US President Donald Trump has signed the executive order, which bans all temporary work visas and green cards for all foreigners, till the end of 2020. This news caused the share prices of leading Indian IT firms like Infosys, Wipro, TCS to crash in the stock market.
Although analysts expect this order of temporarily suspending work visas to have little impact on Indian IT companies as reliance on such permits has reduced over the past few years.
Read on to find more…
Experts Take On The Impact on Indian IT Firms!
Harit Shah, senior analyst at IndiaNivesh Securities said that Indian IT companies have reduced their dependence on these visas over the last few years and hired more locally.
According to Emkay Research, the initial H-1B visa approvals for TCS, Infosys, Wipro, Cognizant Technology Solutions Corp. and HCL Technologies fell to less than 5,200 as of March 2019 from more than 23,000 in 2012-13. Over the last 5 years, approvals for continuing visas have also come down.
That’s not the only reason for the little impact on the IT industry over the order from the Trump administration!
The COVID-19 pandemic has prompted employees at leading organisations to work from home, which will accelerate projects being handled from offshore, leading to even less dependence on work visas, said both Emkay and IndiaNivesh.
The Order Might Face An Upheaval In the Form of Litigations!
The Indian IT sector earns most of its revenue from the U.S. market.
The executive order freezes new H-1B and H-4 visas, used by workers at technology firms and their families. The order is also applicable to most ‘J visas’ for work and study-based exchange visitor programmes.
However, according to Emkay, the executive order is likely to meet with stiff opposition in the form of litigation. The recent judgment in favour of ITServe Alliance and other lawsuits contesting the significant spurt in H-1B visa denials has strengthened the resolve from the parties impacted, the brokerage said in a note.
Also, concerns over a contraction in operating margins eliminated over time. TCS, Infosys, Wipro, Cognizant and HCL Technologies have been consistent in keeping their operating margins from falling over the last 5 years.
Comments are closed, but trackbacks and pingbacks are open.