Indian IT sector stares at layoffs amid visa curbs and rising rupee, says Assocham
With the US tightening the norms for H-1B visas under the President Donald Trump's 'Buy American, Hire American' campaign, the Indian IT companies are bound to face disruptions by way of higher costs and even some laying off work force back home, as the rising rupee is aggravating the situation further for the technology export firms, an ASSOCHAM paper warned on Wednesday.
"Aggravated by rising rupee leading to lower realizations for software exports, the Indian IT firms may be forced to displace work force. In that case, the chances of layoffs are real," ASSOCHAM Secretary General D S Rawat said.
Nearly 86% of the H-1B visas issued for workers in the IT sector go to Indians and this figure is now sure to be scaled down to about 60% or even less, the report said.
Cautioning against a huge decline in remittances from US, Assocham paper said the US move could disturb remittances by 8-10 per cent.
According to World Bank data, US was the second largest source of remittance for India in 2015, behind Saudi Arabia, and about $10.96 billion or nearly 16 per cent of the total inflows were sent to India.
"After all, our stakes are quite high. It is a question of $100 billion software export industry that employs over four million people and reservations for H1B visa for start-ups with less than 50 employee will decrease the number of visa available for Indian firms," the paper said.
With the UK already hiking the minimum wage requirement to 35,000 pounds for tier-2 visa immigrants, this latest move by the US will act as a definitive dampener to the Indian outsourcing industry, the paper cautioned.