Companies
Indian IT services companies shed reliance on H-1B visas
Summary
- The number of H1-B visas Indian IT services companies secured has fallen over the past decade. At the same time, IT companies have increased hiring in the US.
Donald Trump’s return as the president for a second time has again triggered concerns about the fate of H-1B visas, which allow highly skilled non-immigrants to work in the US. But Indian software services providers, among the top beneficiaries of these permits, are less vulnerable than in the past.
The number of H-1B visas secured by India's $250-billion IT services sector employers has fallen over the past decade. At the same time, these companies have hired more in the US.
“IT services companies have increased their hiring in the US, which is causing the H-1B visa requirements to come down," said Abhishek Kumar, equity research analyst for JM Financial. “IT outsourcers have more local Americans working in the US than those on H-1B visas."
H-1B visas allow companies in the US to temporarily employ foreign nationals in specialized roles within the US for a maximum of six years. India’s top software services providers seek these permits to station employees at client locations to carry out work that can’t be offshored.
According to data from the U.S. Citizenship and Immigration Services, as many as 188,400 H-1B visas were granted last year. Most of them were issued to employees working for technology companies. US government data showed three-fourths of them are granted to Indian nationals.
Cognizant, Infosys Ltd, Tata Consultancy Services Ltd and Wipro Ltd together cornered about 25,261 H1-B visas in 2024, about half the number a decade ago.
Retail giant Amazon.com, Inc. was the biggest beneficiary of H-1B visas, getting 9,265 permits last year.
Infosys Ltd, India’s second largest software services company, was second on the list with 8,140 H-1B visas. Indian heritage Cognizant Technology Solutions Corp received 7,919 H-1B visas, followed by India's biggest IT services company Tata Consultancy Services Ltd at 7,568 H-1B visas, completing the top four.
The country's No. 3 IT services firm HCL Technologies Ltd stood ninth with 2,953 H-1B visas, while Bengaluru-based Wipro Ltd ranked 10 at 1,634 visas. Tech Mahindra Ltd. got 1,199 permits to send employees from India to work in the US last year.
However, the dependence on the non-immigrant work visas was higher in 2014, when four of the the top five recipients of H-1B visas were Indian IT services companies. Cognizant, TCS, Infosys, and Wipro got 18,640, 10,892, 10,378, and 9,253 visas a decade ago, respectively. Accenture Plc, the world’s largest tech services company, followed with 4,692 visas then.
Available numbers suggest that the companies ramped up US hiring since then. Infosys had 36,118 employees in the Americas at the end of March 2024, almost double of 19,729 in 2014. As of September quarter, the company had a total workforce of 317,788 employees compared with 160,405 at the end of March 2014.
At Cognizant, the number of US employees rose from 37,800 at the end of December 2014 to 40,500 at the end of December 2023. Its total workforce at the end of September 2024 stood at 340,100 compared with 211,500 a decade earlier.
While Wipro does not reveal the number of employees stationed in the US, the company said in a March filing in the US, “We have increasingly focused on hiring local resources in the countries where we operate."
“The whole idea is that they want to increase local hiring which they have been doing. And they are upskilling locally spending $1.1 bn impacting 2.9 million students positively. The objective is clearly to hire locally," said Shivendra Singh, vice-president and head of global trade at nasscom, which is India’s IT industry body.
Any visa curbs will still hurt margins
That, however, does not mean any further clampdown on H-1B visa allocations won't impact the software services providers.
“...there is skills gap that exist in the US and industry brings non-immigrant high skilled workers through the H-1B route wherein H1B visa workers bridge the critical skills gap, playing an important role in enabling the industry to make US economy the leading global economy," Singh said.
The current concerns over the H-1B visas gained steam after far-right activists in the US led by Laura Loomer criticized Trump’s appointment of Indian-American venture capitalist Sriram Krishnan as his AI advisor.
Tesla chief executive Elon Musk and Indian-origin politician Vivek Ramaswamy countered the anti-H-1B narrative, stating that the US lacked highly skilled graduates and that attracting skilled engineering graduates was “essential for America to keep winning".
Also read | Spurned by Schengen, Indians are being swayed this summer by the lure of liberal visas
For now, Trump’s reaction has been mixed. In his New Year’s eve address, he said the country needed smart people, while also mentioning that the US had the most competent people. He takes oath on 20 January as president of the US.
At least two experts said Trump might raise the minimum salary bar for workers going to the US on H-1B visas. At present, the U.S Department of Labor stipulates that employees working in the US on a H-1B visa get a minimum salary of $60,000 per year.
That may prompt Indian IT services firms to hire more in the US, increasing their wage costs.
“The H-1B issue will Not only impact homegrown software services companies but all tech companies that hire from India," said a Mumbai-based analyst working with a domestic brokerage. “Their wage costs will go up and this will be passed on to the client."
And read | Will see irritants like H1B visa changes in an election year: Infosys’s Rao
