The contentious fee swells for an H-1B Visa to $4,000 from the previous $2,000 and the L-1 Visa to $4,500 from the previous $2,250, have attracted widespread media coverage of late, and of course, the visa charge swell has somewhat soured the Indo-US relationship.
As per some reports, Indian IT groups are expected to counter, via raising increasing client charges and processing extra work from their Indian centres. The same will somewhat make the blow softer of augmented costs, thanks to fees being raised by 100% for the US H-1B and L-1 Visas.
Significantly, the visa cost increases are applicable to organizations/companies with more than 50 workers on their pay-rolls, over 50% of whom happen to be H-1B Visa workers. It affects mostly Indian possessed groups in the US.
Negligible Effects on Earnings of Indian IT Companies
As per a report published in a leading Indian daily, the charge swells for the H-1B and L-1 Visas will cut 50-60 basis points off the profit margins of the Indian IT companies and this covers the well-known Tata Consultancy Services (TCS) and Infosys from the next FY beginning April 1. It is comparable to roughly half of 1% decrease in profitability. So, it is hardly noteworthy, it is asserted.
The outsourcing segment of India has sales of roughly $150 billion, with three quarters of its profits engendered from the US, where Indian IT companies position several 1000s of employees to labor on-site at client places.
As per available data, while TCS, reportedly, proclaimed that it's expected to register a 10% swell in profitability in its December quarter, Infosys is expected to register a 3% increase in profits.
The US Congress passed the augmentation in H-1B and L-1 Visa charges into law during the month gone by--on December 19, 2015, to be precise. It has stimulated widespread fears that more checks on IT job sent abroad by the US firms may also happen.
Allegedly, the higher visa charge is a headwind. However, they can look forward to get back a part of the costs through contract re-negotiations and the stronger dollar.
Immense Expenses for Indian IT Companies
As per the National Association of Software and Service Companies (Nasscom), Indian owned IT firms in the US face an added $400 million per annum in costs, courtesy fee swells for H-1B and L-1 Visas.
Allegedly, the costs are unfounded, and tailored to affect Indian IT firms excessively even as US immigration improvement must happen soon. Still, many observers opine that the augmented H-1B and L-1 Visa charges are hardly of any concern even while according to the noted Indian industrialist N. R. Narayana Murthy, the doubled visa charges will not be a mainly troubling subject.