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Delay in wage-level selection of H1-B visas to benefit IT companies

Experts fear Fortune 1000 companies may cut spending on technology, hurting the outsourcing business of Indian IT companies, including TCS, Infosys and Wipro. Photo:
Experts fear Fortune 1000 companies may cut spending on technology, hurting the outsourcing business of Indian IT companies, including TCS, Infosys and Wipro. Photo:

  • Higher wages eat into the margins of IT companies as employee expenses account for 55-60% of total input cost for them, with 20-30% of employees typically working onsite and a majority of them dependent on H-1B visas

BENGALURU: The US Department of Homeland Security has delayed a rule, issued in the final days of the Donald Trump administration, that sought to change existing H-1B selection process to prioritisation based on wage levels. This is expected to benefit several Indian IT companies and others that are beneficiaries of the H1-B visa.

The United States Citizenship and Immigration Services (USCIS) has said the registration process for 2021-22 will commence on 9 March and continue till 25 March, as per the existing lottery system. This is the second year the e-registration process will be adopted.

According to immigration experts, a wage-level selection process would have hurt IT firms, especially the smaller ones, that might not be able to or willing to pay higher wages for entry-level talent.

Higher wages eat into the margins of IT companies as employee expenses account for 55-60% of total input cost for them, with 20-30% of employees typically working onsite and a majority of them dependent on H-1B visas. To mitigate the impact of changing visa regulations, IT companies have been increasingly hiring locally.

"Prioritising (H1-B visas) purely on wage levels has the potential to significantly damage some of the most innovative companies in the world along with many hospitals and health care providers, research facilities, universities and other petitioners," Nasscom said in a statement.

“We believe it is important for the US to be able to access talent critical to the covid recovery phase. While Nasscom member companies have increased local hiring and focus their efforts on local STEM skills development, the visa program bridges a critical skills gap, enabling America to become more competitive globally," it added.

The H-1B visa is a non-immigrant visa that allows US companies to employ foreign workers in specialty occupations that require theoretical or technical expertise. The technology companies depend on it to hire tens of thousands of employees each year from countries like India and China. USCIS had received 2.75 lakh registrations from sponsoring employers in the last filing season.

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