BENGALURU: A report by brokerage firm Nomura indicates US president Donald Trump’s decision to suspend H-1B and L-1 work visas till December will have no material impact on tier-1 Indian IT firms in the short term. The report finds that new visas comprise only 5% or less of the overall headcount in the US on visas for tier-1 IT firms.
“Worldwide IT service spends are likely to decline by 8% in FY21, according to Gartner, led by Covid-19, and we expect 3-5% decline in dollar revenues for FY21 fiscal for companies across Tier-1 IT, which limits the need for new visas,” writes Nomura research analyst Rishit Parikh.
Indian IT firms have increased localisation efforts in the last two years. Infosys has already surpassed its commitment, made in 2017, to hire 10,000 American workers at its US operations. For Wipro, the local workforce in the US touched a high of 70% of total workforce.

“Comments from tier-1 IT suggest an increasing number of clients are open to allow WFH as a part of their contract negotiations which could lead to a higher push for offshoring in the coming quarters,” Parikh noted.
However, Nomura believes the situation could be grim if the restrictions extend beyond December.
“Rejection rates for India IT (including tier-2 IT and Cognizant) increased from 6% in FY16 to 44% in FY20 for new visa applications and from 4% in FY16 to 21% in FY20 for renewals. Any further increase in rejection rates could lead to companies sourcing talent through sub-contractors and a further increase in localisation as talent availability is less likely to be an issue in the near term given the increase in unemployment rates in the US. However, this could lead to an increase in costs, as locals are 20-25% more expensive compared to H-1B,” Parikh said.