Alarm grows among Indian tech groups over US immigration plans Indian IT outsourcing groups with large operations in the US are reacting with growing alarm to new immigration rules proposed by the Senate, which threaten to limit fundamental elements of their business models. Companies such as Cognizant and Tata Consultancy Services rely heavily on H-1B visas, for highly skilled workers, to allow Indian staff to work on projects in the US. The proposed reforms would curtail that practice, potentially forcing the groups to hire thousands of new local employees or make acquisitions to bring in American staff. But the far-reaching draft immigration bill, unveiled this month by a group of eight senators, also suggests workers on such visas may be restricted from operating on "outplacements" at the offices of their clients, an approach used by nearly all IT services groups. "A lot of people are worried, and if the outplacement thing happens, this industry is as good as dead in the US," says one senior Mumbai-based IT analyst, who spoke on condition of anonymity. Being on the client site is a necessity in most places . . . you might be able to open an office in New York, but they can't do that in every remote town or city. India's biggest IT exporters tend to earn the majority of their revenues working for companies in the US, and are also by far the leading users of the H1-B system. The four largest recipients - Cognizant, TCS, Infosys and Wipro - together had 26,654 visas last year, more than 40 per cent of the total given out. Although these companies do not publish figures on the proportion of staff who are visa holders, analysts suggest roughly three-quarters of US-based workers are typically foreign nationals working on projects temporarily. The proposed legislation suggests that from 2016 any company with more than half of its staff on such work permits will be forbidden from applying for more visas, effectively creating a cap on temporary immigrant staff. Although American IT groups such as IBM and Accenture do have substantial outsourcing operations in India, they also tend to have a higher proportion of staff in the US, and would not be as affected by the measures, analysts say. Most Indian companies have avoided commenting on the proposals in public, but Cognizant, which operates largely out of India despite being headquartered in New Jersey, said the measures would undermine US growth. The unintended consequence of all this could be increased business for Indian IT offshore, not in the US "This bill as written would threaten America's already delicate economic recovery," the group said. Arbitrary limitations on the number of skilled immigrants that leading companies can hire will put US firms at a competitive disadvantage in the global marketplace. The measures come at an uncertain moment for India's software sector, which has seen its once-speedy growth rates slow as blue-chip clients in the US and EU trim IT budgets in the face of tough macroeconomic conditions. India's IT trade body NASSCOM is understood to be pressing for changes to the proposed measures, while industry figures say the companies affected are already considering shifting more work abroad in anticipation of the reforms. "In the short term there will be significant pain for everyone," says the head of one Indian IT group, who asked not to be named. But the unintended consequence of all this could be increased business for Indian IT offshore, not in the US. However, other analysts suggest the measures might provide a spur to the Indian groups, which have been seeking to compete with the likes of IBM and Accenture by offering higher-end services in areas such as management consultancy, which are harder to outsource. "Almost all of the IT majors have come to a point in their growth where they have little choice but to hire in the US," says Siddharth Pai, Asia-Pacific president of research group ISG. So you either hire organically, or you try and find a new group to acquire to pick up the local workers . . . but these groups need to have a more global looking workforce, so this just accelerates a process which is inevitable anyhow.