Soaring US Work Visa Costs Means Rising Expenses for Indian IT Companies

In the midst of a scarcity of US Work Visas, and an augmentation in US visa refusals rates in the US, their most significant market, the operating costs for the Indian IT groups are reportedly heading north as they look to meet client demand, via employing labor force in the US on more costly, short-term agreements. Most probably this denotes appointing more manpower in the country on the B-1 instead of the H-1B Visas.

As per a report, in the financial year ending March 2016, the biggest outsourcing enterprise of India, the Tata Consultancy Services, registered a rise of 78.23 billion rupees (1.17 billion dollars) in sub-contracting costs, vis-à-vis the preceding year, a rise of 28%. Through this time-frame, the sub-contracting expenses as a percentage of the entire income headed north to 7.2%.

For the second biggest technology group of India, Infosys, it's a comparable story. Infosys has reportedly witnessed cost increases rise by 52% to 44.17 billion rupees, accounting for 8.2% of the firm’s whole returns. Wipro, the third-biggest outsourcing firm from India, also registered cost swells amounting to roughly 68 billion rupees--a 30% rise, in relation to the financial year concluding March 2015.

Sub-contracting Expenses at Peak for IT Companies of India

Allegedly, the sub-contracting expenses are at their peak for the firms run and controlled by the Indians. The same is a reflection of the remarkable rise in the fee of the work permits in the US, and the climbing rate of the refusal of visa petitions.

Reportedly, on December 19, last year, the US Congress passed into law an augmentation in the H-1B & L-1 Visa application and renewal charges. While the H-1B charges rose to 4,000 dollars, charges for the L-1 Visa--the visa employed by experts with particular expertise to move to the US inside a firm, called as an intra-company transfer—rose to 4,500 dollars.

The visa cost increases apply to companies with more than 50 workers, over 50% of who happen to be the holders of the H-1B or the L-1 Visa. The US Visa fee increase largely impacts Indian managed firms in the US with the reason being they happen to be the main users of the H-1B and L-1 Work Visa categories, and are also expected to fall under the other conditions for the higher visa costs.

Reportedly, a large number of the IT specialists and this covers skilled programmers and engineers, make their way to the US on the H-1B and L-1 Visas. They are sent by top Indian software firms allegedly to fulfill the demand in the US market. It (the US market) represents a big majority of the industry's proceeds.

Every year, the US issues 65,000 H-1B visas, in addition to an extra 20,000 for those having advanced degrees. During the past couple of years, the supply of these visas has not been able to meet the demand.

For the financial year 2017, a historic 236,000 H-1B petitions were obtained--this has compelled the US Citizenship and Immigration Services (USCIS) to choose petitions at random as component of a lottery arrangement to decide who is really qualified to be thought about further for a visa.

Given the fact that the probability of getting an H-1B Visa is not very high, several Indian IT ventures turn to the L-1 Visa. But, as per some industry analysts and specialists, over half or 50% of the petitions put forward by Indian IT groups for the L-1 Visas fail to get a positive response.

High Denial Rate for L-1 Visas for Indians

Allegedly, it appears that the USCIS is unjustly prejudiced against the Indian owned IT firms in the US.

A high figure of the Indian IT companies are nowadays establishing software development centers in the US and increasing their endeavors to engage local employees, to dodge US Work Visa matters. For instance, in the month of April, this year, Wipro reportedly proclaimed that it would establish a development center in the Mountain View area of California, in addition to two other cities in the US.