Impact of H-1B visa legislation on Indian IT Sector: Angel Broking

Views of Ms. Sarabjit Kour Nangra (VP Research- IT, Angel Broking):

"A reform bill has been introduced in the US House of Representatives mandating that the minimum salary of H-1B visa holders be doubled to US$130,000. The legislation called the High-Skilled Integrity and Fairness Act of 2017 prioritizes market-based allocation of visas to those companies willing to pay as much as 200 per cent of a wage calculated by the survey. The legislation also proposes eliminating the 'lowest pay' category. The raised salary level - to more than $130,000 - is more than double the current H-1B minimum wage of $60,000, which was established in 1989 and has since remained unchanged.

Hike in H-1B visa cost will have significant impact on the financials of the company, as Indian companies while are major users of H-1B visa (according to reports around 85%), though they form very less part of the overall workforce (around 11-15%).Depending upon the companies, they could easily witness around 60-70% rise in the salaries of the H-1B visa dependent workforce, and hence have significant impact on the net profit of the companies.

However currently the bill is yet to be passed and most of the companies are looking at mitigating the risk through increasing the local recruitment, more off-shoring, moving offices to low cost states. Thus the real impact will be difficult to pin down and would be depend upon the time when it actually gets implemented; which according to us could take time. Overall, we remain positive on the IT sector, and currently maintain our picks in the space-HCL Tech and Infosys."

Source : Equity Bulls

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