Visa changes if any, will only impact at end of 2018: Hexaware

Changes are likely to be prospective, won't impact firm as it needn't alter existing H1-B salaries

The Indian IT services industry is bracing itself to meet any eventuality that the current uncertainty in the US regulatory environment might throw up. R Srikrishna, CEO, Hexaware Technologies believes that even if some changes do take place, the impact will be evident only towards the end of 2018.

"An executive order cannot bring changes to H1-B visa. It takes legislative changes for any changes to H1-B. And of the two bills that are there, one has been put forward by the Opposition and may never get passed. The other is bipartisan. Also, if at all there are any changes, they will be prospective and not retrospective," he added.

According to Srikrishna, if the changes are prospective, they will have little impact as the company need not change the salaries of the existing employees on H1-B. "Our 2017 supply of H1-B is in place as the company applied for it in 2016. We already have the requisite people on H1-B visa. For 2018, we will again fill applications this April. Unless there is a change in law before that, we are secured for 2018. Any changes in regulations will impact us only towards the end of 2018. So we have two years to work on our supply," he added.

In 2016, Hexaware saw a reduced dependence on H1-B and is committed to continuous reduction of dependence on/usage of visas. The company has invested in multiple channels of fulfilment, including lateral hires, recruitment and training from college campuses in the US.

Srikrishna said that for 2015, about 46 per cent of its employees in the US were on H1-B visa. That has been brought down to 43 per cent in 2016. Usage of L1 visas have also been restricted due to continued higher rejection rates. For 2016, there were 316 employees on H1-B vis, and 86 were on L1, while around 340 were local hires.

More importantly, Hexaware also shared the salary differentiation between local hires and H1-B employees. "Uptil 2016, the average (cumulative) salaries for employees on H1-B visa were about 10 per cent lower than those paid to local hires. However, in 2016 salaries of incremental employees added on H1-B visa were higher by 10 per cent to local salaries. This difference was due to the skill pool that we are hiring," added Srikrishna.

Srikrishna says while the regulatory hurdle is more due to the change in the (political) environment in the US, a much more serious and far impacting change will be seen in the structural shift in the industry. "I feel automation, cloud and digital are huge structural shifts that are long lasting and will stay around," he added.

For Hexaware the shift is evident in the deals they have signed. During CY2016 the total contract value booked by Hexaware was $155 million, up 29 per cent from 2015. "We define this shift as 'Shrink IT and Go Digital'. Of this $155 million, a good 60-70 per cent falls under 'Shrink IT' work. We define that as legacy work but delivered using different platforms such as cloud, automation etc. The remaining 40-30 per cent is digital deals," he added.

The company announced its fourth quarter results on Tuesday. Its net profit at Rs 121.5 crore for the fourth quarter (the company follows the January-December financial year) was up 22.3 per cent year-on-year, and nine per cent on sequential basis.

Revenue for the quarter rose 14.8 per cent year-on-year to Rs 940.9 crore and grew four per cent quarter-on-quarter. Hexaware's US dollar revenue at $138.9 million was up 2.7 per cent sequentially. In constant currency terms revenues were up 3.4 per cent.