$400 million: That's the H-1B visa fee hike bill for Indian IT

 
NEW DELHI | MUMBAI: The US Congress has doubled the "outsourcing fee" imposed on highly-qualified Indian IT professionals to $4,000 — a move that could cost the IT industry close to $400 million. The $2,000 outsourcing fee for H-1B visas and a $2,250 fee for some L-1 visas, which are used for intracompany transfers, were adopted by the US in August 2010. The fees were valid for five years and were not renewed after they lapsed in September.

While the industry was prepared for the fee to be reinstated, nobody expected it to double. "The pre-September assessment was that the impact was of the order of a $100 million. This could potentially quadruple because it is doubling of the quantum and expansion of the scope," R Chandrashekhar, president of the National Association of Software and Service Companies, told ET.

"It's ironical that countries which have been trying to tell us that you should open up your economy and be more open to trade and investment are now pulling down the shutters in their countries in the areas which matter to us." IT companies apply for thousands of visas a year and the increase will hit their margins. "They've doubled the fee, so that impact is going to be significant even if there are other margin levers to pull. The total impact we will only be able to see next year, when the new batch of filings are made," an analyst with a Mumbai-based brokerage told ET.

TCS and Infosys declined to comment. Wipro and HCL Technologies did not respond to emails seeking comment. Though the service companies will take the hardest hit, even product companies say they expect to feel the pinch. "With the rupee also trading weak against the dollar, this hike would be even steeper for the Indian IT sector and it would adversely affect the revenues of the sector. We would certainly feel the impact of this hike on our bottom line," said Diwakar Nigam, CEO & MD of Newgen Software.

Prime Minister Narendra Modi "shared with President Obama the concerns of the Indian IT industry and professionals on the proposed legislation in the US Congress relating to H1B and L1 visas" during a call, the Press Information Bureau said in a statement on Wednesday.

As the US heads towards Presidential elections next year, the debate around H-1B visas has been heating up. While experts say that raising the fee may not lower filings, it could be the first shot in a battle over the work permits.

"This fee increase, however, may be more a sign that a storm is coming for large IT services firms that are very dependent on H-1B visas. It might be saying that lawmakers are willing to take some steps to reform the visa," Patrick Thibodeau, National Correspondent for Computerworld in Washington, told ET.

The industry, though it may protest the fee and call it unfair, can do very little to stop it - except hope that Modi tackles the issue through diplomatic channels.