Already nervous about an impending clampdown on H-1B visas by the Trump administration, stock prices of Indian IT companies fell 9 points on Tuesday, the day before the annual budget, on news of a recent legislation moved in the US House of Representatives seeking to curb outsourcing.
The bill, High-Skilled Integrity and Fairness Act of 2017, moved on January 24 by Zoe Lofgren, a Democratic member from California, is not expected to go much further in a chamber dominated by Republicans, one of whom, Darell Issa, has moved a competing legislation.
The flurry of legislative activity comes in anticipation of impending action, through a possible executive order by President Donald Trump, overhauling the temporary visa programme that allows the US and US-based companies to hire 85,000 high-skilled foreign workers every year.
The order, first reported by Bloomberg that saw a draft of it, will enjoin American companies to employ Americans first, and if they must look outward, they should grant priority to highly-paid positions.
“Our country’s immigration policies should be designed and implemented to serve, first and foremost, the US national interest,” the draft read, reportedly. “Visa programs for foreign workers…should be administered in a manner that protects the civil rights of American workers and current lawful residents, and that prioritises the protection of American workers – our forgotten working people – and the jobs they hold.”
The Indian IT industry is clearly nervous while it waits for the axe to fall, and any real or perceived threats roils the market as it did on Tuesday, when news of a legislation that has little or no chance of being enacted, drove down stocks of IT companies by 9 points.
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 Bombay Stock Exchange’s IT index 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 external affairs ministry said India’s concerns related to H-1B visas had been conveyed to the US government. “India’s interests, concerns have been conveyed both to the US administration and the US Congress at senior levels,” ministry spokesperson Vikas Swarup said.
According to sources, Indian embassy officials in Washington met US officials and lawmakers “very recently” as the Trump administration was putting in place measures to control immigration.
Trump and senior members of his team have been clear that H-1B, which the president has said he used himself in his businesses, is being abused by US firms to cut costs by outsourcing jobs to companies that bring in less expensive foreign workers, mostly from India.
“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.
It’s not clear yet though how much the Trump administration can achieve through the executive order, as the issue of H-1B is tied to the highly contentious immigration reform effort centered round the fate of 11 million undocumented immigrants and policing the border — and Trump’s wall.
But Trump had said late last year in a video message that among his first tasks in office will be to “direct the department of labour to investigate all abuses of visa programs that undercut the American worker”.
And in a highly publicised meeting with leaders of the US tech industry — called the “Tech Summit” — they discussed doing away with the lottery system through which companies are granted H-1B visas, as the demand far outstrips availability. The other proposal was to make the application fee prohibitively expensive.
Indian IT companies such as Infosys, Wipro and TCS avail a large number of H-1B visas to send professionals to the US. L1visas —a related category – is given to employees of a firm when they are transferred to the US.
In 2015, President Barack Obama’s administration permitted spouses of H-1B visa-holders to get permission to work.
It is estimated that nearly 86% of H-1B visas for computer-related jobs and 46.5 % for engineering positions are availed by Indians. The US issues 85,000 H-1B visas every year.