IT firms concerned over US Border Security Bill

Updated on: Tuesday, August 10, 2010

Leading IT firms have termed as "discriminatory" the US Border Security Bill which seeks to hike in H1B and L1 visa fees to fund border security and expressed apprehensions over the impact of the hike on competitiveness of Indian firms.

"While the full impact of the Bill is yet to be assessed, we think it goes against the notion of free trade and is discriminatory in nature", Wipro said in a statement.

It said the current US administration has been a vocal supporter of globalization. "However, this move puts barriers to trade and would also adversely impact talent flow to the US, which we think may have greater economic repercussions", it said.

Jeya Kumar, CEO, Patni, said the visa fee hikes would further erode cost arbitrage and cause change in the operational model of Indian offshore providers. "On the positive side, the US still recognizes it needs talent. The bigger issue is that if 50-50 rule comes into effect, then that will be a double whammy."

A Religare Indian IT Services research report said visa charges account for almost 0.4% of revenue of Infosys. "Should the bill become law, margins impact could be almost 25-30bps. For TCS, the proportion of US exposure is slightly lower."

While some top tier companies can pass on the hike to clients, given the strong volume momentum or incremental hire of local talent to mitigate some of the costs, the same might be more difficult for mid tier companies" it said.

Infosys said it has been running a programme to recruit about 1000 people in the U.S for the past few quarters... It is unfortunate this tax is being levied on a discriminatory basis when the need is to open markets to make companies more competitive in the global market place".

Nasscom said the Bill unfairly reduced competitiveness of Indian firms. "We believe this will have negative impact on Indian companies which are investing in U.S.,employing U.S. talent, driving U.S. technological talent and are overall aiding the U.S. economic recovery, it said.

"Provisions like these are contrary to the spirit and provisions in World Trade Organisation and General Agreement on Trade in Services. While full details of implementation are not available, we estimate the impact on Indian firms could be as high as 200-250 million dollars per year," it said.

As per the bill, companies with less than 50 per cent of local force have to pay an additional USD 2000 on H1B and L1 visas.

Currently, H1B visas costs range between USD 3,000-5,000 USD, depending on the attorney and premium processing fees taken.

The US government proposes to spend an additional USD 600 million to beef up border security and proposes to fund it by using proceeds from this hike in visa fees. The Bill is still a legislation and has to be passed by the House of Representatives and signed by President Barack Obama for it to become law.

IT firms concerned over US Border Security Bill

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