Impact of Changes to H-1B Visa Program on Service Provider Margins

28 Apr 2017

The proposed visa reforms and greater scrutiny of H-1B visa applications is impacting IT services firms (especially offshore-heritage providers) that have been the largest beneficiaries of this visa program. Almost 60% of the approximately 85,000 H-1B visas in 2016 were granted to these providers.

These visa reforms, if passed, will impact the delivery structure of outsourcing service providers extensively, and consequently, their margins. In this viewpoint, we have explored the impact of proposed H-1B visa reforms on the overall margins of IT service providers, especially offshore-heritage providers for three different scenarios:

  • Greater scrutiny of H-1B visa applications resulting in longer turnaround time and lower acceptance ratios
  • H-1B visas are granted on merit-based lottery system without the minimum annual wage clause
  • Comprehensive H-1B reforms are passed with the minimum annual wage requirement

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