US H-1B Visa Curbs and Rising rupee may result in layoff in Indian IT firms

 

As a result of the tightening norms for H-1B visa by the US Government, Indian IT companies may have to layoff work force in India. The rising rupee cost is also further aggravating the already difficult situation.

As per the data released, almost 86% of the H-1B visa issued by US in the Computer space are issued to the Indians. This percentage is expected to fall to around 60% which is a very steep fall. Due to this, there would  also be a sharp decrease in income from US.

During the period of last 3 months, Rupee has gained about 5% against USD. This has resulted in reducing net realization for Indian IT Companies. As per the statement given by ASSOCHAM Secretary General D S Rawat, “After all, our stakes are quite high. It is a question of USD 100 billion software export industry that employs over four million people and reservations for H-1B visa for start-ups with less than 50 employee will decrease the number of visa available for Indian firms. Mr.Rawat has urged that the Indian Government and the IT Industry bodies should work on a strategy together to deal with this difficult situation.

Assocham has further suggested that to increase profitability, Indian outsourcing industry should invest in “near shore” centres or facilities close to US and hire local Americans.

Another IT Industry body Nasscom says its not possible to assess the impact of new H-1B visa regulations. As of now, it would mean greater scrutiny of the H-1B visa applications by the US Government agencies.

But it looks like that to remain in profit or even for the break-even of expenses in the coming years, the Indian IT firms may have to resort to cost cutting by way of running expenses as also laying off manpower. Looks like there’s tough time ahead for the IT outsourcing sector.

 

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