With the US on the path to an economic recovery, Indian IT services players seem to be rushing to bag as many H-1B work visas as possible.
According to the US Citizenship and Immigration Services (USCIS), H-1B applications for FY15 (beginning October 1, 2014) touched the upper limit within the first five days of opening on April 1.
The USCIS said it received a ‘high number’ of H-1B visa applications for FY15; it did not give a final tally as it was still counting the applications.
The US has set a cap of 65,000 visas in the general category and 20,000 under the advanced degree exemption.
This is the second consecutive year that the cap is reached in five days. Last April, 124,000 H-1B visa applications were filed for FY14.
According to existing norms, H-1B for the next financial year (FY16, starting October 1, 2015) will open only in April 2015.
This means, Indian IT companies might need to hire more local talent to fill vacancies in the US — a costly proposition affecting margins.
“The trend of lower H-1B allocation along with higher rejection rate in L-1 (another work visa meant for employees of large multi-national companies) is disturbing for Indian IT. We expect Indian IT companies to push for higher onsite hiring in an already heated market. The recent wage survey indicates continued shortage of skills pushing higher wages. We see continued risk to onsite margin, hence overall margin due to the same. Moreover, the companies need to keep higher bench and adequate planning to cater on-demand resources,” said Shashi Bhusan of Prabhudas Lilladher in his report.
The 2014 Salary Guide by Robert Half Technology found that the average base compensation for IT professionals in the US is expected to rise 5.6 per cent in 2014, with tech salaries seeing the largest gains among all fields researched, including accounting, finance, marketing and legal.
Employers will pay even higher salary premiums for IT professionals with in-demand skills such as mobile applications, software development and business intelligence analysis, Robert Half found.
“Mobile applications developers will see average increases of 7.8 per cent next year, with salaries ranging from $92,750 to $133,500, while software developers will see average increases of 7.7 per cent, with salaries ranging from $80,250 to $127,250,” the report noted.
Even though the H-1B visa window is closed for now, companies ideally apply for more visas. This will also mean that they will have to better manage the employees who have a visa in place.
For instance, India’s largest IT services provider Tata Consultancy Services (TCS) has been applying for H-1B visas more as rejection rate on L1 category has remained high. For FY13, TCS had applied for 5,900 H-1B visas and the company had said that for FY14 the numbers would continue to be high.
This is second consecutive year when the H1-B visa cap has been filled within a weeks time. The high demand for H1-B visas was also evident from the fact that almost 124,000 H-1B visa applications were filed within the first five days of FY 2014. After 2008 this is for the first time that the cap of 65,000 has been touched within a few days.