Moneycontrol Bureau

Even as the US government is expected to legislate laws tightening controls over cap on H-1B Visas, it’s fees limiting rights to work for H4 Visa holders, stocks of Indian IT companies such as Infosys, TCS, Wipro are seeing a free fall.



TCS fell over 4.4 percent while Infosys stock dipped over 2 percent and Wipro dipped 1.6 percent on the National Stock Exchange as of last close. IT stocks are expected to fall further even as US President Donald Trump is expected to sign an executive order tightening controls over work visa holders.

This comes even as a Democrat Senator Zoe Lofgren has tabled a bill - called The High-Skilled Integrity and Fairness Act of 2017 which will raise minimum the salary of an H-1B worker to USD 130,000 from the USD 60,000 prescribed earlier.



Both actions are likely to impact stocks of Indian IT companies which have till now thrived upon exporting IT workers from India on work visas for off-shoring projects.

Here are 10 things to know about H1B visa and how the new rules could strangulate work related immigration to the US:

1) What is an H-1B Visa

H-1B is a non-immigrant visa granted by the US government that allows employers based in the US to employ foreign workers. The initial duration of stay is three years. It can be extended upto six years. For such a visa, an employer must offer a job and apply for employee’s H-1B visa petition with the US Immigration Department. An approved petition becomes a work permit. It allows the employee to obtain a visa stamp and work in the US for that company alone.

2) How does selection for H-1B take place

Each year on April 1, a fresh cap for H1B visa applications is opened by the US Citizenship and Immigration Services. Employment authorisations are granted on October 1. Applicant can legally apply for the allotment of H-1B visa earliest on the first weekday in April.



USCIS publishes a memo when enough cap-subject applications have been received, indicating the closure of application season. The applications are randomly selected. Thus it is often referred to as the H-1B lottery.

3) How much does a H-1B Visa Cost

The filing fee for H-1B petition is paid by the employer/H1 Sponsor. The fee ranges from USD 1570 to USD 3075.

All petitioners have to pay a base filing fee of USD 325 plus a USD 750 for employers with 1 to 25 full-time employees and USD 1,500 for employers with 26 or more employees. A USD 500 fee is also to be submitted if the request is to change an employer.

4) How many H-1B visas are issued each year

The H-1B quota has a statutory cap of 65,000 visas for each year. There is special master degree quota of 20,000 known as ‘master cap’ reserved just for master’s degree holders from US universities.

In 2016, there were 236,000 applications for just 65,000 available visas.

5) What is the breakup of allotment by countries

There is no quota for any country but out of the above, a total of 6,800 is usually set aside for Singapore and Chile citizens as part of the free trade agreement between them.

6) Which Indian IT companies are the major users of H-1B Visas

Mumbai-based TCS and Bangalore based Wipro, and Infosys are amongst the major users of H-1B visas. In the year 2015, out of eight biggest H-1B employers all were Indian firms that include Cognizant, Infosys, TCS, Accenture. HCL, MindTree and Wipro.

Indian IT companies with roots in India took about 21,750 visas of the total 65,000 cap in 2014.

Big US employers of H1B include Microsoft, Google, Amazon, IBM, Accenture, Syntel, Apple etc.



7) Why are Indian IT companies the worst impacted

In 2014, about 86 percent of H-1B visas were issued to hire IT professionals from India. Indian IT industry earns about USD 160 billion in sales each year. Exports count about USD 108 billion and about 65 percent of the revenues comes from US based clients. For off-shoring projects, IT companies send cheap Indian labour overseas and migration of a project is done which can take about 6-18 months. For such migration of work, long term work visas become essential.



8) Can spouses of H1B workers live in the US

Spouses of H-1B holders can live in the US on an H4 visa. However an H4 holder wasn't allowed to work in US until 2015. For this reason, an H4 visa was often referred to as a ‘Prisoner Visa’. 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. The new H-1B bill is likely to restrict H4 work rights.



9) How do H1 workers get taxed

The taxation of income for H-1B employees depends on whether they are categorised as either non-resident aliens or resident aliens for tax purposes.

A non-resident alien for tax purposes is only taxed on income from the US. A resident alien for tax purposes is taxed on all income, including income from outside the US.



10) How will tech companies change their business model in new environment

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

While India is likely to gain a lot of offshore talent back in the country, it is likely to erode some profit margins for such companies.



With lesser globalisation, IT companies would be forced to execute projects from US shores till the laws becomes relaxed again in new regimen. Expect more automation as a result. It could also slow the growth of innovation in the US if American companies cannot find enough skilled local talent to fill those jobs. Expect more off-shoring of R&D centres of American companies to India as a result.

(Data Source: USCIS, Immihelp, Govtrack)