Infosys in talks with clients on US Immigration bill

The bill can have an impact on operations of IT firms, says Infosys MD S D Shibulal

Infosys today said it is in discussion with clients for a contingency plan to ensure business continuity in the event of the US immigration reforms bill becoming a law.

A major part of revenue for India's second largest IT services exporter comes from the US and North America.

The Bill, which was recently passed by the US Senate, and is before the House of Representatives, proposes several changes including higher visa costs and increase in wages for H-1B visa holders.

If approved by the House of Representatives, the Bill will be sent to President Barack Obama for signing it into law.

The proposed legislation will hurt the over $100 billion IT-ITES industry in India and domestic software firms like TCS and Infosys as their cost of operations could go up significantly.

"It (immigration bill) is a matter of concern for the industry. It could have an impact on operations of IT firms. But it is not concluded yet. We are watching carefully," Infosys Managing Director S D Shibulal said.

Among other provisions, the bill proposes to increase the H-1B visa fees to about $5,000 per application.

Most Indian IT service providers depend on visas to send their employees to client sites in the US, and their operations (albeit to varying degrees) is expected to be impacted if the new law comes into force.

"We are in constant conversation with clients. They understand that it is an industry issue. We are talking to them to put in place a plan in case the Bill becomes a law," Shibulal added.

On the immigration bill, Infosys CFO Rajiv Bansal said: "Outplacement clause is a big concern. It is a show stopper. It prevents from placing the employee at client site and that is a big problem. But, we will have to wait and see the final outcome of the bill."

He, however, added that one of the strategies that Infosys is looking at is off-shore work, which the company feels will not only reduce client spending but also boost margins.

"Any increase in on-site effort increases the margins. So from a margin perspective it is better to have more and more work done off-shore. And this is one of the strategies, which we would be looking at in case the immigration bill goes ahead in its current form.

Even if the immigration bill does not have this clause, I think as a long-term strategy we have to look at moving more and more of our work off-shore to be able to get better value to the client. It also helps us in getting better value. It is a win-win situation for both," Bansal said.

He further added: "I think the long-term strategy would focus in getting work done off-shore, from India."

While there have been arguments against the Bill, top American technology companies including Google, Yahoo, Microsoft and Cisco have said this bill would give a big boost to the economic growth and attract high skilled workers into US.