CONTRACT STAFF AT IT FIRMS FEEL THE HEAT OF H-1B VISA CURBS

MUMBAI: Contractual workers holding H-1B visas are at risk of being impacted by the recent US government executive review on immigration, as IT companies are reducing sub-contracting expenses.

Several Indian IT companies have said that they are re-evaluating their employee spends, and contractual staff will be let go when there is a greater need to preserve the jobs of permanent employees.

In the fourth quarter (Q4), TCS and Infosys reported marginally lower sub-contracting costs at 7.8-7.4% of reported revenue and have identified subcontracting costs among the immediate margin growth levers.

Wipro said gaining market share during these times will be a priority over discretionary spends. Sub-contracting accounts for 21% of its cost of revenue, according to analysts. Sub-contracted IT staff are hired for time-bound projects that require special skills and most sub-contracting needs are centred around top client geographies of the US.

Top Indian IT companies have been reducing dependency on immigrant staff for the past five years and have up to 50% permanent local staff in the US, but smaller companies are yet to catch up.

“Contractual and staffing workers are at significant risk of being subject to termination of employment, especially as various projects are terminated for lack of available budget,” said Scott J FitzGerald, managing partner, Fragomen, a global immigration law consultancy.

H-1B workers who stay employed can apply for an extension. However, if the petitions are denied, the workers have 60 days to either find employers to sponsor them for an H-1B visa, or leave the country.