Affected by delays in processing visas in the United States, Indian IT service providers are hiring more subconstructors, increasing costs.
The United States has over 800,000 job vacancy postings for computer occupations, shows the latest data, and is the largest market for Indian IT vendors.
Visa processing has been delayed as a result of the COVID-19 pandemic, forcing IT companies to rely on subconstructors in global customer locations.
Every year, the US issues 85,000 new H-1B visas, which are used by these tech companies to send workers to client locations.
Over the past few years, the current supply of technical workers in the US is not enough to meet the increased demand, so many companies and industry bodies have been demanding an increase in the H-1B quota.
According to staffing firm TeamLeaseThe current share of the subcontinent among the top Indian IT companies is 6–8%, while it is 3% overall in the Indian tech industry. In comparison, the US tech sector subcontracts about 18% of its needs.
CEO of IT Staffing Portal Techfetch.com Prabhakaran Murugaiah said that Visa delays and a lack of technically skilled talent in the United States are also affecting subcontracting firms.
Prabhakaran Murugaiah further says that “The visa issue affects everyone, including subcontracting firms, because we too use the same visa to bring talent to the US. Immigration challenges are very important for every IT company, if not addressed, it will result in more projects going offshore as there is not enough talent available in the US to complete those projects. ,
He also said that the demand for subcontractors for new technology related skills is also high.
IT services companies are finding it difficult to focus on returning employees to the office of more global technology customers, while managing onsite subcontractor costs while meeting available demand as quickly as possible.
Tata Consultancy Services (TCS) Chief Executive Rajesh Gopinathan Ltd. said during an analyst call after the announcement of its second quarter results on October 10, 2022, that the increase in subcontracting costs was due to two factors, including closed limits.
India’s largest software service provider said that in terms of revenue, however, these costs have started trending down.
Rajesh Gopinathan also said, “… As borders open up and visa availability becomes more and more available in most countries, we would expect subcontractor costs to come down”.
India’s largest software service provider by revenue reported a 40-best point sequential decline in subcontract costs.
An analysis by Kotak Institutional Equities showed that as part of revenue, sub-contracting cost declined to 9.6% during the September quarter from 10% in the June quarter.
National Foundation for American Policy (NAFP) Executive Director Stuart Anderson said“An expansive backlog in visa processing and low annual limits for H-1B visas and employment-based green cards are also contributing to inflation by limiting the supply of labor available to increase production of goods and services”.
Stuart Anderson also said that labor shortages stifle economic growth and encourage US-based companies to outsource more work.
ET reported last month that the unavailability of short-term B1/B2 US visa appointments is also affecting tech companies, affecting their ability to meet clients and explore new business in their largest market. Is.
While B1/B2 visa holders cannot work in the US, these permits are used for personal or business travel to attend client meetings and events and conferences, especially those new to small and medium enterprises. An important way to sign a business.
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