IT services players in a flux over H-1B visa fees, but levers exist to mitigate impact

On September 19, the executive US presidential order to impose a onetime payment of $100,000 on new H1B visa applications sent on and after September 21, sent shockwaves through the IT industry.

- DEVANGSHU DATTA

Analysts are trying to assess the likely damages and the long-term consequences.

Earnings before interest and tax (EBIT) margins could be negatively impacted by anywhere upwards of 0.5 per cent and earnings per share (EPS) may reduce by close to 6 per cent for the highly exposed.

Inthe medium term, corporates and vendors could move away from visa dependency, shift more work offshore and share higher cost burdens with clients. Companies with lower US exposure, and/or lower onsite mix would be relatively better-placed.

Given rising immigration risks and higher acceptance for offshoring postpandemic, visa dependencies have already reduced.

Subdued IT demand over the past three years has also resulted in a drop in new visa applications by Indian companies. The average annual salaries of H-1B visa employees is between $100,000 -110,000, so a hike could result in a shift to local hires.