From Infosys to TCS, visa woes continue to haunt Indian IT firms in the US

The year 2018 is significant for Indian IT services companies on many counts as it is the period when the sector witnessed its growth bouncing back after initial hiccups. This was mainly on account of a huge push towards enhancing digital offerings. 

It is also the period when most Indian IT majors, including Tata Consultancy Services (TCS), Infosys, Wipro and HCL Technologies, made huge inroads into the US, by far the largest market, for establishing a strong local employee base. This was to largely deal with immigration-related uncertainties under the Trump administration.

Indian IT services players not only improved their pace of local hirings in the US this year but also announced local innovations centres to attract and train talent while rebadging client employees to bolster their presence in the country. 

Many of them also took the nearshoring route by establishing delivery centres in countries like Mexico and Canada to service US clients in the same time zone.

The country’s largest IT services firm, TCS, for example, said 20 per cent of its total hiring this year was done in the US alone.

Between 2011 and 2017, the company created 17,000 jobs in the US. Similarly, Infosys has already hired 7,000 in the US during the last 18 months with plans to add another 3,000 by early next year. The Bengaluru-headquartered firm also opened three innovation hubs in that country,including a massive training centre in Indianapolis. Its cross town peer, Wipro, which already has around 8,500 local employees in the US, is also giving an aggressive push to local hiring. 

HCL Technologies has improved the ratio of locals in its US workforce to around 65 per cent, said to be the highest in the industry. The company has more than 17,000 staff members in US.

“A vast majority of the new recruitment has taken place outside India for client-facing works. If you see, hiring percentage for onsite (this year) is higher than that in India,” said Sanjoy Sen, doctoral research scholar at Aston Business School, the UK. “Also, there is a lot of more emphasis on robotics and automation initiatives that eliminate human intervention for doing repetitive jobs on client geographies.”

Driven by the ‘hire American’ policy under the new political regime, the US government this year proposed sweeping changes to the H-1B visa regulations. Popular among Indian IT companies and professionals, the H1B visa allows US companies to employ foreign workers in speciality occupations that require theoretical or technical expertise, for a shorter term. According to US Citizenship and Immigration Services (USCIS), there are as many as 419,637 foreign nationals working in the US on H-1B visas as on October this year. Out of this, 309,986 are Indians with majority of them being software engineers.

“Indian IT firms are diverting actual investments in building delivery centres in smaller cities in the US which provides foundations for increasing US headcount,” said Hansa Iyengar, senior analyst at London-based Ovum Research.

With increased hiring in the US, Indian IT firms have also started reducing their dependency on H-1B visas. According to a Kotak Institutional Equities report, H-1B applications by tier-I IT companies have reduced dramatically with Wipro's being the lowest at 400 this year. “None of the companies are reliant on fresh H-1Bs for staffing projects in the US,” the report said.

Apart from hiring locals, these companies are also opting for nearshoring route to serve clients in this country. Nearshoring is an outsourcing model wherein IT firms establish delivery presence in countries and locations closer to the client geography and depute employees working in those centres to service clients whenever there is a need.

This year, many mid-sized IT firms have gone on record saying that they would opt for the nearshoring route to service clients in the US. 

For instance, Hexaware had said it would use its Mexico centre to service its US clients. Similarly, Tech Mahindra is setting up a centre of excellence in Canada with an investment of $(Canadian) 100 million to build technology solutions for clients in this region. This trend has been reflected in the numbers with India surpassing Philippines to send the highest number of immigrants to Canada in 2017.

Stricter rules

• Stricter scrutiny of H-1B visa applications with tougher qualifying criteria
• Dramatic rise in denial rates of applicants, undue delay in approval 
• Suspension of premium processing of visa application
• Proposal to give preference to master degree holders from US varsities 
• Proposal to roll back work authorisation for spouses of H-1B visa holders