Infosys, Wipro Want to Avoid US Visa Costs by Hiring Locally

Left with few work permits, IT firms have resorted to subcontracting, with Infosys alone spending $659 million on it in the first quarter of the year.

Infosys is known as bellwether in Indian IT industry. That means what it does is often followed by its peers.

Indian IT outsourcing firms Infosys and Wipro are considering hiring more local talent for their operations in the US after being hurt by a dwindling amount of available visas, which has created an upsurge in subcontracting costs.

Chief executives of both firms have expressed their desire to hire Americans rather than bring Indian engineers to the United States, according to an interview with India’s economic daily, Business Standard.

“We continue to be influenced by the visa issue situation. Our view is to become independent of visas and hire locally,” Vishal Sikka, chief executive officer of Infosys told the paper. Wipro’s CEO, Abidali Neemuchwala, expressed similar concerns.

With thousands of employees around the world, both Infosys and Wipro want to be regarded as global companies rather than Indian outsourcing firms. It is clear that they feel frustrated as the political rhetoric grows in the U.S. over immigration and outsourcing.

So far this year, Infosys has hired more than 2,000 people across the Americas.

Until the middle of 2015, Indian businesses, particularly information technology firms, had made investments worth more than $15 billion creating nearly 90,000 jobs in the United States alone, according to a study conducted by auditing firm Grant Thornton International.

That is a huge number and will have large positive effect on US economy, considering the fact that each job in US technology sector leads to the creation of six jobs in other sectors.

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Nowadays, these firms are focusing on providing solutions in emerging technologies, such as automation, instead of cashing in on India’s IT talent willing to work for a quarter of the salary earned by their US counterparts.

Every year, the U.S. issues 65,000 H1-B visas and an additional 20,000 for those with advanced degrees. Indians made up the majority among those who received these visas. Last year, the United States doubled fees on work permits to $4,000 and $4,500, which began to undercut the profits of IT firms.

Left with few work permits, IT firms resorted to subcontracting, with Infosys alone spending $659 million on it, according to its fiscal report for 1Q16, representing a 52% increase over the previous quarter.

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