New Concerns about US Immigration Limits

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Several of the major Indian outsourcing firms recently raised concerns about future curbs on visas for foreign workers in the US. Should we be worried?

First let's recap the foundation for these concerns. Winpro and Infosys, two of Indian's IT and BPO bellwethers, listed a potential reduction of visas as a risk to growth. Firms commonly list a wide range of risks on their financial filings as a protection against future lawsuits about disclosure. Therefore, they may not necessarily see this visa reduction as a high probability outcome, but only a possibility.

In the US, President Obama has put together a plan to end tax incentives for firms creating jobs overseas, but has not explicitly launched a public effort to cut visas. That said, if the green shoots of the US economic recovery turn brown, protectionist views could get more clout and plans could change.

I would put a reduction in visas as a possibility, not a probability. However, one might still want to think through the implications.

Large companies with large new offshore outsourcing contracts could be impacted adversely. These contracts commonly include some onshore or on-site resources over the long-term, but also include an elevated level of on-site resources during the initial transition phases. Visa restrictions could increase costs and risks.

Conversely, small and mid-sized companies will probably not see an impact. Generally speaking, their contracts don't include many, if any, onshore resources. If anything, a reduction of visas could provide a modest improvements in the offshoring business case by adding downward pressure on wages in the affected offshore locations.

As a small or medium business (SMB), a potential cut in visas should not be a big issue even if it does come to pass. Large outsourcers however should keep an eye on development and take proactive action if and when the time comes.