Outlook English - Print Subscribers Copy Outlook English, 26 February 2018 | Page 51
INSIDE OUT Indian professionals
protest in front of the White House
the companies. “This will encourage
Indian IT companies to hire locally and
that has already begun in a large way,”
says Vivek Tandon, Founder and CEO,
EB5 Brics. “Wipro, TCS, Infosys and
Cognizant are already hiring more locally
in the US.” Imposing stricter barriers to
H1B visa categories will also force com
panies to expand their operations in
more open countries such as Singapore,
Mexico, Chile and Ireland.
I
Photograph: PTI
“The concerns over H1B visa legislation
will continue and may work against
Indian IT Services players,” says Thomas
George, senior VP & head, CyberMedia
Research. “Clients are asking their
respective IT service providers to reduce
the dependencies on H1B visa in their
new projects. There could be challenges
with tighter H1B visa rules and regula-
tions. It may affect the revenue growth of
Indian IT Services providers more than
their margins as they will face a higher
visa rejection rate and tougher visa issu-
ing regulations going forward.”
What could be the biggest setback for
Indian companies is that the Bill proposes
to increase the minimum salary of H1B
workers from the current level to a mini-
mum of $ 100,000. Already, the previous
HR 170 bill had proposed to increase the
salary of H1B visa holders from $ 60,000
to $ 90,000. The current bill takes it even
further. This is certain to hit the margins
of the US projects of Indian companies.
“The increase in minimum salary will have
a deleterious effect on costs for many
companies in India as it will affect the
cost structure and make them less com-
petitive,” says Rogelio Caceres, co-fou
nder & CCO of the US-based LCR Capital.
“It would make more sense to just hire the
most talented people, whether from
India or Indiana.”
Caceres adds that even with the
increased visa numbers, the chances of
getting a visa in the current lottery system
will remain the same because the denial
rate of the H1B visa has increased from
7-10 per cent in the year 2007 to a stag
gering 41 per cent in 2017 under the
Trump Administration.
Also, with other r estrictions related to
hiring in the US, companies will be forced
to hire locally. Given the difference in
salary between American and Indian
workers, this will increase the wage bill of
Proposed by senators
Orrin Hatch (top left)
and Jeff Flake, the
new bill has the
backing of several
Silicon Valley bigwigs.
T is also important to note that
$100,000 is a top notch salary in the
US. “For $100,000, IT companies can
easily get local US talent and will not
need to send professionals from India,”
says Ajay Sharma, president, Abhinav
Outsourcings. “The current salary gap
between Indian and American profes-
sionals is 30-50 per cent.”
Experts also say that with the restric-
tions and attack on H1B visas increasing,
many Indian companies have moved
away to the easier EB5 visas, which call
for an investment of $500,000 for a direct
Green Card. Last year, while there was an
increase of 70 per cent in the demand for
EB5 visas, the number of H1B visa peti-
tions filed by the top seven India-centric
IT firms dropped by 37 per cent in a year
and 50 per cent in two years.
That is also because of a change in the
nature of the IT industry itself which is
transforming with the advent of artificial
intelligence (AI), automation and robot-
ics, areas which require a different set of
skills. India has been slow to adapt to this
and is still playing a catch up game. “What
is important to note is that the delivery
model is also changing with the advent of
AI, robotics and the cloud-based delivery
models,” says Raja Lahiri, Partner, Grant
Thornton India LLP. “The old H1B based
people-centric delivery model is slowly
transforming to this new delivery model
and this trend would continue.”
It is clear that the H1B visa regime is set
to change and soon, especially in an atm
osphere where there are repeated attacks
on the H1B scheme. Indian companies
will have to prepare themselves for this
inevitability. With the coming in of newer
delivery models, Indian companies will
have to adapt to new skill sets if they want
to remain competitive in the fast chan
ging US IT landscape. O
26 February 2018 OUTLOOK 51