Home / Markets / Mark To Market /  What rising H-1B visa rejection means for Indian IT companies in US

Rejection rates of H-1B visas have been on the rise. Data from the US Citizenship and Immigration Services analysed by Nomura Financial Advisory and Securities (India) Pvt. Ltd shows a 25% rejection rate of H-1B visa petitions during October-December 2018.

Even worse, the top-30 H-1B visa petitioners have seen a 37% initial-petition rejection rate for the year ended September 2018. Renewal rejections have also increased.

For the lucky ones, the H-1B approvals are not coming easy. Visa authorities have stepped up scrutiny, seeking more information about the petitioner, termed as request for evidence. As many as 60% of H-1B petitions have seen such scrutiny last quarter. Of them, 39% were rejected.

To alleviate the impact of H-1B visa rejections, Indian IT companies are stepping up US hiring, but it is raising cost structures.

“We believe higher localisation will make the IT cost structures less flexible in a downturn and, to minimise utilisation risks, companies will do a mix and match between high-cost but flexible sub-contractors and lower-cost own hires but with higher utilisation risk," add analysts at Nomura.

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