Long road for new US H-1B visa bill to become law: Experts

Two US lawmakers have introduced a new bill in the House of Representatives that proposes to prevent IT companies from hiring more H-1B workers if a maximum of 50 or 50 percent of their employees are already on H-1B/L1 visas.Speaking to CNBC-TV18, NASSCOM President R Chandrashekhar said the proposal is a long way off from becoming law and is unlikely to be passed before the presidential elections later this year.The Bill is yet to be tabled in the Senate and post that it needs to be signed into law by the President.

Industry expert Moshe Katri termed the news as "noise", saying it could be just "election propaganda".He added that if the bill does come through anyway, it will only have a short-term impact on IT companies. "The industry is already adapting and changing because of the nature of the business itself is changing," he said, pointing out that companies have been in the process of bringing down the percentage of visa holders among employees.

But in the near term, such a law could be disruptive for not just vendors but also users. "The industry has already slowed down as pricing for legacy business is getting cannibalized," he said.

The bill has been introduced by Democratic Congressman Bill Pascrell from New Jersey and by Republican Dana Rohrabacher from California.Below is the verbatim transcript of R Chandrasekhar and Moshe Katri's interview to Anuj Singhal and Sonia Shenoy on CNBC-TV18. Sonia: How much will the business model of the companies in India get impacted if this bill eventually becomes a law? Chandrasekhar: As you said, this is a long road for the bill to come in. It has just been introduced in the Congress, it has not been introduced in the senate. Passage before the presidential election of any such bill is unlikely and all legislations will restart from zero post December when they have elections to Congress. So we have to see whether anything comes out of this move. But having said that, if legislation like this comes in, it could have some impact on the company if it happens in very short-term but the fact is that most of the companies are in fact adapting and changing partly because of the change in the nature of the business itself and quite a few of them are moving in the direction of coming below this 50 percent limit and that is because of the changes in the nature of business itself as much as any legislation or legislative proposals. So net-net, given that this is going to take place over a long period of time, there is a counter trend in the industry which is in any case bringing down the percentage of visa holders. The impact of this in the short run will not be there at all and in the medium-term it would be quite limited.Anuj: It is going to be a long road from here but do you think IT companies have reasons to worry now?Katri: Couple of things, I concur with R Chandrasekhar, I think it just adds more noise, things that are drawn out on the industry. Obviously for the past few weeks, we have been concerned because of Brexit and the impact for the industry at least for the second half of the year in terms of spending.This is a very typical election season with elevated entire outsourcing rhetoric. So there is nothing new here. A very similar bill was introduced by Dick Durbin and Senator Grassley in November or December last year, again nothing new. But you have to remember one thing, worst case scenario if these things are going to get anywhere, there will be backlash specifically from some of the heavy users of offshoring and these would be the fortune 100 to 500 companies.This is not only going to be disruptive for the vendours, this will also be very disruptive for the people who are using these resources. So the populations will have to think about this as they want to go through beyond the fact that they just want to make noise and score politically. So that is what I will look at this but it does add more noise to the space, which is something that the space needs.Sonia: What about people who own the Indian stocks because the market as a whole has been slowing down quite a bit and now we are heading into earning season as well, what would your advise be?Katri: For investors, they have to focus on a couple of things, one is that if these guys are familiar with this phase, they will probably be used at this entire sourcing rhetoric and you know the fundamentals and you know the pros and cons, so I am assuming for them this is probably going to be just another factor to look at, I don’t think that is going to be anything major.However, in terms of ownership and other things that are going on in the space, the space is slowing down. We have seen this slowdown because we have seen an ongoing very messy transition for many companies in this space away from legacy to the services. So the legacy piece is getting cannibalised, they are all trying to bulk up on resources and scales to the extreme that they can grow this digital business. So that is why you have seen that slowdown.On top of that, you have other things that are going on, you have thick numbers of contract renewals during the next two years, that is about 60-70 million dollars worth that definitely is causing some shift and then on top of that you have the fact that pricing for legacy work is getting cannibalised. So all these things are happening at the same time and then there is a lot of focus when you talk to investors about the impact of Brexit. I don’t think anything is imminent but during the next six months, there will be focus on whether your typical clients specifically those that are based in the UK are going to go ahead -- it could be client specific, it could be vertical specific, I would focus on the financial services industry in the UK that could be having some near-term issues but investors who have taken a long-term outlook when they own these names, at least pass the next few quarters.