Obamas plea on Immigration Bill puts IT cos in a spot

Written by fe Bureau | Bangalore | Updated: Jan 30 2014, 09:52am hrs
With US President Barack Obama urging the Congress to complete the immigration reform process to boost economic growth, a sense of uneasiness has returned to trouble the $108-billion Indian IT services industry. The proposed Immigration Bill, as passed by the US Senate, may result in a severe setback for Indian IT companies, especially for the large firms such as TCS, Infosys and Wipro if okayed in its current form. The House of Representatives is yet to give its nod to the legislation.

Obama, in his State of the Union Address on Tuesday, said, Finally, if we are serious about economic growth, it is time to heed the call of business leaders, labour leaders, faith leaders, and law enforcement and fix our broken immigration system.. Independent economists say immigration reform will grow our economy and shrink our deficits by almost $1 trillion in the next two decades.

The Bill, in its current form, has increased the cap on H-1B visas from the level of 65,000 to over 1,20,000 but has not removed the crucial clauses, which have damaging consequences for the Indian IT industry.

Mindtree chairman Subroto Bagchi said, As a industry, we are concerned but our company is sufficiently prepared to deal on any kind of outcome.

The outplacement clause in the Bill states that firms with 15% and above H-1B dependent employees are debarred from deploying their resources at customer locations, is one of the measures proposed to save US jobs. Indian IT companies like TCS, Infosys, Wipro and HCL Technologies are heavily dependent on the H-1B visas to carry out the operations in the US, their largest market.

Sanjoy Sen, senior director, Deloitte Touche Tohmatsu India, said the message delivered by Obama implies that the technical manpower with higher skills and capability will be welcomed in the US and they want to stop the movement of lower skilled workers to protect the local jobs.

Last year, the Bill has been passed only by the Senate and the one which has got approval from the Judiciary Committee of the House of Representatives, called the skilled immigration Bill, does not have any outplacement clause, which is a big positive for the Indian IT industry. Sen felt that the current model followed by Indian IT companies is unlikely to work any longer as the visa and immigration costs are set to increase if the Bill is passed in the current form.

In the last one year, the Indian IT services industry has increased the momentum of local hiring in its largest market, the US, driven by the need to be closer to its customers and to offset any impact from the proposed Immigration Reform Bill. Indian IT firms are now pushing forward with the strategy of hiring more US citizens, which will give them better access to customer base and increase chances of bagging big-ticket government contracts.

It is estimated that the total number of US employees currently working for the top four Indian IT companies is around 20,000.