Visa curbs hit business of US IT staffing cos run by Indians

Staffing companies hire nearly 17 million temporary and contract employees annually in the US.

IT services, staffing and consulting firms in the United States — largely owned by Indians — are also finding business models under threat due to the increased denial rates for H-1B visas.

“Our growth has been hampered because of the uncertainty around the H-1B visas,” said Kishore Khandavalli, CEO of Seven-Tablets, a custom software development firm. “In some instances, companies have spent $6,000 to apply for a visa, and instead of three years, they’ve been granted a visa for one day.

IT consultants have seen a much higher denial rate — as high as 40% compared to 1% for other big tech companies like Microsoft Corp., Google and Amazon.com.

This includes IT services firms like Tata Consultancy Services and Cognizant, as well as smaller staffing firms that provide cont-ract workers to enterprises.

While visa costs had gone up, companies have been required to file a fresh application every time the person is deployed at another client location, said Deepali Khad CEO, Precision Technologies Corporation.

In case of visa denials, there is no way of offsetting the costs incurred.

“This has had a huge financial impact and we cannot pass on these costs to the client. At the same time, there is uncertainty over whether we’d get the visa approval or not. As a result, our competitiveness is getting impacted,” she said.

H-1B visa regulations require the employer to pay the visa processing fees, and while these fees have been steadily rising, so have the number of visa denials.

There have been instances where visa extension requests were denied for not meeting the conditions required, even though the initial visa had been granted under the same conditions, Khadakban said.

This has made it difficult for these firms to plan deployments at clients, with some clients now preferring to not contract H-1B workers because of the uncertainty. In some cases, companies have started sending work outside the US since they cannot meet the talent requirements locally.

There have been instances where visa extension requests were denied for not meeting the conditions required, even though the initial visa had been granted under the same conditions, Khadakban said.

This has made it difficult for these firms to plan deployments at clients, with some clients now preferring to not contract H-1B workers because of the uncertainty. In some cases, companies have started sending work outside the US since they cannot meet the talent requirements locally.

Earlier this year, staffing firms filed over 40 lawsuits against the USCIS under the banner of the ITServe Alliance, challenging the visa denials.

Their key contention is that the USCIS has been interpreting the regulations guiding the visa process incorrectly over the past few years.

“The courts have overturned about 90% of the visa denial cases as they do meet the regulatory requirements,” said Gopi Kandukuri,, national president, IT Serve Alliance.

The ITServe Alliance is an association of IT services, staffing and consulting firms. It has over 1,100 member firms, employing over 70,000 people across the US and India, doing combined business worth $5 billion.

Source: Economic Times



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