The US government has recently tripled H-1B and L-1 visa fees in what is seen as an effort to ease the domestic fears about job losses in an election year. The move is certainly a blow to the roughly $150 billion export-driven Indian IT outsourcing industry who is the largest users of the non-immigrant visas.
The higher visa fee is one of the headwinds, and the India's export-driven IT outsourcing firms, in response, are likely to raise client fees and process more work from their centres in India to buffer the collision of an increase in fees for work visas in the United States, their top client market.
The visa is currently $2000 and an additional $4000 has been imposed on H-1B visas and $4500 on L-1A and L -1B petitions. The additional fees apply to petitioners who employ 50 or more persons in the US with over 50 percent of those being under the affected non-immigrant status.
The new US measure will cut down 50-60 basis points off the profit margins of information technology firms including Tata Consultancy Services (TCS) and Infosys from the next monetary year starting April 1. These companies have in the past year increased their spotlight on high-margin digital and cloud computing services, as competition and pricing pressure on routine IT services dented growth.
The outsourcing sector brings about three quarters of its revenue from the United States, where outsourcing companies send thousands of staff every year to work at client locations. These companies now need to modify their resources to mitigate the concern.