The visa fraud charge and investigation by U.S. authorities on Infosys Technologies is sentimentally negative for the company but may not impact its operations, analysts said. on Wednesday.
Infosys closed almost 2% down at R 2,795 on the BSE, a day after the company said it had received a subpoena from a Grand Jury in the United States district court for the eastern district of Texas. The subpoena requires that Infosys provide the Grand Jury certain documents and records related to both sponsorships and uses of B-1 business visas.
Infosys has been accused of using the cheaper B-1 visa programme to send employees for long term work ? H-1B is the appropriate visa for long term work and is more difficult to get.
Sanjeev Hota of Sharekhan said that as of now, it is too premature to estimate the monetary impact from an unfavourable outcome to the case. ?However, it is sentimentally negative for Infosys. And if the U.S. Government tries to regulate the H-1B visa cap, that would be structurally negative for the entire IT sector,? he said.
Earlier this year brokerage firm CLSA had warned that visa troubles need watching. ?Historically, Indian IT has managed to find its way around protectionist measures in the US and most bills with restrictive visa provisions have failed to go through. However, conversations with companies indicated that potential adverse regulations, especially in US need watching. While we do not consider protectionism a game changer for services outsourcing yet, incidents of the past few months concern us. While procedural hurdles are manageable, select regulations being discussed are harmful for the longer term competitiveness of the offshore IT industry,? the firm had noted.
An analyst who did not wanted to be quoted said that in the case of an unfavourable outcome for Infosys, a monetary fine settlement was likely. ?The issue can be settled with a monetary fine. There will not be an impact on operations or delivery,? he said.
Dipen Shah of Kotak Securities believed that Infosys is not at fault. ?My feeling is Infosys will not break compliance requirements for a few dollars. What the impact on the company will be in case of an unfavourable judgement is very difficult to fathom now,? he said.