How Indian IT Firms Are Preparing For Restrictions On H-1B Visa Employees

New US President Donald Trump’s ‘Buy American, Hire American’ call in his inaugural address has put the Indian IT industry on edge. For the $150-billion Indian IT industry, the US is the biggest export market, accounting for nearly 60 per cent of its export earnings. The Indian IT industry is already battling slowing growth amid big changes in the technological landscape (like automation and artificial intelligence) and global headwinds like Brexit.

“From the industry perspective everybody is watching. We all expect the US president to look at a broader global environment and take a decision,” said Mritunjay Singh, executive director at Persistent Systems. “We have to go beyond speeches to see what legislations are coming in.”

Mr Singh points out two key bills pending in the US for tightening the H-1B visa regime: “Do you have at least 50 per cent of the employees who are local US citizens? And the other bill is about minimum wages.”

The first bill is about restrictions from hiring H-1B employees if companies employ more than 50 people, and more than 50 per cent of the employees are H-1B and L1 visa holders.

Another bill, among other things, proposes to increase the minimum salary of H-1B visa holders to $100,000 per annum (from $60,000 per year currently).

Hiring more workers in the US could significantly raise costs for Indian tech firms, analysts say.

Mr Singh says about 48 per cent of its US employees are locals and their minimum wage are close to the $100,000 mark. So he says that Persistent Systems will face ‘minimal’ impact in terms of cost structure if the legislations come into force.

Still, Mr Singh said Persistent Systems is expanding its business in other geographies to de-risk from US business.

The top managements of Wipro and Infosys have said that they are boosting US hiring to have a minimal impact. Also, the IT companies are changing their business models so that they can deliver from different locations globally through innovation.

Industry veteran Abidali Z Neemuchwala, who is also the CEO of Wipro, said the company “entire business model is undergoing a fundamental shift – how much you can deliver from different locations globally through innovation”.

Meanwhile, Indian IT industry body, Nasscom, is planning a visit to the US in the next few weeks to reach out to American policymakers and lawmakers.