The $108 billion Indian IT industry may be busy lobbying in the US to tone down some of the measures recommended in the Immigration Bill but the recent changes made by Canada and Australia to their immigration law does not augur well for the industry. The changes announced will increase lead time for hiring resources and increase cost of servicing clients outside, said a report by Nomura Equity Research. Though both Australia and Canada are not significant revenue contributor to the industry, they have been growing in significance. Australia approved amendments to its temporary work visa (457 visa program) that debars outplacement of resources to clients and increases lead time for hiring resources through longer advertising period, said the report. This may hurt players such as Infosys and Tech Mahindra, since 8-9% of the revenues come from Australia. "The 457 visa now cannot be used by IT companies to outplace employees – which make it similar to the L-visa (internal company transfers) issued by the US. This in our view is likely to impact T&M contracts," said Ashwin Mehta and Pinku Pappan of Nomura Equity Research in their report. Similarly Canada amended its temporary foreign worker programme, which removes wage flexibility for foreign workers (earlier allowed to pay 15% lower than prevailing wages), suspended fast track visa processing (now it will take 3-5 months from the earlier 10 days). Nasdaq listed iGate gets almost 12 per cent revenue from Canada. In case of Canada, where the changes are immediately applicable, the government can suspend and revoke work permits and labour market opinions (LMOs) if the program is being misused. The amendments also ensure that employers who rely on temporary foreign workers have a firm plan in place to transition to a Canadian workforce over time through the LMO process. "For Indian IT firms, this means increase visa lead time with the suspension of the fast-track visa program. Increase scrutiny of visa applications with the government having the power to suspend and revoke work permits and LMO’s. And higher visa fees," said the report.
Posted on: Wed, 03 Jul 2013 13:05:27 +0000
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