(Bloomberg) -- A bill being proposed in U.S. Congress aimed at limiting the outsourcing of jobs and reform the country’s high-skilled immigration program is weighing on Indian IT consulting and software stocks.
Tata Consultancy Services Ltd. fell as much as 3.3 percent, the most since Nov. 9, while Infosys Ltd. shares fell as much as 2.8 percent to their lowest intraday price since Dec. 12. Tech Mahindra Ltd. fell 4.5 percent. The Sensex Index was mostly unchanged. The bill is designed to make it harder for companies in the U.S. to bring in skilled workers from abroad to fill high-tech jobs.
Any restrictions on skilled labor, provided by consultants and programmers from India, could impact the business activities that Tata, Infosys and other firms provide for U.S. companies. The visa program has become a hot-button issue in the U.S. because of concerns it is used to replace American workers with lower cost employees from abroad. It was a major campaign issue during the presidential election, particularly for Donald Trump, who will take the oath of office later this month.
“With Trump talking during his campaign about changing immigration laws and curbing outsourcing of IT jobs, the timing of this reintroduced bill is worrying Indian IT Services industry a little more,” said Bimal Raj, a partner at Mumbai-based investment banking firm Singhi Advisors.
Representatives for Tata Consultancy Services, Infosys and Tech Mahindra declined to comment, citing their silent period ahead of their quarterly earnings.
The bill, introduced this week by Representative Darrell Issa, a Republican from California, is designed to address a loophole that lets employers replace U.S. workers with skilled foreign workers on temporary H-1B visas. While the current rules require heavy users of the H-1B program to attest that U.S. workers won’t be displaced by H-1B workers, unless the H-1B workers have a master’s degree or are being paid at least $60,000, the newly proposed bill would raise the salary threshold to $100,000, and eliminate the master’s degree exception.
While many such independent bills have been introduced in the U.S. legislature in the past decade, none of them have gone past the Senate and the Congress. In this particular instance, Issa’s bill is causing anxiety as it coincides with the arrival of the Trump administration.
India has also filed a dispute with the World Trade Organization over a spike in American visa fees for foreign workers. India generates $108 billion annually from a services industry that depends on sending citizens to the U.S. and other countries to develop software, maintain computing systems and repair broken technologies. It argues the U.S. move to double the cost of visas for these skilled workers constitutes protectionism and violates the WTO’s principles for fair trade.
“It should be a level playing field for all companies and there should be no gaps,” said Shivendra Singh, vice president, global trade development at India’s IT industry trade body, Nasscom. “The U.S. Department of Labor talks of a 1 million shortage of STEM skills by 2018. The U.S. had a calibrated approach to bringing in talent in areas that are short, such as IT and software. That was what made the U.S. successful. The gap is a reality and only a calibrated approach can work.”
The bill is H.R. 170.
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