H-1B visa policy: Tough US stance to put profit margins of Indian IT firms at risk

The strict stance adopted by the US government on the H-1B visa policy would put the profit margins of Indian information technology (IT) services companies at risk in the current financial year, as staff onsite costs continue to rise.

An increase in employee costs can be attributed to tightening of visa norms for Indian players, resulting in higher onsite costs for them. Ever since the US government tightened its H-1B visa policy in 2017, challenges have mounted for the sector, according to ratings firm Crisil.

“Employee expenses which account for nearly 60-65% of total operating costs and cost per employee for Tier 1 players rose faster at about 17% and around 9% on-year in fiscal 2019, respectively, compared with nearly 6% and about 3% a year before,” analysts at Crisil noted.