GET Stock QuotesNews18 APP
News18 English
Powered by cricketnext logo
»
1-min read

'H-1B Visa Rules Tightening to Hit Margins of Indian IT Companies'

However, the impact will be company specific and relative to H-1B visa dependence, rating agency Icra said in its report.

PTI

Updated:June 27, 2018, 10:18 PM IST
facebookTwittergoogleskypewhatsapp
'H-1B Visa Rules Tightening to Hit Margins of Indian IT Companies'
Image for representation only.
Mumbai: Tightening of H-1B work visa norms by the US is likely to put cost pressures on the Indian IT services firms and impact their margins due to increase in compliance and rise in onsite hiring, according to a report.

However, the impact will be company specific and relative to H-1B visa dependence, rating agency Icra said in its report.

"The changes will disqualify certain positions currently eligible for H-1B visas, thereby impeding the movement of low-cost skilled labour from India and will have direct bearing on margins," said Gaurav Jain, vice-president, corporate sector ratings, Icra.

The US is also contemplating on awarding visas to the most skilled or to highest-paid beneficiaries. Icra feels this move will work against the Indian IT services sector (H-1B dependent) as the average wage is approximately lower by 25 per cent compared to companies that are not dependent on H-1B visas as per estimates.

A firm is defined as H-1B dependent if more than 15 per cent of its US full-time employees are on an H-1B visa. Jain said awarding of H-1B visas based on highest skill or compensation, will leave less headroom for Indian companies to get such visas.

Consequently, increased onsite hiring or raising the compensation for H-1B visa applicants will impact companies' margins and will be credit negative, he said.

"However, the impact will be company specific and relative to H-1B visa dependence," he added.

The US government is also planning to permanently end work authorisation (H-4 visa) granted to spouses of H-1B visa holders.

Icra feels revoking such visas will have an indirect negative impact on workers currently employed on H-1B visas or seeking such visas whose spouses are working professionals. Jain said Indian companies have started to ramp up onshore hiring.

"Leading firms are also increasing their proportion of offshore work to reduce dependence on such visas, though the magnitude of such shifts is expected to be marginal as only certain services are amenable to higher offshoring (testing, IMS) compared to others," he said.

Overall, Icra expects a ramp up in onshore hiring, particularly for entry-level programmers to maintain a competitive cost structure, while reducing dependence on H-1B visas for such low-cost skilled labour.

Also Watch

| Edited by: Parth Sharma
Read full article
Loading...
Most Active
Company Price Change %Gain
Bajaj Finance 2,721.35 +201.15 +7.98
Bajaj Auto 2,839.60 -275.40 -8.84
Reliance 1,128.65 +23.80 +2.15
Infosys 1,348.10 +31.40 +2.38
Ashok Leyland 107.45 +1.75 +1.66
Company Price Change %Gain
Bajaj Finance 2,721.50 +203.90 +8.10
ICICI Bank 266.00 +4.80 +1.84
Infosys 1,348.35 +31.80 +2.42
Bajaj Auto 2,841.10 -271.70 -8.73
Power Grid Corp 176.20 -1.05 -0.59
Top Gainers
Company Price Change %Gain
Bajaj Finance 2,721.35 +201.15 +7.98
Bajaj Finserv 6,663.95 +367.05 +5.83
Sun Pharma 560.10 +15.15 +2.78
Tech Mahindra 659.45 +17.25 +2.69
Cipla 625.80 +15.70 +2.57
Company Price Change %Gain
Sun Pharma 559.90 +14.80 +2.72
Infosys 1,348.35 +31.80 +2.42
Reliance 1,128.55 +24.65 +2.23
ICICI Bank 266.00 +4.80 +1.84
Axis Bank 534.45 +7.15 +1.36
Top Losers
Company Price Change %Gain
Bajaj Auto 2,839.60 -275.40 -8.84
HPCL 275.40 -9.00 -3.16
IOC 161.05 -4.75 -2.86
Vedanta 202.40 -5.80 -2.79
BPCL 388.85 -9.45 -2.37
Company Price Change %Gain
Bajaj Auto 2,841.10 -271.70 -8.73
Vedanta 202.60 -5.70 -2.74
Hero Motocorp 3,373.15 -85.75 -2.48
ONGC 157.85 -3.55 -2.20
Kotak Mahindra 1,333.45 -16.80 -1.24
Loading...
Loading...