The H1-B visas reforms in the US or the snap poll in Britain over Brexit issue will pose no near-term risks to the Indian IT industry, global research analyst Jefferies said on Thursday.
“The US President’s order on immigration was sparse in detail and in contrast to fears of major clampdown, poses few incremental risks. Near-term risks of work visa reforms for the IT sector have waned,” claimed the global investment bank in a statement from New York.
Similarly, snap elections in Britain on June 8 indicate a softer Brexit, reducing probability of shocks to India IT sector though volatility in pound and euro on dollar revenues needs to be kept under watch, it said.
On Tuesday, US President Donald Trump signed an executive order titled ‘Buy American, Hire American’ to tighten the grant of H-1B visas. The order also makes specific suggestions for H-1B visas to be granted to the most skilled and the highest paid applicants.
“Prima facie, the order does not lay out either limits for the visa quotas, definition of wages or skills other than what is already prescribed, or a timeline under which this needs to be implemented,” asserted Jefferies Equity Analyst Vaibhav Dhasmana in the statement.
Equating the order to the April 4 guidance memo of the United States Citizenship and Immigration Services (USCIS), the analyst said it (order) would not change what is already in practice.
“In reality, the order means little, given that the scrutiny of Indian visas has been high in recent years even though it does indicate a higher focus on skilled labour immigration,” noted Dhasmana.
In view of the low unemployment rates in the US (-2.5 per cent for graduates 25 years and older), the research firm said immigration reforms would have to balance protectionism and business needs. “For the Indian IT [industry], the risk is from legislative reforms [bills proposing increase of minimum wage], which does not seem to be priority for the Congress and hence near-term risks have waned though noise levels might remain high,” Dhasmana pointed out.
Noting that the June 8 British snap poll was to seek a higher majority to iron out issues in negotiating Brexit, Jefferies said the fears of the Indian IT firms were over their volume growth getting impacted or delayed decision-making, as reflected in the scrapping of an IT project by the Royal Bank of Scotland to Indian software major Infosys in August 2016.
“The weakness of the pound and euro had also led to cross-currency headwinds on reported dollar revenue in the September-December quarter of calendar year 2016,” recalled Dhasmana.
A higher majority for the ruling Conservative Party would mean a firmer hand for its Prime Minister Theresa May in negotiating a softer Brexit with the European Union and reduced risks of potential shocks for Indian IT firms.