Anti-offshoring pitch, H-1B visa cap may affect biz: Infosys
Expressing concerns over the possible measures by foreign countries, especially the US, to restrict off-shoring and movement of work visa-holders, Indian IT bellwether Infosys has said that such steps could adversely impact the company's business.world Updated: May 10, 2009 13:07 IST
Expressing concerns over the possible measures by foreign countries, especially the US, to restrict off-shoring and movement of work visa-holders, Indian IT bellwether Infosys has said that such steps could adversely impact the company's business.
The Obama administration has restricted the hiring of H-1B visa-holders by companies bailed out by the Federal government and recently announced a plan to end tax incentives for American entities generating jobs overseas.
Both moves are expected to impact the Indian IT sector, whose major chunk of revenues come from the US.
Infosys has said that in the prevailing economic environment, there could be a change in the existing laws or the enactment of new legislation, restricting "offshore outsourcing" or imposing restrictions on the deployment of work visa holders at client locations.
Such actions "may adversely impact our ability to do business in the jurisdictions in which we operate, especially with governmental entities," the IT firm said in its annual filing with the US Securities and Exchange Commission.
Nearly 60 per cent of Indian IT-Business Process Outsourcing industry caters to the US companies, according to latest figures. India's BPO industry employs over 17 lakh professionals.
Every year, a major chunk of the Indian professionals receive H-1B visas, which is basically a working visa for highly skilled people. In the previous fiscal year, nearly 8,200 Infosys employees held H-1B visas.
Moreover, Infosys has pointed out the possibility of private sector companies working with these governmental entities, being restricted from outsourcing projects which are related to government contracts.
These firms could even face "disincentives if they outsource certain operations", the filing noted.
Many foreign governments mainly in the US and the UK have pumped in billions of dollars into companies battered by the financial turmoil. In return, these administrations have snapped up significant stakes in those bailed out firms.
"Equity investments by governmental entities in, or governmental financial aid to, our clients may involve restrictions on the ability of such clients to outsource offshore or otherwise restrict offshore IT vendors from utilizing the services of work visa-holders at client locations," Infosys said.
Infosys has expressed concern that restriction on deployment of trained people at client locations could require the company to seek local talent. In such a case, the "local resources may only be available at higher wages," it said.
"Any resulting increase in our compensation, hiring and training expenses could adversely impact our revenues and operating profitability," the firm said.
First Published: May 10, 2009 12:55 IST