The US immigration rules always hang as a sword over Indian IT companies. On Friday, US President Barack Obama signed the $1.8-trillion spending package, which among other things reauthorised the special fee levied on non-immigrant visas for companies that hired more than 50 per cent foreign workers. The fee had expired on October 1.
Sadly, the visa fee has also been doubled to $4,000 for H- 1B and to $4,500 for L-1.
The special fee on non-immigrant work visas was originally introduced in 2010 under the James Zadroga 9/11 Health and Compensation Act (named after a detective who died in the terror attack on the World Trade Centre).
Impact The big daddy Indian IT companies have 50-70 per cent of their workforce in onsite locations mainly filled by H-1B visa holders.
Nasscom has estimated that the new fee will cost about $400 million a year for the IT industry.
For the $100-billion revenue generating Indian IT industry, the impact on margins may be 30-40 basis points.
But what is more of a concern is the possible change to the US immigration Bill that many senate members are demanding. This includes a cut in the number of available visas to 70,000 from 85,000, preference to candidates from the US universities and requiring companies applying for H-1B visas to have at least 50 per cent of their US workforce as Americans.
If the above restrictions come into play, then it may have far-reaching impact on Indian IT companies.
These companies have long been complaining about the lack of required skillset among IT professionals in the US. Nasscom quotes several industry research reports that validate this. A research shows that 46 per cent of openings in STEM (Science, technology, engineering and Mathematics) go unfilled for more than a month in the US.
If Indian companies are forced to make do with US manpower, they are likely to face talent crunch for many of the skilled and senior positions.
On the same boat Despite the shortage in skilled labour, data from Nasscom show employment of US nationals and green card holders by Indian IT companies has grown at 10 per cent every year between 2010-11 and 2014-15. The remuneration paid to Indian and US employees has also been at par. Indian companies have paid an average $81,447 to a US national, which is not much higher than the cost incurred in employing an Indian H-1B visa holder- where the average salary paid works out to $81,022. Companies also have to shell out an additional $15,000 for visa, tickets and other expenses (the number are for the year 2012-13) for Indian employees.
Already, the procedures to obtain H-1B visas are quite tough. The rules of the US Citizenship and Immigration Service are framed in a way that it protects the US worker. In addition to high educational requirements, employers also have to submit the Labor Condition Application showing that they have complied with rules on wages. They also have to disclose the foreign worker’s rate of pay.