Indian IT companies still cautiously watching US Immigration Bill

Venkatesh Ganesh Bangalore | Updated on January 29, 2014

Obama avoids talking about contentious clauses in State of the Union address

Although President Barack Obama did not touch on discriminatory clauses in the US’s Immigration Bill during his State of the Union address on Tuesday, Indian IT service companies remain cautious.

In a statement, industry body Nasscom said the US President’s address did not refer to the outsourcing industry or any particular country and added that the focus on Science Technology Engineering and Mathematics (STEM) education will open up opportunities for Indian IT.

Despite this, the industry is still watching the signals given out by lawmakers in the US. The country contributes over 60 per cent of the industry’s $100 billion revenue.

“As an industry, we are concerned,” said Subroto Bagchi, Chairman of Mindtree, adding that the Bill, yet to be passed by the US House of Representatives, might take a more ‘realistic’ view of the contentious clauses.

Ramesh Loganathan, Vice-President of the IT Industry Association of Andhra Pradesh, feels that there is nothing that explicitly impacts outsourcing.”

“It seems his emphasis is on creating more jobs. In a capitalist economy, it is not possible to prevent outsourcing,” he said.

As the US economy continues to struggle with sustained unemployment, lawmakers are trying to fix its immigration system. In line with this, the US Senate approved H1B and L1 Visa Reform Act of 2013 in late June.

The passage of this Bill ensures that an H1-B application filed by an employer that employs 50 or more US workers will not be accepted unless the employer attests that less than 50 per cent of the employer’s workforce comprises H1B and L visa holders. This affects Indian technology companies that send their workforce to client sites to design, implement and maintain software.

“It is not going to have any impact as our industry is moving up the value chain. The Indian IT ecosystem has evolved over the last few years and not depended on any single country,” said Murali Bukkapatnam, President of The Indus Entrepreneurs (TiE-Hyderabad). “We are now going much beyond services and taking care of strategies of companies. It is not possible for any country to put clamps,” he said.

Immigration experts, however, say that the US President cannot take this approach. “Ultimately, it is the House, controlled by Republicans, that will have a say and the President has to act within the framework of the US constitution,” said Rajkamal Rao, Managing Director of Rao Advisors. He has written a book on immigration issues.

Nasscom last year said that it had received assurances from key US representatives that the House Bill would not contain discriminatory clauses. Companies are also taking measures such as hiring locals in American cities, opening development centres and partnering with academia.

Published on January 29, 2014

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