Tech stocks took a beating Tuesday and the National Association of Software and Services Companies (NASSCOM) said the US Bill proposing the High-Skilled Integrity and Fairness Act of 2017 to more than double the minimum wages for H1B workers from the current $60,000 to $130,000, and to prevent high skill jobs from going to non-US citizens, will pose a big challenge to the Indian information technology sector.
The Zoe Lofgren Bill, introduced in the US House of Representatives, is a long way from becoming law but it does pose dangers to Indian IT companies which receive the largest share of the 65,000 H1B work visas issued by the US every year, NASSCOM said in an official statement.
The Lofgren Bill is the first introduced in the US since Donald Trump took charge as President on January 20. Earlier, on January 4, two Republicans from California, Darrell Issa and Scott Peters, had tabled a Bill called the Protect and Grow American Jobs Act in the US Congress to raise wages for high skill jobs in the US to $100,000 per year from $60,000 and to make Master’s degrees mandatory to qualify to work with H1B visas in the US.The Bills are basically intended to prevent companies from using low-cost foreign workers to do high-skilled jobs in the US. “The Lofgren Bill contains provisions that may prove challenging for the Indian IT sector and will also leave loopholes that will nullify the objective of saving American jobs,’’ NASSCOM said.
The High-Skilled Integrity and Fairness Act of 2017 looks at a market-based system for allocation of visas to companies willing to pay more than double the wages calculated by a survey. “The Bill does not treat all IT service companies with H-1B visa holders equally, and the provisions are biased against H-1B dependent companies. The higher wage level would have ripple effects for many other industries including nursing, engineering, life sciences, and others,’’ Nasscom said.
Given the sensitivity of the issue and the fact that Bills have to go through multiple stages before being enacted, IT companies preferred not to comment on the matter on Tuesday.
As of 2015, Indian IT companies were the top users of H1B visas issued by the US, with TCS at the top with 4,674 new visas for its employees during the year.
Analysts also said Indian software companies could be forced to weigh in the option of hiring locally in the US to control additional costs.
On Thursday, IT stocks bounced back today, rising as much as 3 per cent, on value-buying at lower levels in line with a positive stock market sentiment. Shares of Infosys gained 2.05 per cent, TCS rose by 1.68 per cent and HCL Tech went up by 1.41 per cent on BSE. Tech Mahindra gained 2.85 per cent and Hexaware Technologies went up by 1.82 per cent. The BSE IT index rose by 1.78 per cent to end at 9,635.41. Shares of Wipro ended marginally down by 0.01 per cent.
“IT stocks, which were under pressure owing to the US immigration woes, swung back sharply lending positivity,” Geojit BNP Paribas Financial Services Ltd Chief Market Strategist Anand James said. IT stocks were reeling under pressure amid fresh concerns over H1-B visa issue. These stocks were on the backfoot and witnessed a combined erosion of Rs 44,280 crore from their market valuation in the past two straight sessions.
Meanwhile, asserting that artificial trade barriers between India and the US would “evaporate” quickly, an Indian-American donor and supporter of US President Donald Trump has said fears about the H-1B overhauling is “overblown” and the issue is unlikely to cause trouble in bilateral ties.
“President Trump first and foremost is a businessman. He knows how to grow US as a business. He is pretty clear on the position of US Chambers of Commerce that in order to grow the American economy, you need a lot of IT experts and professionals,” Chicago-based Shalabh ‘Shalli’ Kumar said.
“My expectation is that there would be a good monitoring of abuse and fraud in H-1B system. There is a little bit of that, not much. Otherwise when the US economy grows 4-5 per cent per year, there is going to be a very big need of IT workers and IT work, which will still be primarily be going to India and Indians,” he added in response to a question on the series of legislations pending in the US Congress and if this could be a major point of friction between India and the US.
During his campaign, Trump promised to increase oversight of our H-1B and L-1 visa programmes, said Kumar.