Congresswoman Zoe Lofgren has proposed a bill which aims to double the minimum wage of H-1B visa holders to $130,000 per annum
Image: Hyungwon Kang / Reuters
For years, Indian it services companies have met the needs of their customers in the US, their biggest market, by sending software professionals from India to work at client sites, equipped with H-1B visas.
Now, the new US administration under President Donald Trump is planning to limit the scope of the H-1B programme, which, its opponents argue, displaces local workers with cheap foreign labour.
The latest proposals on H-1B visas are part of a bill introduced by Zoe Lofgren, a US Congresswoman from California, in the House of Representatives on January 24. Among other things, it proposes to more than double the minimum wage of H-1B visa holders to $130,000 per annum. Another bill, by Representative Darrell Issa proposes to raise the minimum wage to $100,000 a year.
Some analysts have tried to quantify the potential impact. Based on visa petitions filed by Infosys, India’s second largest IT services company, average annual salary for H-1B visa holders was $79,794 in FY16 and $79,201 in FY17 and is projected at $100,000 for FY18 and FY19, Mumbai brokerage Equirus said in a note.
At an average annual salary of $100,000 per professional, Infosys’s gross margins could be pared by 260 basis points from current levels in FY18, Equirus estimates. At $130,000, gross margins may fall by as much as 700 basis points.
“The risks to the IT services sector include an increase in cost per professional, more local hiring and a disruption in service continuity, which may have a negative impact on the profitability of companies that are visa-reliant,” DD Mishra, research director at technology consultancy Gartner, tells Forbes India.
(This story appears in the 03 March, 2017 issue of Forbes India. To visit our Archives, click here.)