Indian technology firms are playing down fears over US President Donald Trump’s order on a big hike in H-1B visa fees that could make recruitment of Indian workers in the US almost prohibitive, even as share prices of several IT and software firms slipped after the announcement. Over a dozen small and mid-sized information technology (IT) and software firms said this week that the $100,000 fee on fresh work visas will not materially affect their operations.
On Tuesday, IT services firms Sonata Software Ltd, Biralsoft Ltd, Zensar Technology Ltd and Happiest Minds Technologies Ltd, along with data analytics player Latent View Analytics Ltd and business process software firm Digitide Solutions Ltd, said the visa norms introduced by Trump would have no impact on their businesses.
The country’s top five tech majors—Tata Consultancy Services Ltd, Infosys Ltd, HCL Technologies Ltd, Wipro Ltd and Tech Mahindra Ltd—have so far not disclosed whether the order will impact their business.
Trump order
On Friday, Trump signed an executive order requiring companies to pay $100,000 annually for every new foreign worker under the H-1B visa, up from about $1,000 earlier. The White House clarified on Sunday that the one-time fee would apply only to new applications, not to existing visa holders. H-1B visas allow highly skilled non-immigrants to work in the US on a temporary basis.
The statements on Tuesday add to the eight mid- and small-sized IT service providers that had a day earlier flagged little or no impact from the fee hike. In all, 14 IT and software companies—almost a fifth of the BSE IT Index constituents—have now dismissed concerns that the order would materially affect their operations.
The markets reacted nervously to the visa fee hike. Shares of 13 of these companies fell by up to 12% since the fee hike was announced, dragging the BSE IT Index down 3.3% and pulling the benchmark Sensex lower by 0.6% in the first two sessions of the week. Cyient Ltd was the outlier, rising 0.3% over the sessions.
Sonata Software said H-1B utilization within the company was “not material,” with existing deployed employees and contractors unaffected. The Bengaluru-based firm added that local hiring and sustained investments in workforce planning, visa compliance and global mobility would ensure uninterrupted client service.
Chennai-based Latent View Analytics gave a similar assessment, noting that it had filed for 135 new H-1B petitions this fiscal year, of which 32 were approved by the US Citizenship and Immigration Services. Digitide Solutions also said it foresaw no material impact on its operations or financials, and was monitoring the situation. Digitide, which listed in June after a demerger from Quess Corp Ltd, earns more than three-fifths of its revenue from India.
For FY24, Sonata Software, Digitide Solutions and Latent View Analytics reported revenues of $1.2 billion, $342 million and $95 million, respectively.
Analysts expect the sharp fee hike to accelerate localization and reduce reliance on H-1B visas. “In our view, IT companies would further reduce dependence on the H-1B visa and increase localization. In the medium term, we believe IT services companies should benefit from this move, as it would trigger higher offshoring to reduce costs,” ICICI Securities analysts Ruchi Mukhija, Aditi Patil and Seema Nayak wrote in a note dated 21 September.
