New H1-B Visa Rules To Hit India’s IT Industry Hard As US May Prefer Those Holding American Degrees Instead

A report has said that a recent policy change favouring advanced degree holders for visas in the U.S will have a drastic impact on the IT sector in the country as the number of H1-B visas approved gets reduced, reports The New Indian Express.

The United States Citizenship and Immigration Services (USCIS) proposed altering the process for selection of H1-B visas favouring advanced degree holders. Rating agency ICRA said this would likely lead to a 10 per cent reduction in approvals for regular applicants, where the applicant does not posses an advanced degree or masters from universities in the United States, said rating agency ICRA.

Factors such as pricing pressure on commoditised services, lower revenue growth and wage inflation along with increased onshore hiring associated with higher wage bill will negatively impact the margins in the future, it said.

"Under the proposed amendments, USCIS would first select the 65,000 visas from the cumulative pool of regular as well as advanced degree holder applicants and 20,000 highly skilled H1-B visas would then be allotted among the remaining pool of unselected advance degree holder applicants," said ICRA's vice-president Gaurav Jain.

"This will work against the Indian IT services sector (H-1B dependent employers) as their share of a masters degree or equivalent for H-1B visas approved was approximately 27 per cent compared to 55 per cent for non-H-1B dependent employers," he added.

An organisation or entity is considered H-1B dependent if 15 per cent of its employees are on an H-1B visa. However, credit profiles of players will remain stable as companies will be able to sustain the free flow of cash despite pressure on margins and growth, said the agency.