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IT stocks crash amid concerns over H-1B move

IT stocks crash amid concerns over H-1B move

Amid the chaos and plummeting stock of IT companies, India conveyed its concerns to the U.S. over a bill being introduced in the Congress to change rules on H-1B visas which is likely to impact its IT industry and Indian techies working in the US.

In addition to satisfying the minimum wage requirements, the bill will also mandate that employers first try to hire a qualified American for the job before applying for an H-1B or L1 visa.

Senator Sherrod Brown has also announced to introduce H-1B and L-1 Visa Reform Act in the Senate which he said: "would close loopholes in the H-1B and L-1 visa programs and provide increased protections for both American workers and visa holders".

A new bill introduced over the past week in the US Congress to overhaul the rules for immigration of highly-skilled workers has sent Indian IT stocks lower.

Alongside, a draft legislation, which among other things, calls for more than doubling the minimum salary of H1B visa holders to $130,000, was introduced in the US House of Representatives.

The bill also does not address the acute shortage of STEM-skilled workers in the U.S., which led all companies to have a calibrated hiring of locals and bridging the skills gap with skilled workers on non-immigrant visas, including H-1Bs. Its business in the USA, where it provides engineering and other tech services to firms such as IBM (IBM, Tech30), Microsoft (MSFT, Tech30) and Citibank (C), is highly dependent on the H-1B visa. These visas fill up pretty quickly and if the applications exceed the cap, a lottery system is used to allot them further.

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The new legislations will force IT companies such as Infosys, TCS, MindTree, Infosys to hire more in the USA and not renew existing visas of employees.

It will also cancel the lowest-pay categories and raise the salary at which H-1B employer is exempt from non-displacement and recruitment attestation requirements. It could also slow the growth of innovation in the USA if American companies cannot find enough skilled local talent to fill those jobs.

"We can't say how many people will be affected by the legislation". "We have already held negotiations with the Ministry of IT and are planning to go to the United States in the month of February".

The BSE IT index, which is a benchmark of IT stocks, fell over 4 per cent. Shares of outsourcing giant TCS fell 5.6 per cent, Tech Mahindra 9.7 per cent, HCL Tech 6.3 per cent, Infosys 4.6 per cent and Wipro 4.23 per cent.

The H-1B visa is a non-immigrant visa that allows companies to employ foreigners for a period of up to six years.

Now, the hike is more than double of the H-1B minimum wage which is $60,000 currently. Because the work permit is based on the spouse's H-1B visa, the H-4 spouse can work as long as the H-1B visa is valid.


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