H1B Visa: Indian IT Companies’ Resort To Subcontracting To Fill The Gap

Most Indian tech companies’ expenditure on subcontracting increased during the July-September quarter

Express News

H1B Visa: Indian IT Companies' Resort To Subcontracting To Fill The Gap


The Donald Trump administration has already announced that it is planning to make major changes to the US H1B visa policy. While the H1B visa changes are expected to get officially announced next year, the mere announcement has begun showing its effects.

According to an analysts’ note released by Kotak Institutional Equities Research on Tuesday, most Indian tech companies saw a significant year-on-year rise in the share of revenue spent on subcontracting during the July-September quarter this year.

The IT companies are now resorting to subcontracting as a short-term measure to fill gaps in supply intended to be filled through H-1B workers or offshoring, to avoid drag on margins. According to Kawaljeet Saluja and Sathish Kumar from Kotak Institutional Equities Research, subcontracting levels are expected to be up in the short to medium term as companies try to find other ways to offset the supply gap due to the H-1B worker shortage.

The IT companies have increased recruiting professionals from the US’s neighbor countries like Mexico and Canada through the TN visa category.

“Unlike H-1B visas, TN visas have no application timeline, are quicker and cheaper to process, have no annual quota and can be renewed indefinitely,” Saluja and Kumar wrote in the analysts’ note, reported Quartz.

The US government has already tightened the criteria for granting H-1B visas which includes an increase in paperwork. Furthermore, more and more H1B visa applications are being rejected than ever before. The Trump government has also initiated efforts to dig up H-1B visa fraud and abuse.

Two lawmakers Anna G Eshoo and Zoe Lofgren have recently introduced legislationagainst the Donald Trump administration’s plan of revoking the work authorization of H1-B visa holder’s spouses. The proposed changes in the H4 visa policy put forward by the government will make the spouses of H1B visa holders no longer eligible for work in the country.