Wipro Fires 600 Employees: Are H1B visa restrictions to blame?
Apr 24, 2017
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Wipro , India’s third largest computer software services company, will sack 600 employees; there is speculation the number could go up to 2,000. The IT major says the firings are part of annual "performance appraisal." Such firings and layoffs are not isolated events; in fact, they are becoming alarmingly recurrent. Other Information Technology Sector companies have been laying off as well. These are indeed troubled times for the sector considered as one of the top revenue earners for India. Cognizant fired 6,000 employees, with the number reportedly reaching up to 10,000. Cognizant also said employees were fired due to non-performance. The technology major has 2,60,200 employees globally, of whom 1,88,000 or 72% are based in India. India’s IT companies have been facing tumultuous and uncertain times in the wake of visa restrictions being put by various countries like the USA, Australia, Singapore, and New Zealand. Indian IT companies use the temporary work visa route in order to send employees abroad. Such companies are badly hit and there are serious consequences awaiting them. Global visa restrictions on Indian IT workers will hit industry hard
When news about H-1B visa reforms surfaced, Indian information technology company stocks went into a free fall. As much as $6.4 billion went up in smoke. Infosys stocks fell by 4.5%, followed by Tata Consultancy Services (5.5%), Tech Mahindra (9.7%), HCL Technologies (6.3%) and Wipro (4.1%). Stocks of other mid-cap IT companies like NIIT, Geometric, Mphasis, Mindtree and KPIT Technologies plunged by 4%. Additionally, the year 2017 has seen a sharp drop in the number of US employers seeking H1B visas for out-station employees. They applied for 16% fewer H1B visas for highly skilled workers as compared to 2016. Employers seeking visas for 2018 have submitted 199,000 applications compared to 236,000 in 2016. Indian IT firms like Wipro, TCS, and Infosys, which bank on cheap Indian workers, will be hit. Indian IT firms earn $60 billion per year from the US market. They provide services to top American companies. Every year 85,000 H1B visas are issued, including 20,000 for students. Indian IT companies make up for 17,000–18,000 of H1B visas every year. Moreover, countries such as Singapore, Australia, and New Zealand are also putting visa restrictions. No worker visas have been issued by Singapore for Indian IT professionals since January 2016. It apparently wants to hire locally. Singapore-based Indian IT firms will have a tough time hunting for suitable talent as they used to import workers from India. That was profitable due to low wages and costs. Tough times ahead for India’s Information Technology sector
As visa curbs become more prevalent globally, Indian IT companies will have to face challenges in labor management along sharp increase in costs. Indian companies get 60% revenues from the American market, with 20% from Europe and the remainder from other countries. Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house
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