More reports on: Nasscom
Indian IT industry to create new business models says Nasscom news
14 August 2010

Following US president  Barack Obama signing the Border Security Bill into a law, Nasscom, the apex body representing the Indian software industry, has proposed creation of alternative business models for the creation of new jobs in India rather than in the US.

Meanwhile, leading Indian IT firms have also said the are trying out fresh approaches to contain the impact of the fee increase.

The US president's legislation nearly doubles the H-1B and L-1 visa application fee from the current level of about $2,300 to about $4,300 per application.

Nasscom had protested against the 'discrimination' through the Indian government and various industry associations in the US, and has called for creating new business models if working in US would get difficult.

Nasscom president Som Mittal said yesterday that even though the move would hardly have any impact of Nasscom revenues, costs are bound to go up and to address this it was looking at new business models, but it would take time.

He added that the US would continue to be the largest market for the Indian IT industry and its share may go down but the quantum of business that it was getting would come down.

According to Infosys Technologies, the second largest software exporter in India with over 66 per cent of its revenues coming  from North America including the US, new business models would evolve over a period of time which would reduce the dependency on H-1B visas.

According to Kris Gopalakrishnan, CEO and ME of Infosys Technologies, the model would evolve over time around lines where customers would come to the company. He added that this was already being seen to be happening in case of large clients that have captives in India.

He added however, that the dependency on H-1B visas may not reduced completely but it would certainly fall and the company is already seeing it happen.

expressing disappointment over the 'protectionist move' from the US, the Confederation of Indian Industry (CII) on Friday urged the US administration to reconsider the largely protectionist provisions in the Emergency Border Security Supplemental Appropriations Act.

It said the legislation would burden Indian industry with additional costs, while being detrimental to the economic interests of both countries.

Chandrajit Banerjee, director general, CII said in the absence of a social security agreement with the US, Indian industry already has to bear the burnt of double taxation while operating in the US economy and the hike in visa fees would make the business climate even worse.

Industry experts point out that unlike all other countries including India, the US has no specific employment visa and that was the reason for the use of the H-1B visa over the last two decades to fill the gap.

Nasscom has been trying to make a case with US authorities for the introduction of a service visa, but in vain.

According to Mittal, a separate category of service visa was needd because the issue kept coming up and Nasscom has been discussing it with the US authorities for the last two years to introduce it.

Mittal added that employment visas had been used by a large number of US citizens to come to India to further their business interests.

The H-1B visa guidelines have stipulated a minimum salary and additionally, conditions like not displacing local workers and making all efforts to hire locally before petitioning an H-1B employee.

The H-1B visa applied by Indian companies is closely linked to the US employment scenario and in 2009, the top 10 Indian companies had filed for 4,555 visas, a mere 6 per cent of the total visas issued.

The Obama Administration, meanwhile, yesterday came out in strong support of the Border Security Bill, termed discriminatory by Indian IT companies. It added that this would  in no way undermine US-India relationship.

"I think the United States and India have a robust and vital relationship, and nothing in this bill should interfere with that," US homeland security secretary Janet Napolitano told reporters at a White House briefing, shortly after US president Barack Obama signed the Border Security Bill into law.

Napolitano said it made sense to raise visa fee for certain businesses as it would fund the security of the US-Mexico Bill with no financial burden on American economy.

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Indian IT industry to create new business models says Nasscom