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H1-B Visas: Shock And Awe Begins For Indian IT Companies

Sutanu Guru takes a quick look at the implications of a new H1-B Visa Bill tabled in US House Of Representatives

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Many analysts tracking the Indian IT sector were apprehensive of what the maverick President Donald Trump would do with the contentious issue of H1-B visas that allows “cheaper” global techies to be hired by Indian as well as American IT companies. The speed and decisiveness with which Trump has been signing executive orders have already sent shock waves across the world. He seems determined to fulfill his campaign promises; critics and liberals be damned. Giving back jobs to American workers was a key Trump promise during the bitter election campaign. So something was expected from Trump when it comes to H1-B visas.

But it is not Trump who has taken the first step. A Congressman from California Zoe Lofgren has tabled The High Skilled Integrity & fairness Act which, if passed, would double the “minimum” wage earned by a techie working with an H1B visa in the United States to more than $ 130,000 a year. The limit at the moment is $ 65,000 a year. Within minutes of this news coming, the BSE It Index fell by almost 5 per cent. It seems the worst fears of IT companies who were hoping against hope is coming true. The cost structures of Indian IT companies would go haywire if the wages they pay to techies are doubled overnight. Companies like TCS, Wipro, Infosys, HCL Technologies and Tech Mahindra are bound to be affected.

The worst is that this could just be the beginning. Donald Trump is yet to announce his own measures which could be even more draconian. More than 60 per cent of the overseas revenue earned by Indian IT and ITES companies comes from North America. There can no doubt that there will be severe short term disruption if the measures are adopted.


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