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Infosys begins moving work out of US over immigration Bill fears

K. Giriprakash
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Infosys has started moving onsite work in the US to India or near-shore destinations in a move to de-risk itself in case the dreaded immigration Bill becomes law.

Sources in the company confirmed to Business Line that some cost centres, such as general, administrative and sales-support functions, are beginning to be off-shored.

There is also a possibility that the level of off-shoring of services, such as application management, infrastructure management and business process outsourcing, will be increased. This strategy is also expected to lower dependence on the low-margin onsite business.

Most of the off-shoring is being carried out after consultations with clients, said sources.

Congress debate

The move assumes significance as US Congress is expected to take up the Bill for discussion soon. The Senate has already passed the Bill, which seeks to increase visa costs as well as salaries of H1-B visa holders, making it unviable for companies such as Infosys to carry on business in the US.

Over 65 per cent of the revenues of the domestic IT and ITeS industry comes from US clients. Infosys is the second-largest employer of H1-B visa professionals in the US.

IT industry lobby Nasscom has come down heavily on provisions in the Bill, stating that they amount to non-tariff barriers.

An analyst with Prabhudas Lilladher said the immigration Bill continues to be the source of uncertainty for offshore vendors, such as Infosys and TCS. The margins of Indian IT service vendors will get impacted if any version of the Bill increases visa costs or mandates more local hiring.

However, Vintha Khatwani of Kotak Securities said that while there is some unease over the proposed Bill, the impact will be limited.

Lobbying Congress

Last year, a group of eight Indian IT companies, including Infosys, formed a lobby to influence US Congress to drop crucial clauses in the Bill. Infosys had also said that it is in discussions with clients for a contingency plan in case the immigration Bill becomes law. The company had said it was examining the option of off-shoring work in case the Bill became law.

In fact, it has started implementing the strategy even before US Congress has taken the Bill up for discussion.

giriprakash.k@thehindu.co.in

(This article was published on January 7, 2014)
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