Indian IT cos to pay 40% higher wages due to new visa rules: US think tank

Major players likely to ramp up local hires in US and go for offshoring to dodge visa and other cost issues

Indian IT service providers may need to shell out 40 per cent higher on wages for H-1B and other non-immigrant visas as a result of the hike in minimum wages by the US Department of Labour (DOL), according to US public policy think tank Cato Institute.

The move is likely to result in companies like Tata Consultancy Services (TCS), Infosys, HCL Technologies and Wipro ramping up their local hires in the US and offshoring, that is, relocating projects to countries such as India to dodge visa and other cost issues.

"Overall, 94 per cent of H-1B job offers were below the (new) prevailing wage rates under the interim final rule (IFR). The new IFR prevailing wage rate is 20 per cent more or higher than the actual wage offers for 88 per cent of H-1B jobs in 2020. Overall, the average H-1B employer will have to increase actual wage offers by more than 30 per cent," said David J Bier, an immigration policy analyst at the Cato Institute.

According to the Office of Foreign Labour Certification and Cato's study, Wipro faces the maximum brunt among the IT companies. The Bengaluru-based firm may have to shell out $57.01 per hour, a 49.9 per cent rise from the existing rate of $38.03 per hour. This is followed by TCS that may have to pay $52.07 an hour, a 44.3 per cent increase from the current $36.51 per hour. Infosys's wages may increase to $59.51 from $41.49 per hour, up 43.6 per cent. Zensar Technologies was the only other India-based firm in the list that may witness a 53 per cent increase to $67.03 per hour.

Among the global tech giants, Apple Inc will have to pay $89.03 from $67.07 per hour while Amazon's wages jumped to $74.70 from $59.53 per hour.

Earlier this month, the US government has published a set of rules that will result in US companies shelling out more to hire foreign workers and narrow the eligibility criteria for visa applicants. The DOL increased the minimum wages for H-1B, H-1B1, E-3 and I-140s types of visas. The prevailing wage is subdivided into four tiers or wage levels, representing the range of skills from entry-level to experienced.

The rule changes the prevailing wage levels 1-4 from the 17th, 34th, 50th and 67th percentiles to 45, 62, 78 and 95 percentile of surveyed wages from Bureau of Labour Statistics. Most H-1Bs are actually paid in the bottom slots which have been hiked the most.

On Monday, the US Chambers of Commerce, the National Association of Manufacturers (NAM) and several other organisations filed a lawsuit against the federal government, asserting that recent H-1B regulations will undermine high skilled immigration into the United States.

The lawsuit filed in the Northern District of Columbia alleges that "harmful and haphazard rules on H-1B visas" if left in place, would affect hundreds of thousands of American-based workers and disrupt manufacturers' ability to hire and retain critical high-skilled talent.