US may push IT cos for 50% local hiring

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The US operations of top Indian IT companies like Tata Consultancy Services (TCS), Infosys Technologies, Wipro, Satyam Computer Services and HCL Technologies are likely to take a hit, with the US keenly looking at introducing a “50:50” law, under which Indian IT companies will have to employ 50% Americans in their US operations.

US Senator Chuck Grassley is expected to pursue the proposal and a final decision on this is largely dependent on the US presidential polls, according to senior industry sources.

Sources reveal that about 90% employees at the US offices of some top-rung Indian IT companies are Indians. With the implementation of the “50:50” law, Indian IT companies would have to shell out much more as salaries for foreign staff, which will have a bearing on the profitability of these companies. Top-rung IT companies, on an average, get 55%-60% of their revenues from the US. TCS derives 50% of its IT services revenues from the US (overall revenues of Rs 22,863 crore in FY 08), Infosys 62%, and Wipro 63%. TCS has about 14,000 employees in the US, Wipro has 8,100, Satyam 51,000 and Infosys has 91,000 employees globally, including the US.

At present, it is not mandatory for Indian IT companies to hire any fixed number of American employees in the US. Moreover, IT companies can send any number of Indian employees with a year’s experience under L1-B visas. Besides, the H1-B visa, through the lottery system, enables about 65,000 employees to immigrate to the US, of which about 80% lands in the IT industry. Sources say it is important for Indian IT firms to maintain a higher ratio of Indian employees, as Indians tend to work for extra hours. While there is not much data available on the wage differential between Indian and American professionals, there have been media reports earlier that Indian workers under the H1-B visas are not paid according to the prevailing wage structure in the US.

Two months back, the US Democrat senator Dick Durbin and Republican senator Chuck Grassley had questioned top Indian IT companies about their recruitment process for professional workers. The two senators had also introduced the H1-B & L-1 Visa Fraud & Abuse Prevention Act in 2007, which would require companies applying for H1-B visas to make a good faith effort to hire American workers first, without stipulating a “50:50” approach.