US is that Indian companies bring in low cost resources on these visas to the detriment of the American citizens.

Shivendra Singh, vice president & head, global trade development, Nasscom, said, “Today it is not an issue of low cost anymore. It is about whether relevant skills are available or not. Till the time the skill sets are not available, this calibrated approach has to be adopted.”

According to Singh, estimates by the US Labour department have shown that there will be 2.4 million jobs unfulfilled in the science, technology, engineering and mathematics (STEM) segment by 2018 and 50% of them will be computer and IT related.

Nasscom in a report had said that India-based information technology companies providing services to American businesses and other customers invested more than $2 billion in 2011-2013; paid $22.5 billion in taxes to the US Treasury in those years. They support more than 411,000 direct and indirect jobs in the US – including 300,000 held by US citizens and permanent residents.

Indian IT companies such as TCS, Wipro, and Infosys are among the largest users of H1-B visas where they send employees to work on projects at client locations. With the Presidential race hotting up in the US, the immigration of skilled workers under the H1-B programme has led to politicians raising a hue and cry. Republicans Donald Trump and Ted Cruz have called for restrictions on these visas, stating that the programme was not in the interest of American job seekers.

On the latest bill, Dinesh Goel, India head, Information Services Group, a IT advisory group, said the proposal is not a worrying factor yet as several Bills have been proposed in the past but have never been enacted. “There is a skill shortage and US thrives on immigration,” he remarked.

However, there are certain worrisome factors also. In December last year, the US had raised the fee for H-1B visa from $2,000 to $4,000, while that for L-1 visa went up from $2,250 to $4,500. Nasscom said at that time that the increase in visa fee would impact industry margins by 15 to 20 basis points.

Sanjoy Sen, doctoral research scholar, Aston Business School, UK, said, “If (Bill) passed, this will certainly represent one further barrier to the traditional operating model of engaging Indian staff on US projects.

Having said that, most of these companies have already been increasingly employing local US nationals in their American entities rather than just depending on Indian immigrant staff which reduces the impact of this risk, provided they continue to do so.”

Singh of Nasscom said, “The content of the Bill is not something new. In reality, any legislation that places further restrictions and costs on these short term high skilled visa programs will end up hurting thousands of US businesses and their American employees.”