According to a recent article in Knowledge Wharton Today, the software industry in India is not pleased by the recently drafted U.S. immigration bill. Though the overwhelming focus has been on how to deal with the undocumented immigrants currently in the country and whether or not to provide them some clear path to citizenship, the firms are most concerned with the bill’s clauses which map the latest rules for non-immigrant visas.
The bill does not allow the outplacement of H-1B visa holders who are more than 15 percent of a U.S. company’s workforce. The proportion of H-1B visas workers as well as L1 visa workers is also limited to 50 percent of a company’s total workforce as of fiscal year 2017, which starts in October of 2016. Large numbers of Indian-based employees are sent by their companies to work at U.S.-based client locations on H-1B or L1 temporary work visas. If the currently-drafted immigration bill is passed, firms in India will be forced to drastically cut down on the number of employees they can send abroad. The cut in workforce will adversely affect both Indian- and U.S.-work sectors. The CEO research director of Offshore Insights, Sudin Apte, estimates that his visa employees make up between 60 and 70 percent of U.S.-sent, offshore workers for the IT research and advisory firm. India-based companies have between 35 and 60 percent of their employees working on H-1B visas, which means the bill will dramatically affect how those firms can distribute their employees for clients.
India-based IT firms will likely have to employee far more U.S. residents, which will increase their own overhead for wages and benefits. Company heads also report that the bill also requires than they pay higher wages to H-1B visa holders and pay more for visa fees overall. Earnings for fiscal year 2017 could be between 60 and 120 basis points lower than previous years, and earnings-per-share could see as much as a 3-to-6 percent dip.
While Indian-based executives state they understand the need for U.S. immigration reform, the H-1B and L1 visa limitations will overwhelmingly affect the Indian ,marketplace like no other country which sends temporary visa workers to the country.
India has the largest applicants of H1B and L1 visas globally and currently has a 55 percent market share of the global IT outsourcing industry. The IT sector makes up approximately 4 percent of India’s GDP and the U.S. makes up close to 60 percent India’s software exports.
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