Proposed H-1B curbs to hit Indian IT most

Written by Surabhi Agarwal | Rachana Khanzode | New Delhi, Mumbai | Updated: Apr 25 2009, 05:33am hrs
Visa power
The $40-billion Indian IT export industry, which depends on the US market for more than half its revenues, received a jolt in a recession-hit market after legislation curbing H-1B and L-1 visas was introduced in the US Senate by senators Dick Durbin and Chuck Grassley.

Employees of Indian IT majors working on projects in the US are issued a large proportion of these visas. Last month, representatives of IT industry body Nasscom had visited the US and met with Grassley and key Durbin staff over the anti-outsourcing issue.

Though the legislation is subject to voting and is still far from being passed, domestic industry leaders termed it restrictive and protectionist in nature. According to the Bill, companies would have to first make a good-faith attempt to hire US employees before bringing in overseas workers. However, a clause that prohibits employers from hiring additional H-1B and L-1 guest-workers if more than 50% of their employees are H-1B and L-1 visa holders, could hurt Indian IT companies severely.

The Bill is protectionist in nature and if it becomes law, Indian companies will be isolated, said Zensar Technologies vice-chairman & MD Ganesh Natarajan, a former Nasscom chairman. He explained that global IT giants like IBM or Microsoft would not be hit much, as a majority of their workforce is American. However, for Indian IT companies, most of their onsite employees are Indians on H-1B and L-1 visas.

According to estimates, of the 65,000 H-1B visas issued last year, 12,000 were issued to employees with Indian IT companies. The top five Indian IT companies--TCS, Infosys, Wipro, Satyam and HCL Technologiesaccounted for 90% of this.

In a statement, Nasscom president Som Mittal said, The stated objective of the Bill is to prevent fraud and visa abuse. However, several of the provisions are against the principles of free trade and are creating trade barriers. He added that in many ways, the Bill targets Indian companies and restricts their ability to compete in the US market. If the Bill were passed, Indian IT companies would be forced to recruit US employees as their onsite operations already hade more than 50% Indian staff.

This could become a major issue in these times of recession, pointed out Gartner principal research analyst Diptarup Chakraborti. Appointing American workers would mean higher employee costs and a higher expenditure on training as finding skilled engineers is a challenge in the US, he said.

According to some estimates, out of the 18,500 employees that TCS has in the US, 17,000 are Indian nationals on H-1B and L-1 visas. When contacted by FE, a company spokesperson refused to comment on the matter. But officials recently told FE that TCS would not be applying for H-1B visas this year. TCS vice-president & head (global HR) Ajoy Mukherjee said, Even if there are protectionist measures coming up, we have a plan in place.

In a statement, Wipro executive vice-president-HR Pratik Kumar said, The proposed H-1B visa legislation is the antithesis to globalisation. It is a restrictive trade practice. Over the years, India has helped the US to compete globally and this has brought benefits to both countries. A reversal of this could impact US economy adversely. Infosys director HR & administration Mohandas Pai, however, said, We need to study this matter further.

Some analysts, though, see the introduction of the Bill as little more than political posturing in the light of a similar Bill introduced in the Senate last year that has not made much headway. Industry veterans like Deepak Ghaisas, former CEO of India operations at i-flex Solutions, said, Had the US government been serious about this reform, it would have made it a law immediately.