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IT service providers prepare for potential H-1B visa changes

Stephanie Overby | Jan. 30, 2017
Indian providers prepare for possible H-1B visa reforms that could increase onshore costs by 20 percent for IT outsourcing companies who depend on the temporary worker visa program.

Given the continued lack of clarity on changes to the H-1B program, the muted response of India’s IT leaders makes sense. “Everyone wants to avoid the attention of the new administration, and their stance reflects this,” says Peter Bendor-Samuel, CEO of outsourcing consultancy and analyst firm Everest Group. “This includes companies like IBM and Accenture which stand to benefit from the changes, but the being seen to utilize this might cause reputational damage in their client base and also make them a target for the administration. “

The likely impact of H-1B caps, restrictions, or increased fees will be an increase in landed labor costs for IT service providers. Everest Group estimates that onshore costs for H-1B dependent firms could surge as much as a 20 percent if the Senate bill proposed by Grassley and Durbin becomes the basis of visa reform. “The net effect of these changes will not dramatically change the offshoring equation,” says Bendor-Samuel. “However, they will further level the playing field between Indian heritage and [U.S.-based] multinational providers.”

To offset the prospective profit margin hits, Indian service providers will need to accelerate their adoption of robotic process automation, DevOps, and other emerging tools and processes, Bendor-Samuel adds. “The hope is that the efficiencies derived from these investments in productivity will offset the increased cost.”


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