Domestic IT cos may seek fewer H1Bs this year

Source: The Hindu Business Line
An uncertain business outlook coupled with pressure to trim onsite workforce as clients ask for price cuts could prompt Indian outsourcers to apply for lesser number of HI-B visas for 2009.

The H1-B programme allows US companies to bring in foreign skilled workers when such skills are in short supply. The US Citizenship and Immigration Services (USCIS) will take H1-B applications for the next fiscal from April 1-7.

“I would think so: the number of applications will be substantially lower,” said Mr Ganesh Natarajan, Chairman of Nasscom, the apex industry body of software services companies, stating that it would be difficult to put a figure. “The duration for receiving applications is expected to be longer,” he said.

The USCIS recently said that it would continue to accept applications beyond the five-day stipulated period if it does not receive adequate number of applications to meet the annual cap of 65,000. Generally, the quota gets exhausted within the first two days.

H1-B recipients
Though Indian firms have been among the top H1-B recipients, they do not disclose the number of applications filed. In 2008, four of the top five H1-B recipients were Indian IT firms – Infosys Technologies, Wipro, Satyam and TCS, while the fifth was Microsoft. Infosys topped the 2008 list with 4,559 visas followed by Wipro (2,678), Satyam (1,917) and TCS (1,539).

“We will apply for H1-B based on our business requirements. It will be lesser than last year,” an official of a large IT services firm said.

Shrinking volumes
Faced with shrinking volumes and with new business hard to come by, as US customers reel under the impact of the economic crisis, Indian IT companies have resorted to reducing their onsite workforce in recent months.

“I don’t see that rush to grab visas this year,” said Mr Avinash Vashistha, CEO of Tholons Inc, an offshore advisory firm that helps clients with their outsourcing strategy.

Explaining why there could be a drop, Mr Vashistha said the Indian vendors are increasingly looking at a business model that’s not dependent on visas and includes hiring local workforce and in near shore locations.

Lower costs
Also, these vendors are keen on moving work offshore while agreeing to client requests for price cuts. Further, companies have significantly reduced their staff augmentation because of the availability of skilled resources locally, Mr Vashistha said.

Applying for lesser number of visas would mean lower costs and that would have a positive impact on their first quarter margins, said Mr Harit Shah, analyst at Angel Broking Ltd.

“The chances of getting a visa could be higher this year as the number of applications would be less and the smaller companies could benefit,” Mr Natarajan said.

MindTree CFO, Mr Rostow Ravanan, said the company’s business model uses less US visas and that they would be applying for fewer H1-B permits this year.