H1B Reform is a Threat to Indian IT Industry: #4 Risks Indian IT Firms Stand to Face

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After US President's immigration jolt to companies, H1B is predictably the next reform which has already raised higher concerns from Indian I.T firms.


Is it not going to be a good time for Indian-Americans in Trump's America?

The newly proposed Bill of US on High-Skilled Integrity and Fairness Act 2017 that has been tabled in US Congress is to double the minimum wage limit from USD 60,000 to USD 1, 30,000. This move to prevent non-Americans from American jobs, is posing some hardcore challenges for Indian IT firms.

The chief executives of Indian IT companies are to meet US administration officials, lawmakers to prevent him from making changes in H1B visa requirements, on February 20 said R Chandrashekhar, the President of Industry group Nasscom, according to Indian media reports.

Tech stocks have also started plummeting with one after another new move of 45th US President Donald Trump.

IT companies' stance on H1B reforms

Among 2400 IT companies encompassed by Nasscom, some of the chief IT companies like Microsoft and Infosys have spoken against the Bill proposal.

Microsoft wants exception to Trump's order for employees with H1B visas, according to Fox Business Media.

Infosys founder, "Narayan Murthy' has said, "Indians should stop sending people on H1B visas and focus on local hiring in the US" to Indian media.

Explaining how the situation can be managed he further added that they (Indian software companies) must recruit American residents in the US, Canadians in Canada, British people in Britain etc. That's the only way, we can become a true multi-national company and in order to do that, we should stop using H1-B visas and sending a large number of Indians to those countries to deliver services,"

"I think even if the executive order comes, we should look at it more as opportunity for Indian companies to become more multi-cultural than we have been, rather than looking at it as a lacuna. This was the "only way" to remove the risk of government mandating things like the executive order," Murthy added.

#5 Risks to Indian IT Companies

India's one of the biggest outsourcing industry, Information Technology accounts for around 9.5% of the country's GDP and employs nearly 3.7 million professionals who could face these #5 major risks.

  • Higher Operational Costs

The minimum wage limit which was fixed at USD 60,000 in 1989 is to be revised in Trump's regime, which is going to greatly impact Indian IT firms in their revenue bases. Indian IT companies may face risk of higher operational costs in terms of expanding operations in other foreign countries.

  • Shortage of skilled workers

With increase in minimum wage limit in H1B visas, IT companies may deal with shortage of skilled workers in various branches across the world. Once the legislative reforms have been made in High Skilled Integrity and Fariness Act 2017, the skill shortage might hit US-based IT companies.

  • Less Competition

Indian IT companies may get affected with less competitiveness in the market in comparison to other foreign-based IT firms. The set rate of productivity of each employee tends to get hampered with a prospective revamp of teams especially in the IT sector.

  • Slowdown in investments

A dip in IT growth in industry will lead to a slump in investments for which Indian IT sector may not be ready post Indian government's demonetization drive last year. With the shortage of skill workers, IT companies might face slow growth, which will ultimately impact their revenue generation.