Onsite dreams are evaporating

Updated: Feb 27 2012, 06:01am hrs
Increased visa rejections are forcing Indian IT firms to change their entire outlook towards the way they do business. IT vendors from India have traditionally done considerable amount of outsourcing work

on-site, but now that seems to be a story of the past with technology firms trying to reduce the extent of such work. According to a CLSA report, H-1B/L1 visa rejection rates have doubled to 8% for larger companies, and in case of smaller firms, the rates are even higher.

All outsourcing firms have spent nearly 15 years sending its staff to the US to help deliver huge contracts, largely from the banking and insurance sector. But now the industry may well think about keeping more of its employees in India to execute these projects. US firms that have outsourced work to Indian firms are now fearing governmental backlash at home and are trying their best to provide jobs locally. Indias showpiece software industry gets 60% of its revenues from the US, and is hence worried about the situation.

Software firms from India do nearly 30% of their work on-site. Such work is considerably more expensive for US clients compared to the portion of work done back in India. Increasingly, work is moving offshore and that has hit the profit margins of many IT firms.

The visa case involving Infosys has spread a lot of concern among American companies, though nothing has been proved yet. Infosys has admitted that some of its employees are target of a US probe

related to its sponsorships of B1 business visas. B1 visas are intended for short-term purposes such as consulting with business associates and attending business conventions. A former employee had alleged that Infosys had in the past misused these visas. American authorities are now investigating whether the company had abused these temporary business visas to get employees from India work for long term projects.

Last year US had raised visa fees for skilled workers, stating that the proceeds will be used for protecting the US-Mexican borders! That did not help matters either. Led by trade body Nasscom, Indian IT firms have tried to explain their point of view to US authorities but have not made much headway in this regard. Indian IT firms have tried to point out that they have created thousands of jobs for Americans at their development centres right across the country.

Nasscom has said the visa rejections are a cause of concern. There are some interpretation issues with some of the visa regulations, and people like Som Mittal are trying to work with US authorities on the matter. It is now clear that Indian software firms have to work on alternatives. They will now be forced to hire more people locally. That may not be great news for the average Indian code writer who made his fortunes during on-site visits. That may not happen often again.