US visa ban 'mildly' -ve for Indian tech cos: Icra

The US government's decision to extend its ban on the issuance of green cards and a range of other work visas till the end of the year will be only 'mildly' negative for Indian technology companies because of their reducing dependence on these visas.

The top seven companies based in India saw only 6,855 H1-B petitions being approved for initial employment in 2018-19 (Oct-Sep), which is down 63% as compared to the previous year.

A sharp rise in the number of visas being denied has led to companies relying less on such visas and building up domestic workforce in the US.

These technology services companies are also using more of digital services, such as cloud computing, bots and artificial intelligence, which require fewer workers, the ratings agency said. This temporary suspension of visas will hamper the execution of pipeline and new projects, and will also lead to companies ramping up their hiring onshore, which will impact profitability. Hiring locally costs about 25-30% more as compared to the costs of H-1B visas, ICRA estimated.

Employee costs are about 55-60% of the total expenditure for technology companies, of which, a majority is for onsite work. Companies will now focus on increasing their offshore component to manage the disruptions caused by the temporary suspension of visas; they will also look at more automation and artificial intelligence in the medium term to manage higher onsite hiring costs.