H1-B Visa Restrictions Force Technology Companies To Hire Locals

Restrictions on the H1-B visas by the U.S. have compelled Indian technology companies to hire more locally and led to an escalation in employee costs, a rating agency said on Friday.

Second largest exporter Infosys Ltd. led with 2,122 visa denials in fiscal year 2017-18, followed by its larger rival Tata Consultancy Services Ltd. with 1,896 rejections, the report by Care Ratings said.

"The increasing protectionist measures imposed by U.S. administration to safeguard U.S. workers are directly having an adverse impact on the Indian Information Technology majors," it said.

Out of the top three companies with highest H-1B visa denials in financial year 2018, Cognizant was leading with 32 percent denials followed by two Indian IT majors namely Infosys and TCS with 26 percent and 18 percent, it said. It can be noted that the U.S.-headquartered Cognizant has a large pool of employees working out of India comparable with any Indian technology major.

The cost structures for the Indian IT majors have been impacted as a result of the U.S. policies, the agency said. It can be recalled that while every major Indian company has pointed out to a surge in local hires in U.S., while sub-contracting work in geographies like U.S. has also put a drain on profitability for some.

The report said in the last five years, the number of H-1B approvals reduced by 21 percent. However, after the installation of the Trump administration, which has been vigilant on ensuring American interests, there has been a faster fall. The approvals declined by a sharp 50 percent in FY18 to 22,429 from the 43,957 in the year ago period, it said.