Funding for New Border Security Bill Directly Impacts Indian IT Sector

Before the August recess last week, the U.S. Senate passed a bill called “Border Security Bill” for increasing funding for U.S.  border security. The funding for this bill, a $600 million border security spending, primarily comes from increasing visa fees for skilled foreign workers, namely H-1B and L-1 visas.  This bill requires that companies with 50 percent of employees under H-1B or L-1 visas must pay substantially higher new fees, including renewals, for each foreign worker.

As reported in Wall Street Journal (http://blogs.wsj.com/digits/2010/08/09/us-visa-fees-hurt-indias-infosys-wipro/), on an average it costs about $2,000 to get an H-1B/L-1 visa currently and the bill proposes an additional fee of $2,000-$2,500 per visa as filing and fraud prevention and detection fees. Consequently, if this bill becomes a law, it means that foreign high technology companies would be spending a lot more to bring temporary skilled workers to the U.S. for work.

In a statement released on its web site, India’s not-for-profit trade body NASSCOM estimated that the impact on Indian IT sector could be as high as 200-250 million US dollars per year. Some of India’s biggest IT outsourcing firms impacted by this bill include Wipro Ltd., Infosys (News - Alert) Technologies Ltd., and Tata Consultancy Services Ltd.

Because the foreign workers of the big U.S. technology companies, such as Microsoft , Intel, IBM and others, make up less than 50 percent of their overall U.S. work force, they are not affected by this bill. An Intel (News - Alert) spokesman talking to WSJ said, “We are aware of the legislation, we did not take a position on it and are not impacted by it.”

According to NASSCOM, it seems that the funding proposed by this bill would be from the Indian IT sector. Infosys, India’s second-largest outsourcing company by sales, said in a statement to WSJ, “It is unfortunate that this tax is being levied on a discriminatory basis when the need is to open markets to make companies more competitive in the global marketplace.”

While, we understand the need for the U.S. to protect its southwest borders, We would like to reiterate that Indian companies only take a fraction (under 12 percent) of the total H-1B visas and U.S. companies, who also use these visas in large numbers will remain unaffected by this bill, thus unfairly reducing the competitiveness of Indian firms, according to NASSCOM.

Furthermore, NASSCOM believes that this bill will have negative impact on Indian companies which are investing in the U.S., employing U.S. talent, driving U.S. technological talent and are overall aiding the U.S. economic recovery. In addition to this, Indian firms and Indian citizens pay in excess of $1 billion to the U.S. in the form of social security, with no benefit or refund, said NASSCOM.

The bill, introduced by Sen. Charles Schumer (D-N.Y.) and Claire McCaskill (D-Mo.), intends to fund 1,500 new enforcement agents and additional unmanned drones along the Mexican border.