Democrats' win in US mid-terms opens a door of hope for IT firms

With Democrats having an upper hand in US Congress, the Donald Trump administration will find it difficult to come up with any future legislative changes with regard to visa regulations.

With Democrats winning a majority in the House of Representatives, industry experts expect some checks and balances in future immigration policies though it may not bring a significant shift in the US Administration's stance on current visa rules.

According to senior sources in the Indian IT industry, with Democrats having an upper hand in the US Congress, Donald Trump administration will find it difficult to come up with any future legislative changes with regard to visa regulations.

"There will be checks and balances because if you need new visa regulations, the Trump administration will require support of the House.

"So, the administration can't do whatever it wants," said V Balakrishnan, chairman of Exfinity Ventures, and a former board member and chief financial officer at Infosys.

The Trump administration has come up with many changes in the visa rules since taking over the presidency, making it difficult for Indian IT services firms to man their US centres with Indian engineers for servicing clients.

Apart from raising the cost of H1B visa applications, processing of both H1B visa and Green Card has slowed down by the current US administration.

"The reality is the US doesn't have enough talent to feed the IT industry.

"These are all political rhetoric.

"But, (at the end of the day) economic reality is much more important than political noises," Balakrishnan added.

The US Citizenship & Immigration Services (USCIS) has a provision for 65,000 H1B visas a year in the general category and another 20,000 for advanced degrees.

Indian IT services players, one of the largest applicants for the H1B visas, have witnessed a drop in number of applications with the US administration's emphasis on local hiring.

However, IT firms are struggling to man their projects in the US despite their localisation efforts due to shortage of STEM (science, technology, engineering and mathematics) talent.

"The Trump administration has made several changes in immigration rules through executive action, where they didn't have to go to the Congress for a vote.

"So, I don't think, this democratic balance is going to help business immigration in the short term," said Poorvi Chothani, founder and managing partner at LawQuest, and president, Indo-Americans Chamber of Commerce (Western Region) who specialises in immigration laws.

"The win for Democrats can create some resistance but I don't know how successful they will be against the current style of changing things," she said.

In the second quarter of the current fiscal year, many large and mid-tier IT services firms have flagged up concerns with regard to non-availability of local talent in the US, leading to disruption in project execution apart from a rise in sub-contracting cost.

For example, the country's second-largest IT services company, Infosys, saw higher on-site costs as well as attrition in the second quarter.

Hexaware, a mid-sized IT services company, said it could not fulfill clients' demands in the US as the company didn't have enough number of employees with the US visa.

It also said getting subcontractors in a short notice was also a challenge.

Even Wipro, which has a significantly higher percentage of local employees in the US, saw its on-site attrition rate going up.

"I would say the mid-term election is not going to have any positive or negative impact on the present regulations.

"Because, these are not new regulations but are administrative action, where the current pain is," said Vineet Nayar, the former CEO of HCL Technologies & founder chairman of Sampark Foundation.