NASSCOM proposes new business models for Indian IT industry

Even as the Unites States President Barack Obama signed the much-debated Border Security Bill upgrading it into a law, the National Association of Software and Services Companies (NASSCOM), the nodal body of the Indian IT and ITeS sector, has put forward a proposal to generate alternative business models that would help to create new employment opportunities in India, instead of offering jobs to the US professionals.

Echoing NASSCOM’s views, Indian IT majors too underlined that they were endeavoring to draft with new models regarding how to control the consequences of the steep hike in the H-1B and L-1 visa application from the current level of approximately $2,300 to around $4,300 for each application.

A business website reports that NASSCOM, which had been vociferously protesting against the ‘discriminatory’ US legislation, has stated that if it was becoming difficult to work in the US, the Indian IT industry will be required to generate new business models to bring back the jobs to India. The report quotes Som Mittal, NASSCOM president, as saying that while the new legislation would have little or not impact on the revenue generated by the Indian IT and ITeS sector, it would certainly enhance the operational costs. In order to deal with the situation arising out of the new US legislation, NASSCOM was exploring new business models that would take some time to evolve.

At the same time, Mittal emphasized that despite the new legislation the US would remain the principal market for the country’s IT industry. He further said that while the share of the Indian IT industry may drop, the amount of business that they have been getting from the US firms would continue to and ought to remain large enough.

Infosys Technologies, the second largest software exporter from India, which generates more than 66% of its revenue from North America, has been most vociferous against the US move to hike the visa application fee. A statement issued by the company said that it would take around a year’s time to evolve the new business models that would eventually lessen the need for H-1B visas. At the same time, the CEO and MD of the Indian IT major, Kris Gopalakrishnan pointed out that although the dependence on H-1B visas would not be diminished entirely, it would definitely drop and they are already witnessing this occurring.

Meanwhile, NASSCOM has pointed out that merely 15 to 20 per cent of the endeavors in the total project life-cycle are performed onsite. It further said that while the Indian IT companies employ US professionals on a permanent basis, but the Indian resources (read professionals) are sent to the North American nation for a temporary period. Quoting statistics, NASSCOM stated that of the permitted 85,000 visas made available during 2010, just 28,000 have been utilized by around 26,000 firms worldwide. Critical of the US policies, Mittal said that the Indian IT firms are being made scapegoats. He emphasized that sending professionals to the US is a part of a business and cannot be treated as immigration; hence movement needs to be free.

Meanwhile, the Confederation of Indian Industries (CII) has urged the US administration to reconsider this ‘protectionist’ move. According to Chandrajit Banerjee, CII director general, the move would not only put a burden on the Indian IT industry in terms of operational expenses, bust also proves to be detrimental for the economies of the two countries. He said that owing to the nonexistence of a social security pact with the United States, the Indian IT industry has already been bearing the burnt of double taxation when operating in the US economy. According to him, the ‘abnormal’ increase in the visa fees has worsened the business atmosphere in India.