A crucial bill in US House of Representatives have been passed, which has increased the H-1B and L1 visa fees by 100%. This means that American IT companies will need to pay $4000 for H-1B and $4500 for L1 visa now, if they want to hire an overseas employee to work in US.
Earlier it was $2000 for H-1B and $2250 for L1 visa.
As per various estimates, this doubling of work visa may result in additional expenditures to the tune of $4 billion (Rs 26,000 crore) for Indian firms, which have a presence in US.
This new fees hike is applicable only for those American companies which have more than 50 employees and 50% of these employees are foreigners. Thus, IT biggies such as Wipro, TCS and Infosys would now spend more for bringing in Indian employees into the US.
As per a 2013 report, Cognizant, TCS and Infosys were the companies which received maximum H-1B visa approvals.
Earlier, we had reported that a bill has been proposed which will reduce total H-1B visas offered in US by 15,000; which was touted as another major decision against IT firms.
As of now, US allocates 65,000 H-1B visa every year, which gets filled up within days of the lottery on April 1.
Catastrophic Fee Hike: Burden of Rs 26,000 Crore for IT Firms
After this bill was passed, various estimations have been projected regarding the actual loss which IT firms may incur.
As per R Chandrashekhar, president of industry body Nasscom, annual expenditure incurred by domestic IT firms will now immediately increase from Rs 665 crore to Rs Rs 2660 crore, due to this fees hike. Considering that the new rule will be applicable for 10 years, it means that Indian IT firms will need to additionally spend close to Rs 26,000 crore in visa fees.
Chandrashekhar said, “The new visa fee is applicable not only on visa applications but also on reissuance. The net effect is quadrupling of the impact to $400 million on annual basis. Over a 10 year period, it has a $4 billion impact on the industry,”
Nasscom and IT firms from India has severely objected to this sudden hike in visa fees, as they have claimed that Indian IT firms are getting targeted intentionally by US lawmakers. Chandrashekhar even said, “It does not confirm to the rules of fair play..”
On the other hand, analysts are predicting that operating margin of IT firms will also suffer, as the impact may vary from 15 to 20 basis points.
As per the information available, this increased revenues from visa hike will be used by US Government to “fund continued healthcare for first-responders impacted by the 9/11 terrorist attacks and biometric entry and exit monitoring system.”
US Economy Will Suffer?
If observed strategically, then we will see that this move may further deteriorate US economy. Considering that there is a shortage of skilled workers in US, pressure would be now to outsource the jobs, rather hiring overseas employees.
Hence, overall, jobs will move out of US, outsourcing will further anger the local population and overall, no one wins here.
As per Chandrashekhar, “If a job has to be done and we cannot bring in people and they are not available locally, it will increase the pressure on offshoring… The consequential spinoff that would have accrued to US markets would be lost,”
We will keep you updated as more information comes in regarding this visa hike.