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Demand for H-1B visa drops in 2010

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Of the 65,000 issued by the US annually, 11,000 were lying vacant at the end of 2010.

The H-1B visa, the most sought after by for working in the US, is losing its sheen, and soaring visa fees is hardly the reason.

Of the 65,000 H-1B visas issued by the (USCIS) annually, 11,000 were lying vacant at the end of 2010, for want of applications, as opposed to peak seasons when the cap would be reached within hours of them being issued.

The US economy, still grappling with recession, protectionist measures aimed at outsourcing and the Indian information technology (IT) industry that is increasingly inclined towards becoming global, appear to have created a casualty out of H-1B visas.

“As opposed to peak times from 2002-2005, when the H1B applications would be get filled within a matter of hours, there is a downward slide in demand,” said Ameet Nivsarkar, vice-president, global trade and development, National Association of Software and Services Companies (NASSCOM).

H-1B is a non-immigrant US visa that allows employers in the US to temporarily employ foreigners specialty occupations. The visa itself is understood to be primarily utilised by Indian IT companies for onsite project delivery.

“There is, at present, a trend to hire locals in the US for onsite work. Contributing factors include the still absent vibrancy in the US economy, which means there is an availability of cheap local talent,” Nivsarkar said.

There is also the factor of mounting protectionism, which has translated into prices for H-1B being hiked from $320 to $2,320 by the Border Security Bill. Interestingly, even in 2009, with recession was at its peak, the cap for H-1B reached in December.

Industry moguls while supporting the idea of an increasingly global Indian IT industry with a clear focus on local hiring assert that the hike in visa fees is not the deciding factor behind a fall in H-1B demand.

“The increase in visa fees is not large enough for us to fundamentally alter hiring policies, but a sign of the overall maturity in the industry whose increasing focus is towards globalisation of operations,” said Sambuddha Deb chief global delivery officer, Wipro Technologies.

Wipro has operations in Atlanta in the US, where 75 per cent of the workforce comprises of local nationals. While acknowledging that the via fee rise makes business costlier, Deb is clear that an additional cost of $2000 does not make the Indian IT expert cheaper than his US counterpart.

“The present headroom in H-1B visas on offer stands at about 10 per cent. The more tangible impact, which has led to the delay in reaching the cap is attributable to the absence of speculative hoarding of visas characteristic of the early days,” Deb clarifies.

For Tata Consultancy Services (TCS), the country’s largest IT service provider, the still available H-1B visas are a signal of the increasing focus of the company on onsite hiring as opposed to transport of Indian professionals. In 2009, TCS had 10, 475 employees outside India. In 2010-2011, the company’s annual report pegged its US onsite recruitments at 3,000. In India itself this financial year, the company has set its hiring target at 50, 000.

“While the rise in H-1B prices is a factor, this is not large enough to be determinate. Issues of continuity onsite, the aim of making the company more global and the availability of more local talent at lesser costs has meant a reduction H1B applications for us,” said Ajoy Mukherjee, global head of HR, TCS.

Onsite functions for IT companies are inclusive of client interface tasks such as consulting, solutions requirement and deployment. The more manpower intensive aspect of the process, which includes testing and coding processes along with and maintenance work gets done from remote locations, mainly out of India.

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