The Indian outsourcing industry has begun feeling the heat of US visa fee hike, with quarterly fiscal reports of major outsourcing firms showing a sudden upsurge in subcontracting costs.
In its report for fiscal quarter ending in March, TCS, the country’s largest IT outsourcing provider, reported a 28% increase in subcontracting costs to $1.17 billion from a year earlier, according to The Economic Times. For Infosys, the cost jumped 52% to $659 million, while Wipro reported a 30% rise in the cost.
Analysts say a sharp increase in the cost of US work-permits and the high rate of rejection of visa applications have forced Indian firms to hire people inside the US. When they found little skilled labor even in their US locations, they resorted to subcontracting.
Indian firms are the main beneficiaries of the US visa program, but these days they are moving cautiously as outsourcing has been a political hot potato in the ongoing presidential campaign, with many American firms accused of using the visa to send jobs overseas.
Last year, the United States doubled fees on work permits to $4,000 and $4,500, depending on the kind of visa. The Indian government has filed a complaint with the World Trade Organization challenging the system of handing out temporary visa.
Every year, the U.S. issues 65,000 H1-B visas and an additional 20,000 for those with advanced degrees. In the last few years, the demand for these visas far exceeded supply. Some Indian firms even use L-1 visas, but most of the L-1 visa applications get rejected.
Frustrated by the disagreement over visas, many Indian companies are setting up software development centers inside the United States. And some of them are offering computer science education to increase the availability of skilled labor in their main market.