US Immigration Bill poses dilemma for India's IT companies

US Immigration Bill poses dilemma for India's IT companies

    By Madeeha Mujawar
    POSTED: 03 Jul 2013 10:38 PM

At least 11 million illegal immigrants now have a chance to become US citizens after the US Senate approved the landmark Immigration Bill last week.

NEW DELHI: At least 11 million illegal immigrants now have a chance to become US citizens after the US Senate approved the landmark Immigration Bill last week.

While that will be good news for the 250,000 undocumented immigrants from India, the clauses relating to non-immigrant visas are causing great anxiety for the US based operations of India's IT companies.

This is because many of their Indian workers are visa holders.

For Indian IT firms, their US operations are major revenue generators but more than 70 per cent of their employees in those US facilities are foreign workers - mostly from India – holding H-1B company sponsored, temporary work visas.

The new Immigration Bill seeks to reduce this number to 50 per cent by 2016 forcing Indian IT firms to hire employees locally in the US.

It will also prohibit any company with more than 15 per cent of its workforce holding H-1B visas from placing those workers at client sites. Analysts say will really hurt Indian IT firms.

Ajay Srinivasan, director of industry research at Crisil Research, said: "I think it will have a very immediate impact because 15 per cent is a very low number. And if you are having more than 15 per cent of your total employees in US on H-1B visas, you cannot actually deploy anybody to work at client sites nor can you contact for the services of these employees. I think that is probably the most damaging provision."

The bill also seeks to increase fees for H-1B and the less restrictive L1 visas making it costlier for companies to hire foreign employees in the US and closing the gap a little between the cost of foreign and US workers.

Sudip Bandopadhyay, CEO of Destimoney Securities Private Ltd, said: "By employing and resourcing in India, these IT companies are saving on cost and increasing their profitability. And because the employees are based in India, they are able to quote a lower cost for their US clients."

If the bill is passed, the additional costs may be pass on to the consumer.

"American employees would need to be paid at least 50 to 60 per cent more than what Indian companies currently pay the Indian employees who are on H1B visas," said Mr Srinivasan.

He added: "Secondly also it may be more difficult to get the right talent locally in America so because of that, it will be a challenge both in terms of finding the right people and secondly, the cost element of it."

IT Industry body NASSCOM has criticized the bill saying it fails to recognize the vital services that global IT companies deliver - the innovation and competitiveness they have spurred in thousands of US businesses and the investments these global IT services companies make in the US.

Voices across the industry are demanding a relaxation in certain provisions that may harm the overall revenues of IT firms.

At the moment, the domestic IT industry is anxiously awaiting the final version of the bill and pinning its hopes on those lawmakers who have already expressed their reservations against it.

- CNA/fa

- wong chee tat :)