IT stocks under pressure as US congress reintroduces bill to curb H1B visa use

All the Indian IT stocks were under tremendous pressure in early morning trade as two US Congressman reintroduced the bill to curb the use of H-1B visas on which the Indian IT majors are heavily dependent.

This bill comes on the heels of growing rhetoric from President-elect Donald Trump, who is against outsourcing of jobs to countries like India. The developing countries including India allegedly take away jobs from young American citizens.

The new bill would require workers on the H-1B visas to pay a minimum of USD 100,000, up from USD 60,000 currently. The bill also removes the Master's degree exemption to the cap on the number of visas available.

As per the Congressman who introduced the bill, curbing abuse of H-1B system will protect American jobs and maintain a competitive workforce. The bill, which was introduced earlier too, could not go through as it did not have majority support in the house.

The protectionist stance of the US authorities does not bode well for the Indian IT companies who earn close to 60 per cent in revenues from the United States. The IT firms will also face cost pressures as visa cost would go up drastically affecting margins and bottomline negatively.

The IT index was trading with losses of 2.4 per cent at 10,155

IT losers: -

HCL Tech- CMP- Rs 816 (down 3.5 %)

Tech Mahindra- CMP- Rs 474.75 (down 2.8 %)

Infosys- CMP- Rs 971.50 (down 2.5 %)

MindTree- CMP- Rs 510.25 (down 2.45 %)

TCS- CMP- Rs 2288.90 (down 2%)