Information technology companies like HCL Technologies, Infosys, Wipro, TCS, Tech Mahindra, Mindtree, Persistent Systems and Mphasis came under heavy selling pressure after a bill backing the key changes in the H1-B visa program was reintroduced in the US.
IT sub-index on the BSE had slumped 2.5 percent with shares like HCL Technologies fell by 3.5 percent, Infosys is declining 2.5 percent, TCS slipping 2 percent and Wipro down by 2 percent.
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The bill, proposes to increase the minimum salary of H-1B visa holders to $100,000 per annum and eliminate the Master’s Degree exemption.
AK Prabhakar, head of research at IDBI Capital Markets & Securities, said that “H-1B visa is the main reason for fall in IT shares. If the bill is passed, then it will have an impact of 150 basis points on the EBITDA margins of IT companies.”
“A few Indian IT companies, like Persistent Systems, which already have 50-55 per cent of local people employed in the US will be impacted to a lesser extent,” adds Mr Prabhakar.
A bill has been proposed in the U.S. Congress by Rep. Darrell Issa, R-Calif., and aims to limit the outsourcing of jobs and reform the country’s high-skilled immigration program, is weighing on Indian IT consulting and software stocks.
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“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.
“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.”
By Premji
