US bill to tighten H-1B visa norms hits Indian tech stocks
07 January 2017
A bill being proposed in US Congress aimed at limiting the outsourcing of jobs and reforming the country's high-skilled immigration programme is weighing on Indian IT consulting and software stocks.
Tata Consultancy Services Ltd fell as much as 3.3 per cent, the most since 9 November, while Infosys Ltd. shares fell as much as 2.8 per cent to their lowest intraday price since 12 December on Friday, Bloomberg reports. Tech Mahindra Ltd fell 4.5 per cent in a BSE Sensex that was mostly unchanged.
The bill is designed to make it harder for companies in the US to bring in skilled workers from abroad to fill high-tech jobs.
Any restrictions on skilled labour, provided by consultants and programmers from India, could impact the business activities that Tata, Infosys and other firms that provide for US companies. The visa programme has become a hot-button issue in the US because of concerns it is used to replace American workers with lower cost employees from abroad. It was a major campaign issue during the presidential election, particularly for Donald Trump, who will take the oath of office later this month.
H-1B visas have seen rising demand from employers, who have filed requests for thousands of foreign workers in recent years. Companies ranging from big banks to information technology firms are among largest filers for the visas.
''With Trump talking during his campaign about changing immigration laws and curbing outsourcing of IT jobs, the timing of this reintroduced bill is worrying Indian IT services industry a little more,'' said Bimal Raj, a partner at Mumbai-based investment banking firm Singhi Advisors.
Representatives for Tata Consultancy Services, Infosys and Tech Mahindra declined to comment, citing their silent period ahead of their quarterly earnings.
The bill, introduced this week by Representative Darrell Issa, a Republican from California, is designed to address a loophole that lets employers replace US workers with skilled foreign workers on temporary H-1B visas. While the current rules require heavy users of the H-1B programme to attest that US workers won't be displaced by H-1B workers, unless the H-1B workers have a master's degree or are being paid at least $60,000, the newly proposed bill would raise the salary threshold to $100,000, and eliminate the master's degree exception.
While many such independent bills have been introduced in the US legislature in the past decade, none of them have gone past the Senate and the Congress. In this particular instance, Issa's bill is causing anxiety as it coincides with the arrival of the Trump administration.
India has also filed a dispute with the World Trade Organisation over a spike in American visa fees for foreign workers. India generates $108 billion annually from IT services industry that depends on sending citizens to the US and other countries to develop software, maintain computing systems and repair broken technologies. It argues that the US move to double the cost of visas for these skilled workers constitutes protectionism and violates the WTO's principles for fair trade.
''It should be a level playing field for all companies and there should be no gaps,'' said Shivendra Singh, vice president, global trade development at India's IT industry trade body, Nasscom. ''The US Department of Labor talks of a 1 million shortage of STEM skills by 2018. The US had a calibrated approach to bringing in talent in areas that are short, such as IT and software. That was what made the US successful. The gap is a reality and only a calibrated approach can work.''