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Walking softly and carrying a big stick

America's move to hike H-1B and L-1 visa fees may push Indian tech majors to hire more locals abroad.

Saumya Bhattacharya | Print Edition: September 5, 2010

Should America's porous land border with Mexico be of any concern to Indian information technology (IT) professionals? It would appear so, with the US administration seeking to fund increased border patrolling and surveillance by raising the fees for H-1B and L-1 visas used by expatriate IT workers. The US has passed a border security Bill that increases the fees for H-1B and L-1 visas by $2,000 (about Rs 92,000) apiece. At present, Indian technology companies shell out at least $3,000 (Rs 1.38 lakh) for an H-1B visa and $1,750 (Rs 80,000) for an L-1 visa.

"We believe this move will have a negative impact on Indian companies which are investing in the US, employing and driving US technological talent and, overall, aiding the US economic recovery," Nasscom, the Indian IT industry lobby, said in a statement.

The increased visa fee will be applicable to companies that employ 50 or more people in the US and have more than half their employees under the H-1B or L-1 categories. The new piece of legislation will not impact American technology firms as H-1B or L-1 visa holders account for less than half their workforce.

The Indian IT industry is going to be hit the hardest by this fee hike and is, naturally, crying foul. "The Indian IT industry, while recognised as a success story, is a fraction of the US technology business, and it is shocking that the Senator (Charles Schumer) chose to blame this sector for all the generic issues of the US - increasing unemployment, lower wages, students not taking up technology education, etc," says Nasscom President Som Mittal. Senator Schumer has coauthored the Bill and called IT major Infosys Technologies a 'chop shop'.

Mittal argues that while Indian companies, which account for less than 12 per cent of the H-1B visas, will be badly hit by this move, US companies, which also use these visas in large numbers, will remain unaffected, thus unfairly reducing the competitiveness of Indian firms. Also, in the absence of a totalisation agreement, Indian firms and citizens are already paying more than $1 billion to the US in the form of social security premiums, without any benefit or refund, he adds.

But some IT industry honchos play down the immediate impact of the US move. "Most Indian IT companies would have made provisions for H-1B visas for this year, so the impact will be felt only next year," says Ganesh Natarajan, Vice Chairman and CEO, Zensar Technologies, an IT services company headquartered in Pune. Moreover, the financial liability arising from the fee hike will not exactly be huge for Indian companies, as it will mean an additional cost of only $200-250 million a year, though it does send a wrong signal, he adds.

The move will have a marginal impact on Zensar, which has local development centres in Poland, the US, the UK, Singapore and China (to be opened in September). "Most IT companies are looking at globalisation of the workforce. This Bill will accelerate the trend," says Natarajan.

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