Wipro Ltd., Infosys Technologies Ltd. and Patni Computer Systems Ltd., which provide technology services to corporate customers, may see expenses for U.S. work visas double if a bill passed by the U.S. Senate becomes law.
The plan, passed unanimously by the Senate yesterday, would add $2,000 to visa fees for companies with more than half of their employees in the U.S. on such visas. Firms typically pay about $2,000 to $2,250 per visa application now, Kaufman Bros. analyst Karl Keirstead said.
Technology companies such as Wipro and Infosys bring skilled workers from overseas, often from India, into the U.S. to develop software and manage projects for customers in the country. The bill could cost such companies up to $250 million a year, said Som Mittal, president of Nasscom, a trade association for Indian information-technology companies.
“There would certainly be a long-term negative impact from this,” Mittal said. “This legislation would make many of the services we provide not viable.”
The majority of U.S. workers for Wipro, Infosys and Patni, all based in India, are in the country on what are known as H-1B and L-1 visas, the companies say in regulatory filings.
The Senate fee increases are aimed at helping to finance a $600 million effort to boost security at the U.S.-Mexican border, including through the addition of 1,500 guards and other officials. Sen. Charles Schumer of New York, who’s sponsoring the bill, said the technology-services companies add to unemployment in the U.S. by outsourcing jobs to foreign workers.
“It will level the playing field for American companies and American workers to compete,” Schumer told the Senate this week.
The law wouldn’t affect U.S. technology companies such as International Business Machines Corp., Microsoft Corp. and Google Inc. since less than half their workers use work visas.
Infosys, based in Bangalore, spent $12 million on H1-B and L-1 visas in the second half of 2009, according to its regulatory filings. The company, which files about 7,000 to 8,000 visa applications and renewals each year, could see $15 million in added costs from the bill, Keirstead said.
Still, the hikes are “relatively innocuous” for the Indian services companies, he said, compared with their total profit. Infosys posted net income of $1.3 billion for its fiscal year ended in March.
“It is unfortunate that this tax is being levied on a discriminatory basis when the need is to open markets to make companies more competitive in the global market place,” the company said in a statement. Infosys added that it is working with industry associations to convey its views on the issue.
Radhika Mahadevan, a spokeswoman from Wipro, also based in Bangalore, and Mike McConnell, a spokesman for Mumbai-based Patni, didn’t immediately provide comment.
Infosys’s American depositary receipts dropped 34 cents to $61.88 at 4 p.m. in Nasdaq trading. Patni’s receipts fell 24 cents to $21.06 in New York Stock Exchange composite trading, while Wipro’s added 20 cents to $13.88.
The $2,000 bump in visa costs may not be enough to make companies hire U.S. workers instead of bringing overseas employees in, said Ron Hira, a public policy professor at the Rochester Institute of Technology. Companies can pay workers on L-1 visas roughly what they would be paid in India, much less than what they would have to pay American workers, he said.
“They’ll continue to do it because the arbitrage opportunity is still great,” Hira said.