Reprieve for Indian IT firms as US visa impost ends

Part of border security policy, US in 2010 asked global firms to pay $2,000 more per application for protecting Mexican borders

In what could be a temporary relief to the Indian information technology (IT) outsourcing services sector, a contentious clause in the US government’s border security policy, which required companies to pay an additional $2,000 per visa application of their employees, lapsed in the US Congress on September 30.

Unless renewed by the Congress, the expiry of this provision would help reduce visa costs of Indian IT services companies almost by half.

Though the provision has lapsed, the sector is treading cautiously in terming this a victory.

“Hopefully, the Congress will not pursue it further. During our recent meetings with various stakeholders of the US government in Washington, we had apprised them about the negativity around this provision and why the US should not pursue it,” said Nasscom chairman B V R Mohan Reddy. “We only hope that it should end here.”

In a report last month, Nasscom had said the Indian IT sector contributed an estimated $375 million during FY11-15 to the US treasury.

In 2010, the US Congress had enacted this legislation while approving the Border Security Bill. The objective was to use the fund generated out of this to protect its porous borders with Mexico to curb illegal immigration.

The move affected the Indian IT outsourcing sector. And, increased the visa cost of Indian IT outsourcers from $2,300 to $4,300 per application.

BIT BY BIT

• In 2010, US Congress passed legislation, which raised visa application costs by $2,000 each
• It was targeted against Indian technology firms, as those with less than 50% of US workforce as locals were required to pay this  
• Fund generated was initially used to fund protecting its borders with Mexico to curb illegal immigration
• Initial tenure of the provision for 4 years got extended to 5, to help pay the medical needs of 9/11
• Expiry of the provision on Sept 30 expected to bring down visa costs of Indian tech firms by almost half

Nasscom had estimated its impact on Indian IT firms at $200-300 million a year.

Though the provision was originally to last four years, the duration was subsequently extended to five years under the James Zadroga 9/11 Health and Compensation Act to provide health care and financial compensation for the firefighters and first responders who helped in the aftermath of the 9/11 attack.

Indian IT services companies are the largest recipients of non-immigration visas such as H-1B and L-1, as they need to depute engineers from offshore locations to work at clients sites in the US, which still accounts for 60 per cent of the overall market.

For FY16, United States Citizenship and Immigration Services received 233,000 H-1B visa petitions against the cap of 85,000. These include those filed under the US advanced degree exemption. For FY14, there were 124,000 petitions, which went up to 172,500 for FY15.