Every time USA is about to face elections, the Department of Labour will introduce a new bill to impose a rhetoric against the outsourcing policy of IT firms.
But the recently proposed addition to the LCA (Labour Condition Application) is much more than just rhetoric. One of the additions include that the employees will have to disclose the name and location of the clients that hire for them.
This is complete violation to the non-disclosure agreement clause that is present in every contract.
This hard blow comes as a surprise to the IT industry which was actually expecting a breather from the Government, so that they can grow in a limping economy.
But the trend has been like this for a long time, for e.g. the application cost for H1-B and L-1 visa was increased from $2300 to $4300 and the rejection rate increased from 2.8% in ’08 to 27% in ’11 and now it hovers between at 40 – 50%. Imagine half of all the Visa applicants are sent back home.
These kind of rejections rates are putting Indian IT software services in a quandary. Due to higher rejection rate the companies applied for twice the number of visas than it used to. This also increased the burden on them.
And, if the new proposals by DOL are implemented then the Indian IT firms will have to increase the number of American hired at its US offices. Till they can hire in large numbers, the IT firms have subcontracted to independent US developers.
Now, as an alternative (albeit very expensive one), the Indian IT firms are setting up HR and training centres in US. They are visiting US campuses and getting them familiar with their firm, building relationship with the campuses.
This whole thing beats the very reason the Indian IT firms had set up base in the US. The ones which already had HR and training centre in US are further strengthening their HR module by hiring former executives from US companies.
They never intended to hire engineers from US on a large scale because the pay scale for US graduated engineers is much more than India graduated engineer.
The margins have already taken a hit, now if these proposals are implemented then the economy and structure of IT business will change in a big way in the years to come.