Local hiring to rise? Indian IT cos may cut H1B visa applications next year

This, despite clients investing on digital and cloud services that require people onsite

Indian IT services firms may apply for lesser number of H1B visas than in the past when the United States begins applications from high technology workers for short term work visas from April 3.

While these firms are witnessing a business shift - clients investing on digital and cloud services that require people onsite as against traditional IT services that can be delivered offshore, anti-immigration policies of the US government is deterring them to look at sending engineers on work to the US.

US President Donald Trump came to power over rhetoric of strict immigration laws and protection of local jobs. In January, a US lawmaker introduced a bill in the US Congress to mandate companies who employ workers with H1B visa to double the pay to $130,000 a year.

While it would take longer for this bill to turn into a law, the sentiment against immigrants has Indian firms concerned. On Monday, US officials said there would be an indefinite ban on travellers carrying electronic gadgets, laptops and iPads as part of cabin baggage on airlines that emerge from West Asia. Most Indian IT workers to the US travel either through Dubai or Abu Dhabi and these restrictions would impact them as they carry office provided laptops on work.

Indian nationals account for nearly two out of three H1B visa holders in the US. But majority of them are from companies such as IBM and Facebook. Indian firms such as TCS, Infosys, Wipro and HCL Technologies have been reducing dependency on H1B visas, accounting to less than 20 per cent of the nearly 80,000 visas issued annually.

Infosys, India's second largest software exporter, is planning to significantly reduce the number of visa petitions for its junior staff. Chief executive Vishal Sikka said during the Q3 results that the company would use advanced virtual technologies and hire locally to reduce dependency on H1B visas.

"There will be more companies, including us, who will not file visa applications for the for the junior engineers this year. Applications will be filed for employees with 4 years of experience," said a senior executive with a Bangalore-based IT services major.

Companies such as TCS, Infosys, Wipro, HCL Technologies, industry analysts say, will try to hire junior software engineers locally and skill them wherever there is a shortage of right skill sets.

"In a nutshell they are trying to become less dependent on the H1 B visas for junior staff and complement it with local hiring and use of virtual technology. There will, however, be initial challenges as they may find skill gaps among junior talent in the US," said Pareekh Jain of HfS Research India.

Tech Mahindra said there will be higher billing rates if the bill to raise wage for H1B visa-holders is passed. "We are applying for visas proportionate to our business needs with higher anticipated billing rates," said C P Gurnani, managing director and chief executive officer, Tech Mahindra.

Indian firms are expected to step up hiring locally in the US, while reducing their overall hiring as the industry witnesses a slowdown due to the business shift. Fresh hiring is expected to reduce by as much as 40 per cent as companies look at utilising existing resources displaced due to automation on newer projects.

"The key thing is that we will stop applying for H-1B visas for employees with lower levels of experience," Krishnakumar Natarajan, executive chairman of IT services company Mindtree Ltd, told Bloomberg News. "Additionally, we will reduce the numbers of visa applications as a whole and I expect overall industry numbers to fall."

Shivendra Singh, head of global trade development, Nasscom, said industry would do whatever is best to remain competitive to their clients. He, however, did not rule out the talent supply constraint.

"We have not seen any executive order on it yet. Different companies want to follow different measures. The fact of the matter is preferred model for us would be to hire locally and subject to the fact that we get the relevant skill sets. Indian IT industry has been a creator of jobs in the US and we want to create more jobs," said Singh.