Few takers of H1-B Visa

The H1-B visa quota has still not touched the cap of 65,000. Till May 2009, the US Citizenship and Immigration Services (USCIS) had about 45,500 H-1B petitions, 19,500 short of the quota. Imagine this, in 2007 and 2008, the 65,000 cap was hit in under two days. The fact that there are still available H1B visas this time of the year means that the US economy is really bad shape and that no US businesses want immigrant workers.


The cost of one H-1B visa is around $3,000. The number of H-1B visa holders in Infosys(second largest Indian IT service vendor) was 8,700 as of December 31, 2008.It came down to 8,200 as of March 31, 2009. This number is expected to come down further by another 500 at the end of the first quarter of fiscal year 2010,according to company sources.



The Indian IT community and the Indian government have protested legislation introduced by U.S. Senator. Chuck Grassley (R-Iowa) and Dick Durbin (D-Ill.)

They have introduced a new bill to impose further restrictions on H1-B visa quota.The proposed legislation would set tougher wage standards, which may increase salaries for H-1B workers as well as impose limits on the number of visa workers to 50% of the workforce.


Wipro Chairman Azim Premji, one of the speakers at the recently held U.S.-India Business Council summit, said that the India IT industry is "extremely concerned" about the Grassley/Durbin bill. He warned that the repercussions of trade protectionism will be disastrous.

Nasscom wants TAX breaks for IT-BPO sector in Union Budget

The apex body of Indian IT/ITes industry Nasscom has demanded for a 5-10 year extension of the tax holiday that is due to end next year. It has also articulated its desire for the extension of STPI scheme,removal of FBT (Fringe Benefit Tax), certain clarification on service tax. Rationalization of direct taxes is also on Nasscom’s Budget wish list.

Speaking at Nasscom’s BPO Strategy Summit 2009 here on Tuesday, the organization’s president Som Mittal said the industry has started showing signs of recovery, but that the challenge continues. “Government support through extension of the fiscal benefits under Section 10A/10B to mitigate the impact of the recession and protectionist measures being adopted globally is very necessary. This is particularly important for SMEs as it will facilitate their continued growth, provide parity with incentives under the SEZ scheme and encourage industry to move into Tier 2/3 cities”, he said.

Pramod Bhasin, president of Genpact and chairman of Nasscom, said the government sector will throw up large business deals for companies. “Seeing the opportunities in government, telecom and insurance sectors, service providers are increasingly focusing on the domestic market. Companies have to create new operating and business models to tap into the domestic opportunity. This is a huge market,’’ said Bhasin.

You got it wrong Mr. President; ‘Bangalore is still cheaper than Buffalo’

US President Obama’s proposal to scrap tax incentives that encourage American firms to ship jobs overseas is unlikely to affect Indian outsourcing companies. Since, most of them are registered in India and they do not enjoy any tax benefits in the US. But it will definitely affect large American companies who have tens of thousands of employees in India in their wholly owned subsidiaries. Many of these Indian operations handle customer service and back-office functions, particularly for banks and credit card companies. American businesses employ thousands more people in India by contracting out work to local technology and outsourcing companies.


President Obama vowed to overhaul a tax code that allowed companies to pay less tax to, as he said, “create a job in Bangalore, India, than if you create one in Buffalo, New York.” One major element to that change could be the elimination of a deduction that American companies get when they invest in subsidiaries outside the United States.

Some big American companies have large numbers of employees in India, in part because of its low labor costs. General Electric has about 14,500 employees in India, I.B.M. more than 74,000, and Citigroup more than 10,000. In addition, India’s information technology and outsourcing companies employ about 2.2 million people, and American companies account for about 60 percent of their business.


And recently, many American corporations have also expanded their sales, marketing and distribution in India to take advantage of the country’s fast economic growth and expanding middle class.

It is still unclear, whether Obama’s proposed tax plan will actually translate into massive job losses in India.

But, it’s a tax disincentive to discourage outsourcing to countries like India. And more significantly companies do not move jobs to India, China or Philippines because the tax rate is lower, they do it because labor cost is less here and that still remains the same.

Infosys employee commits suicide for job loss fear

Abhijeet Mukherjee a 23-year-old trainee at Infosys's Mysore Campus has committed suicide for the fear of failure in the company's performance assessment tests. Infosys Technologies, India's second largest IT bellwether had sacked 2100 employees recently for non-performance and has hinted at more sacking on ground of non-performance. Company's HR head, T V Mohandas Pai had earlier said that there will be "Zero Tolerance" this year for the non-performing workers.
Infosys currently employs close to 90,000 people and is often touted as one of the finest IT organizations in India.

Currently, global economic slowdown has severely impacted the company's revenue basket and the company is trying to mitigate the slowdown impact by freezing employee increment and other belt tightening steps like-increasing the probationary period for the new recruits by two months.
In its quarterly result Infosys has reported that it has lost 4 clients and its top 10 clients has slashed their IT budget by atleast 10 per sent. In the current economic scenario the company is exerting more pressure on its existing workforce and has virtually freezed all new recruitments.

HCL pockets $100m data services outsourcing deal from Xerox

Indian IT services major HCL Technologies on Monday announced that it has signed a six-year, multi-regional data centre services and transformation deal worth about $100 million with printing major Xerox Corporation. While HCL didn’t disclose the deal size, it’s learnt that the contract size is about $100 million.
The deal with Xerox spans disaster recovery, data centre hosting and migration, virtualisation and consolidation across Xerox’s data centres in North America and Europe. The Indian IT firm will also centralise and standardise the data centre infrastructure for Xerox. “Data centre environments are the heart of our business operations and we look to partner with companies that can manage our centres and take them to the next level,” Xerox chief information officer John McDermott said. HCL Technologies Infrastructure Services Division’s North America senior vice president R Srikrishna said: “This engagement is a significant milestone for HCL and further enhances our credibility for managing complex, multiregional data centres”. Last year, the two companies had announced a strategic global alliance under which HCL became the systems integrator for Xerox’s managed print services offering for enterprises. HCL has clinched a number of outsourcing deals in the last few weeks, the biggest being a $350-million total IT services outsourcing deal with Readers’ Digest Association (RDA) last month. The Indian IT firm will provide applications development and maintenance services and infrastructure support to the New York- headquartered media firm. HCL also bagged a $170-million contract from Microsoft for providing technology services for its online services business. It has also signed outsourcing contracts in the domestic market. Last month, it won a seven-year, Rs 393-crore IT services deal from general insurer National Insurance Company that covers application blueprinting, systems integration and IT infrastructure management. Remote infrastructure management (RIM) is one of the four focus areas identified by HCL for growth. Of the global RIM market estimated to be worth $524 billion, about $100 billion is considered offshorable and India’s share is minuscule at less than $1 billion.