Visa dependency needs to come down in the long run to combat the regulatory changes in the US, said UB Pravin Rao, chief operating officer of Infosys on October 14.
In the earnings call, Rao said the regulatory changes would continue irrespective of governments, and the only option is to reduce dependency.
“In the long run we have to reduce the dependency,” he added.
Over the last three years, the company has increased its localisation efforts in the US. About 63 percent of the employees in the US are Americans.
“We are hiring both laterals and freshers in community colleges and universities, imparting them training. We have recruited 13,000 so far,” he said.
The company aims to recruit 12,000 more locals in the next two years. It has also increased hiring in nearshore centres like Canada and Mexico that offer same time zone services to clients in the US.
According to Rao, the company is less dependent on H-1B, and the latest changes will not have a huge impact.
The Donald Trump administration recently announced two new changes in H-1B rules that increased the H-1B minimum wages and introduced more restrictions aiming to make qualifying for H-1B tough.
According to Rao, wage increase will impact those who are using new Labour Condition Application, or LCA, (a petition applied by employer for employees with H-1B visa) going forward and not those are in the old LCA or existing LCA.
“We have enough time and also several options right now, nearshore, offshore, and aggressive onsite hiring. We should be able to manage challenges with minimal impact,” he said.
The company’s onsite mix has increased to 73.9 percent in Q2 FY21 compared to 71.8 percent in the year-ago period.
According to Salil Parekh, chief executive officer of Infosys, the increase was in part due to travel constraints and over time, the mix will change as travel opens up.
According to a report by Kotak Institutional Equities, the impact of wage hikes in the company margins could be 1.7 percent (assuming 30 percent increase in wage rates for new H-1Bs and renewals).
The report, which assessed the margin impact based on simplistic scenario without taking into account any offsets and other complexities, said: "An increase in compensation for H-1B worker can result in revision of compensation for local worker as well. It is not prudent for any organization to pay materially different salaries for the same role and function."
The measures are likely to increase offshoring, the report added.
As per the current wage rules, hikes could go as high as 47 percent in some regions, and this will impact Indian IT majors. These rules are likely to be challenged in court.
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