Trump’s H-1B Visa Suspension Seen Having Little Impact On Indian IT Firms

Analysts expect U.S. President Donald Trump’s plan to temporarily suspend work visas to have little impact on Indian IT companies as reliance on such permits has reduced.

Indian information technology companies have reduced their dependence on these visas over the last few years and hired more locally, said Harit Shah, senior analyst at IndiaNivesh Securities.

According to Emkay Research, the initial H-1B visa approvals for Tata Consultancy Services Ltd., Infosys Ltd., Wipro Ltd., Cognizant Technology Solutions Corp. and HCL Technologies Ltd. fell to less than 5,200 as of March 2019 from more than 23,000 in 2012-13. Over the last five years, approvals for continuing visas have also come down, the brokerage said.

That, coupled with the Covid-19 pandemic prompting employees at leading organisations to work from home, will accelerate projects being handled from offshore, leading to even less dependence on work visas, said both Emkay and IndiaNivesh.

The Indian IT sector earns most of its revenue from the U.S. market. The executive order freezes new H-1B and H-4 visas, used by workers at technology firms and their families. The order is also applicable to most ‘J visas’ for work and study-based exchange visitor programmes.

But, according to Emkay, the executive order is likely to meet with stiff opposition in form of litigations. The recent judgment in favour of ITServe Alliance and other lawsuits contesting the significant spurt in H-1B visa denials has strengthened the resolve from the parties impacted, the brokerage said in a note.

Also, concerns over a contraction in operating margins dispelled over time.

TCS, Infosys, Wipro, Cognizant and HCL Technologies have been consistent in keeping their operating margins from falling over the last five years.

Also Read: Why 2020 Can Be Indian IT’s Worst Year Yet

The Nifty IT Index gained 0.7% Tuesday, with eight of its 10 constituents trading higher.