“This will work against the Indian IT services sector (H-1B dependent) as the average wage is approximately lower by 25 per cent compared to companies that are not dependent on H-1B visas as per estimates.

New Delhi: United States’ move to tighten the H-1B visa norms is likely to have a negative bearing on H-1B-visas-dependent Indian IT services companies, according to a report.

“Tightening of H-1B norms and the changes thereof will disqualify certain positions currently eligible for H-1B visas, thereby impeding the movement of low-cost skilled labour from India and; will have direct bearing on margins,” said Mr Gaurav Jain, vice president, Corporate Sector ratings, Icra.

He said that similarly, the awarding of H-1B visas, based on highest skill or compensation, will leave less headroom for Indian companies to get such visas. “Consequently, increased onsite hiring or raising the compensation for H-1B visa applicants will significantly impact companies’ margin and will be credit negative. However, the impact will be company specific and relative to H-1B visa dependence,” said Mr Jain.

US government through Department of Homeland Security (DHS) is undertaking a study to review the definition of specialty occupation that is positions which are eligible for H-1B visas along with guidelines to ensure employers pay appropriate wages to H-1B visa holders. The guidelines are expected to be issued by October 2018.

“Such changes could be in the form of filtering various computer-related occupations, which require a bachelor’s degree (a pre-requisite for being classified as specialty occupation) or mandating a combination of education and the kind of work required to qualify as a specialty occupation,” said Icra.

Further, while the current H-1B system is lottery based, thereby giving equal selection rights to all applications, the DHS is also contemplating awarding visas to the most skilled or to highest-paid beneficiary. “This will work against the Indian IT services sector (H-1B dependent) as the average wage is approximately lower by 25 per cent compared to companies that are not dependent on H-1B visas as per estimates. An entity is defined as H-1B dependent if more than 15 per cent of its US full time employees are on an H-1B visa,” Icra said.