Infosys sees less than 0.3% impact on its margins due to visa fee hike

IT major Infosys today said the recent H1B visa fee hike by the US is likely to have less than 0.3 percent impact on its margins.    The city-based company is also working on utilising other levers like increasing onsite recruitment to mitigate the situation in the longer term. “Initial estimate of potential impact for us because of increased visa costs was about 0.3 percent impact on the margins. But over the last couple of days, we have got clarification that the increased costs apply on new visas and not for amendments and transfers,” Infosys President and COO U B Pravin Rao said. So, the impact will be much lower, he added. The company’s operating profit margins were at 24.8 percent at the end of the December 2015 quarter. Infosys remains confident of holding onto an operating profit margin of about 25 percent on the back of a strong deal pipeline and returns from investment in new technologies. Stating that visa fees were a “cost of doing business”, Rao said he expects similar kind of measures across geographies in the short term. “In the longer term, we have to look at how to diversify our resource base, how to increase recruitment onsite, how to have a much more global workforce; those are some of the things we are working on over the next 2-3 years to mitigate this risk,” he added. The US, under the 9/11 Health and Compensation Act, has imposed a special fee of $4,000 on certain categories of H-1B visas and $4,500 on L1 visas. Almost all Indian IT companies would pay between $8,000 and $10,000 per H1B visa from April 1, when the next annual H1B visa filing session starts, thus making it quite economically unsustainable for them. According to Indian IT body Nasscom, this is expected to have an impact of about $400 million annually on India’s technology sector. The industry, however, doesn’t seem to be too worried. Infosys’ larger rival, Tata Consultancy Services (TCS) has said the fee hike was not a big concern and that it is more of a cost issue than a revenue issue. A series of other fee has also been added in the H1B visa application over the past one decade. Notably, the original H1B visa application fee is $325. India has been in talks with the US in this regard. PTI