Moneycontrol Bureau
Technology stocks were battered on Friday with the Nifty IT index falling nearly 3 percent after the immigration reform Bill was re-introduced in the US House of Representatives by a couple of Congressmen. Stocks fell for the second consecutive session.
Protect and Grow American Jobs Act, a bi-partisan legislation, has been re-introduced in the US House of Representatives by Congressmen Darrell Issa and Scott Peters.
The key objectives of the Bill is to raise the annual salary requirement for the positions to USD 100,000 from USD 60,000 currently and eliminate masters degree exemption with a view to prevent H1B visa applicants from obtaining relatively lower quality certifications to meet the qualifying requirements.
Annual median wages for H1B positions of Indian IT companies in FY16 was around USD 65,000-75,000, according to h1bdata.info.
Citi remains cautious on technology sector, saying the recent re-introduction of the Protect and Grow American Jobs Act reaffirms its view that immigration reform remains an overhang to watch and likely a key theme for the sector in 2017.
According to the research house, an increase in H1B salaries to the mooted USD 100,000 levels could lead to significantly higher costs for the industry.
Given the competitive nature of the sector currently, Citi sees a risk that these higher costs may not be fully passed on to end clients, leading to vendors absorbing a significant extent of the impact. Over time, it could see increasing adoption of offshore resources and automation.
The brokerage house says while the Bill has been re-introduced, if and in what exact form the reforms are finally implemented remains unclear at this juncture, along with potential timelines.
In the past, rhetoric against outsourcing has often tended to pick up in the run-up to the elections, but has tended to peter out.
| Company Name | Last Price (Rs) | % Loss |
| Tech Mahindra | 469.9 | -3.73 |
| HCL Tech | 818 | -3.16 |
| Mindtree | 507.4 | -3.11 |
| Infosys | 973.5 | -2.27 |
| TCS | 2281.5 | -2.27 |
| Wipro | 472 | -1.75 |
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
