No visa power

IT companies’ will be hit by the US’ move to hike visa fees

It’s not only polls in India that affect Indian business — election years in the US can be nerve-wracking, too. Especially for the IT companies. In end-March, the US government hiked the fee for H-1 B visas from its next fiscal year, starting October. The impact is already being felt, because visa applications for the new financial year open in April. The fee hike is a stiff one and IT companies are already provisioning for lower margins as a consequence — the bulk of Indian IT companies’ earning are from work in the US, after all. 

And a quick end to the problem seems unlikely. Companies aren’t willing to comment on record. “We continue to get the visas we need, and it’s business-as-usual. In the US we have the supply we need — through a combination of local hiring wherever we can get the people and getting the appropriate visas for our associates,” Cognizant Technologies said. Off the record, though, companies are vocal. “Not much will change until the US presidential elections are over. This is always an election issue, but a particularly vocal one this year due to high unemployment in the US,” says the HR head of an Indian IT major . 

If it’s not bad enough that fees have been hiked, rejection rates have gone up, too. That probably has a lot to do with the fact that there have been several accusations of visa fraud against Indian IT companies, including Infosys, Cognizant and L&T Infotech. 

But companies can do little now. The impact on margins seems inevitable since they are applying for larger number of visas so they can shore up as many acceptances as possible — and visa fees are non-refundable. Any shortfall will have to be made up with local hires in the US, which will add to costs substantially. Between April 2 and 6, US Citizenship and Immigrations Services got 22,000 petitions for H-1 B visas, compared with 5,900 in the first week of April 2011 and 13,500 in 2010. “All we can do is plan our projects better, hire efficiently and build redundancies in the visa process,” says the HR head.