LIVE TV DownloadNews18 App
News18 English
Powered by cricketnext logo
»
2-min read

H1B Visa Reform to Increase IT Firms' Margin Pressure: Report

IT firms' margins will come under more pressure if the US government clears the H1B visa reform Bill -- 'Protect and Grow American Jobs Act', rating agency India Ratings and Research (Ind-Ra) said on Tuesday.

Press Trust Of India

Updated:January 10, 2017, 8:04 PM IST
facebookTwittergoogleskypewhatsapp
H1B Visa Reform to Increase IT Firms' Margin Pressure: Report
Representative Image
Loading...

New Delhi: IT firms' margins will come under more pressure if the US government clears the H1B visa reform
Bill -- 'Protect and Grow American Jobs Act', rating agency India Ratings and Research (Ind-Ra) said on Tuesday.

"...the employee cost of IT companies has increased over the past eight quarters and impacted margins negatively. The

passage of the Bill would impact IT companies operations and might lead to further increase in the onshore efforts and
subcontracting expenses," Ind-Ra today said in a statement.

The key proposal in the Bill is to increase the salary of H1B visa holder to USD 100,000 (Rs 66 lakh) from USD 60,000 per annum and the cessation of an exemption of having a master's degree. The cash cushion and low debt levels that IT companies enjoy however will mean the squeeze on margins will be credit neutral.

The salary level that has been proposed is significantly higher than the average employee cost of Indian IT companies
of under Rs 1 million (ranges between Rs 3 lakh to Rs 5 million).

Indian IT companies generate around 55-60 per cent of the revenue from the US. The onsite proportion of revenue exceeds
the offshore portion and the subcontracting expenses as a percentage of revenue has increased by around 50-100 bps over
the last eight quarters for the top IT companies.

"Further the removal of the exemption of possessing a master's degree to qualify for a H1B visa if implemented will reduce the talent pool qualifying for such visas and in turn result in either increased employee cost for hiring employees
with higher qualification or subcontract work, both of which would increase the cost of operations and pressurise margins,"
Ind-Ra said.

The US starts accepting the visa application under H1B typically from 1 April every year and issues around 65,000
visas to highly skilled professionals.

A bulk of these visas are issued to technology companies belonging to various nationalities. Indian IT companies incur
visa related costs in the first quarter of the financial year, the statement said.



Catch the biggest newsmakers and the biggest newsbreaks on CNN-News18, the only news destination. Keep watching CNN-News18 at just 50 paise per month. Contact your cable/DTH operator now!

*Rental/capacity fee of Rs. 130/- as charged by cable/DTH operator may apply. **GST extra.
Read full article
Loading...
Next Story
Next Story

Also Watch

facebookTwittergoogleskypewhatsapp
Most Active
Company Price Change %Gain
Reliance 1,222.00 3.18
Sun Pharma 401.50 2.75
Larsen 1,320.15 0.17
HDFC Bank 2,156.90 1.25
Infosys 745.10 1.94
Company Price Change %Gain
Reliance 1,220.45 3.17
Sun Pharma 402.25 2.94
Shriram Trans 1,119.25 -1.46
ICICI Bank 372.60 0.19
Larsen 1,319.50 0.09
Top Gainers
Company Price Change %Gain
Reliance 1,222.00 3.18
Sun Pharma 401.50 2.75
Infosys 745.10 1.94
Dr Reddys Labs 2,637.45 1.57
Tech Mahindra 719.20 1.42
Company Price Change %Gain
Reliance 1,220.45 3.17
Sun Pharma 401.60 2.78
Infosys 745.00 1.92
HCL Tech 976.45 1.24
TCS 1,925.20 1.30
Top Losers
Company Price Change %Gain
Wipro 337.55 -2.48
Hero Motocorp 2,851.55 -1.63
Bajaj Auto 2,682.90 -1.39
Power Grid Corp 191.35 -1.16
IOC 136.00 -1.34
Company Price Change %Gain
Hero Motocorp 2,853.05 -1.38
Bajaj Auto 2,683.05 -1.23
IndusInd Bank 1,499.65 -1.09
Power Grid Corp 191.30 -1.01
Bharti Airtel 308.00 -0.95

Live TV

Loading...
Countdown To Elections Results
  • 01 d
  • 12 h
  • 38 m
  • 09 s
To Assembly Elections 2018 Results