“US-based enterprises would be forced to choose between shifting more tech work offshore where larger talent pools are available or delaying innovation because of the lack of requisite tech talent domestically,” industry body Nasscom said, adding that the rule (to increase visa hikes) would adversely impact the US economy.
The anti-immigration stance by the US administration has become aggressive since the start of President Donald Trump's tenure in 2016. Top IT firms such as Tata Consultancy Services, Infosys and Tech Mahindra have been consciously going for local talent in the US to dodge the visa uncertainties.
"The dependence of Indian Inc. on H1B visas has reduced. Around 45 per cent of our workforce is localised and definitely, till December, the requirement for H1B visa is much lesser than the usual," said CP Gurnani, CEO & MD of Tech Mahindra.
Wipro reported offshore revenue from services rose to 48.5 per cent in the June quarter, from 48.2 per cent in the March quarter, and 47.7 per cent for the same period last year. The figure stood flat at 72 per cent for Infosys. TCS and HCL Tech do not disclose the offshore revenue mix in their quarterly statements.
In the short term, industry insiders say, that the impact of the visa fee hike won’t be that pronounced given that most of the works are now getting executed remotely, owing to travel restrictions. Also, the cost benefits that IT services companies
are enjoying owing to travel restriction, is also helping them to absorb the impact rising visa cost.
"The (visa price hikes) impact will be minimal as IT companies
are already sitting on comfortable margins due to absence of travel and reduction of other discretionary costs while some players are even pushing projects offshore," said Pareek Jain, an outsourcing advisor and founder of Pareekh Consulting. "However, the visa issue may pose risks in the medium term from a cost point of view."
According to Ruchi Burde, AVP at BOB Capital Markets, while the uptick in expenses will have an impact on the margins, it won't be a severe one. “Typically, increases in visa costs affect operating margins by 100 basis points on an average but Indian IT firms
structurally reducing their visa dependency (and going for local talent) will offset this impact."
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