A US legislation that proposes doubling of the minimum wages of H-1B visa, sent IT stocks plunging on fears that headcount expenses will go up hitting the sector's profitability
People protest US President Donald Trump’s travel ban at the Bradley International Terminal at LA. Pic/AFP
New Delhi: Indian IT firms face the risk of higher operational costs and shortage of skilled workers with the proposed overhaul of popular H-1B visa regime by American President Donald Trump, leading to a sharp slide in tech stocks and prompting India to convey its concerns to the US.
A US legislation that proposes doubling of the minimum wages of H-1B visa holders to $130,000, sent IT stocks plunging by 9 per cent yesterday on fears that headcount expenses will go up hitting the sector's profitability.
Industry body Nasscom conceded that the Lofgren Bill contains provisions that may prove "challenging" for the sector.
The US protectionism could spell more trouble for firms like TCS and Infosys that are already facing strong headwinds from currency fluctuation and cautious client spending.
"Since the rationale for the administration and the legislative wing is to protect job opportunities for Americans, our strong suggestion is that they should carefully calibrate the conditions keeping in mind the skill shortage in the US," Nasscom President R Chandrashekhar said.
The worth of the IT industry
What's been proposed
> Increase the salary to $130,000; eliminate category of lowest pay
> Prioritise visas to those companies willing to pay 200 per cent of a wage calculated by survey
How does it affect India?
> Indian IT firms face the risk of higher operational costs and shortage of skilled workers with the proposed overhaul. As if on cue, IT stocks plunged on fears that headcount expenses will go up.
Shares of IT companies plunged as much as 9 per cent yesterday amid concerns that the new bill in the US that aims to rework the H1-B visa programme will adversely impact the hiring plans of Indian technology firms. Shares of TCS plunged by 5.46 per cent to touch an intra-day low of Rs 2,206.55 on BSE. Infosys lost 4.57 per cent to Rs 905 and Wipro went down by 4.11 per cent to R445.55. Tech Mahindra tumbled as much as 9.68 per cent to Rs 426 and HCL Technologies declined by 6.25 per cent to Rs 787.20. The BSE IT index fell by 4.83 per cent to touch an intra-day low of 9401.85. It is currently trading at 9547.53.