IT industry fears dent in margins as US notifies H-1B, L-1 visa fee hike

On the back of a hike in H-1B and L-1 visa fees, the Indian IT industry is concerned about more surprises that lie ahead such as higher visa rejections, which can have a direct impact on margins.

The US notified that an additional fee up to $4,000 will be applicable for certain categories of H-1B and L-1 visas. Further, the US Citizenship and Immigration Service (USCIS) said companies that have applied for certain categories of H-1B visas post December 18, 2015, will have to dole out an additional $4,000.

Additionally, for L-1A and L-1B visas, companies will have to shell out $4,500 more. All this is in addition to the base fee, the processing fee, the Fraud Prevention and Detection Fee, and the American Competitiveness and Workforce Improvement Act of 1998 fee.

The CEO of one of the top five IT exporters said on condition of anonymity that with visa norms getting stricter, there could be a higher percentage of rejections. “It is becoming highly bureaucratic and there is too much room for interpretations,” he said.

Often, the reasons are not clarified with companies and in a year when the US is set to elect a new President, companies are a worried lot. “The cost of doing business will increase for reasons beyond their control,” said Sandeep Goel, Partner at ISG-One, an outsourcing advisory firm. Analysts estimate that the hike in visa fees would impact margins by 3-3.5 per cent. While there is no latest data on visa rejection rates, in 2013, it was estimated that 60 per cent of visas applied for by Indian exporters were rejected. India accounts for almost 16 per cent of the overall visas in 2014, according to data from the US Labour Department.

Industry watchers have been surprised by the fact that one of the world's most developed countries and largest free market economies has adopted such a measure. “This indicates that pushbacks may continue to come on the Indian IT companies in unexpected forms at least until the US elections,” said Sanjoy Sen, Doctoral Research Scholar, Aston Business School.

Indian IT industry has been strongly batting for not increasing the cost of work visas. Last year, Nasscom pointed out that the Indian technology industry paid $22.5 billion in taxes during the financial years 2011-15 and supported four lakh jobs.

Some industry watchers believe that this was an expected development and opine that this will help Indian companies move up the value chain. The labour arbitrage model is the target and the intent is to slowly move companies to the original intent of these kinds of visas, that is, to apply only when sending the 'best and brightest', said Rajkamal Rao, an immigration expert.

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