Indian IT companies face dilemma over immigration reform

Approximately 11 million undocumented immigrants stand a chance of gaining US citizenship following last week’s landmark approval of the immigration reform bill by the US Senate, but while that may be good news for the estimated 250,000 illegal Indian immigrants in the country, the clauses that relate to non-immigrant visas are generating concern for Indian IT companies that are based in the United States.

The reason for this is that many of their Indian workers hold US visas.  Around 70% of the workforce in the US operation centers of Indian IT firms is foreign-born, generally from India itself and who hold company-sponsored, temporary H-1B visas.  However, the new immigration bill is aiming to cut this number by half within the next three years by forcing them to hire local US employees.

The bill will also prevent any companies with over 15% of their workforce in possession of H-1B US visas from being able to place those employees at client sites.  Analysts say these rules are going to have a major negative impact on Indian IT companies.

“I think it will have a very immediate impact because 15 percent is a very low number,” says Crisil Research’s Director of Industry Research, Ajay Srinivasan.  “And if you are having more than 15 per cent of your total employees in US on H1-B visas, you cannot actually deploy anybody to work at client sites, nor can you contact for the services of these employees.  I think that is probably the most damaging provision.”