The United States Congress has doubled the "outsourcing fee" imposed on highly qualified Indian IT professionals, raising it to $4,000 from $2,000, on certain categories of H-1B visas, and $4,500 on L-1 visas. The revised fee will apply to companies with at least 50 employees with 50 percent of them on H-1B or L-1 visas. The fees will be increased "for applicants that employ 50 or more employees in the United States if more than 50 percent of the applicant's employees are nonimmigrant’s", the Congress said in a spending bill.
The H-1B and L-1 visas are work permits obtained mainly by the Indian IT companies to be able to operate in the US. Now all Indian IT companies would be mandated to pay around $8,000-$10,000 per H-1B visa applicant from April 1, 2016, thus making the operations quite economically unsustainable.
Despite of President Obama’s stated support for continued openness and ease of access to the US market by Indian service companies and his advocacy of continued openness of the Indian market to US companies, this move hampers the investment by IT companies in US market. Though the specific provisions of the bill do not mention any particular mention to the Indian IT companies, and as the further impediment the US lawmakers has now described the increase as a temporary provision for a period of 10 years as against the previous 5 years.
NASSCOM has openly advocated against the imposition calling it as irrational, discriminatory and short-sighted. “The increase in cost of hiring for IT services will force more US companies to shift their IT operation overseas, thereby reducing American jobs and tax revenues”, NASSCOM further stated in its reaction.
Importantly, the US is the biggest market for IT giants such as Tata Consultancy Services (TCS), which earns over 50% of its revenue from the US and for Infosys the US market comprise of large chunk of over 60% of its revenues.