The US Senate has just voted to put the burden of funding a US-Mexico border security programme on Indian IT companies. The Bill, yet another sign of growing US protectionism, will raise substantially the fees paid for H1 and L1 visas that Indian IT companies use to bring employees to the US to work on projects. IT industry body Nasscom estimates that the move will raise costs for Indian IT firms by as much as $200-250 million a year and indicated that it is preparing for a fierce lobbying campaign against it.
The Bill, whose main objective is to beef up US-Mexico border security with more agents and more unmanned aerial vehicles, will have to now be passed by the US House of Representatives. Charles Schumer, the US senator who sponsored the legislation, is seen as one of the most vocal critics of outsourcing.
Nasscom’s cost estimate is based on the assumption that the increase in fees is $4,500 (on top of the existing fee of $2,500 for H1 visas) and the fact that India uses approximately 50,000 H1 and L1 visas a year.
However, it admits that the language of the Bill is ambiguous on the quantum of the fee increase. The fees are typically split into what are called filing fees and fraud fees. Nasscom says it’s unclear whether there’s an increase of $2,250 in both filing fees and fraud fees or whether it’s for both combined. Either way, the impact will be substantial.
The Bill is also seen to make Indian IT companies less competitive vis-a-vis their US counterparts like IBM, Accenture and HP. Under the Bill’s provisions, the higher fees are applicable only to companies that employ 50 or more people in the US and only if more than 50% of those company’s employees are under H-1B or L-1 status. For US MNCs, only a tiny fraction of their employees are under these visas. On the contrary, most big Indian IT companies would have well over 50% of their employees in the US under these visas, even though most are in the process of increasing their base of local employees.
"While we understand the need for the US to protect its southwest borders, it seems that the funding proposed by this Bill would be from the Indian IT sector," Nasscom said in a statement. Pratik Kumar, executive vice president (HR) in Wipro, also said the proposed hike goes against the notion of free trade.