The Indian information technology (IT) industry, is set to fund the expenditure involved in securing US borders.
Ridiculous as it may sound, a Bill to this effect unveiled by democrat senators Chuck Schumer and Claire McCaskill has been passed by US senate Thursday.
The Bill, intended to improve security along the US-Mexico border, seeks to fund the programme by levying higher visa fees on companies that do not satisfy the norm of employing at least 50% local staff.
The Bill has now to be approved by the US Congress.
Brokerage CLSA Asia-Pacific Markets, in a note to clients after the US Senate approved the bill, said no Indian company meets this criterion and hence they “will be likely hit by higher visa fees”.
“A handful of foreign-controlled companies that operate in the United States —such as Wipro, Tata (Consultancy Services), Infosys and Satyam—rely on H1B and L visas to import foreign workers to the United States. The Senate Democrats’ border security proposal would increase the visa fees paid by these companies by roughly $2,000 per visa application,” McCaskill said in a press release..
Such visas currently cost between $2,000 and $2,300 per applicant meaning if the Bill becomes law, visa cost will double.
“We pay about $15-20 million annually as visa charges. Now it may double,” said V Balakrishnan, chief financial officer of Infosys Technologies.
The industry overall will see a negligible negative impact of about $200 million on profits.
“We have seen what happened to Durbin-Grassley Bill earlier. This, too, I believe will meet a similar fate. Even if it becomes a law there is a very negligible impact of 50 to 100 bps on Indian IT firms’ revenues,” said Sandeep Muthangi, analyst with brokerage IIFL.
The Bill, which came up as part of US Border Security Spending Bill, aims to bring in balance to budgetary spending and raise $600 million to fund various border security programs.
Annually, Indian firms are granted close to 85,000 visas by the US government.
The Bill, according to Indian IT industry insiders, is discriminatory since it selectively targets Indian IT firms.
A summary of the Bill said the funds would be raised with a $2,000 per visa increase in the price paid by specific companies for non-immigrant ‘H1B’ visas for highly skilled workers or ‘L’ visas for intra-company transfers.
Ganesh Natarajan, a member of the innovation council of IT body Nasscom, who was also its earlier chairman said, “ The IT body will surely oppose such a discriminatory policy by all means’
India’s second-largest IT firm Infosys Technologies, with an employee base of about 120,000, has about 10,000 people in the US.
Other top IT firms such as TCS, Wipro and Cognizant also employ between 6,000 and 10,000 each in the US.
At any point in a year, about 60-70% of the US workforce of these firms are on either H1B or more temporary L1 visas. Thus the proposed Bill will mean these firms will have to pay the increased visa charges.
However the Bill will not apply to major US-based technology firms such as Microsoft, IBM, or Intel and the likes since more than half of their workforce are ‘local’ employees.
Krishnadevan Vijayraghavan is with Newswire 18.
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