Continued concerns over new H1-B visa regulations set stock prices of information technology companies tumbling down by 9% on Tuesday, a day before finance minister Arun Jaitely is scheduled to present the union budget.
The fall in stock prices are a result of growing investor discomfort with the newly proposed bill in the US that aims to rework the H1-B visa programme, under Donald Trump’s presidential regime.
The new bill will adversely impact the hiring plans of Indian technology firms, which have grown over the past three decades as a large number of American companies outsourced the non-core IT work at cheaper cost to Indian tech firms that helped in building the $160 billion Indian IT industry.
Shares of Tata Consultancy Services plunged by 5.46% to touch an intra-day low of Rs 2,206.55 on the Bombay Stock Exchange. Infosys lost 4.57% to Rs 905, and Wipro went down by 4.11% to Rs 445.55. Tech Mahindra fell by 9.68% to Rs 426 and HCL Technologies declined by 6.25% to Rs 787.20.
The IT index on the Bombay Stock Exchange initially fell by 4.83% to touch an intra-day low of 9401.85. Though, it picked up to 9547.53 later in the day.
The H1-B visa has been an ongoing debate in the US, as Trump feels that it has taken away a lot of US jobs over the past many years.
His views are clear that many of these jobs should come back to his citizens. “America will start winning again, winning like never before. We will bring back our jobs. We will bring back our borders. We will bring back our wealth. And we will bring back our dreams,” Trump said during his 16 minutes inaugural address from the Capitol.
In another speech he had said, “I will direct the department of labor to investigate all abuses of visa programmes that undercut the American worker,” Trump had said in one of his speeches.”
“The Indian IT sector is heavily dependent on North America for its revenues. Around 60% of India’s software exports are made for North America,” said Alka Dhingra, Assistant General Manager TeamLease Services.
Many feel that Trump will overhaul the work-visa programme, which will make it expensive for the companies to import Indians at a comparatively lower cost than that of an average American. The difference can go up to 30% to 40% in some cases.
A legislation has already been introduced in the US House of Representatives. It proposes at doubling the minimum salary of H-1B visa holders to $130,000, which will make it almost needless to prefer an Indian over an American.
(With inputs from PTI)