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Steeper proposed visa fees could cost employers $232 million

Posted on May 29, 2013
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New work-permit fees proposed in the Senate’s immigration bill mean companies such as Accenture, Infosys and Tata Consultancy Services that depend on employees from overseas would foot the bill for stepped-up border-­control measures.

The measure would double, to $4,825, the cost of H-1B visas for highly skilled employees from overseas. It also would expand the number of permits to as high as 180,000 from the current cap of 85,000 per year. For the top 20 companies that used the program last year, the new fees would have driven the cost of visas approved last year to $232.2 million, according to data compiled by Bloomberg.

The bill targets outsourcing companies where more than 50 percent of the workforce holds H-1B visas or L-1 visas for intra­company transfers, including Mumbai-based TCS and software firm Wipro. Those companies would have to pay an additional fee of $10,000 per visa in 2015 and would be restricted from having more than half of their staff members on visas by fiscal 2017.

The changes mean “the combined costs of hiring someone that is not an American citizen is real to the companies in question,’’ Sen. Lindsey O. Graham (R-S.C.) said May 21.

The Senate Judiciary Committee approved the legislation May 21. It includes border- security enhancements that would be paid for partially through a new fee on H-1B visas and through surcharges on citizenship applications. The money would go into a trust fund to help buy drones to monitor the U.S.-Mexico border, to build more secure fencing and to hire more law enforcement personnel.

That part of the bill is designed to meet Republican lawmakers’ demands that any immigration legislation include measures to make it harder for undocumented workers to enter the country. The measure also includes a path to citizenship for an estimated 11 million undocumented immigrants who are in the United States.

Outsourcing companies have criticized the higher fees.

The bill “will impose arbitrary and onerous new penalties and costs that will threaten the competitiveness of U.S. businesses globally,’’ TCS spokesman Michael McCabe said in an interview.

Teaneck, N.J.-based Cognizant Technology Solutions, which provided back-office support and other services to companies, including JPMorgan Chase, Bank of America and Citigroup, said its business would be threatened by the legislative changes.

Detrimental’ fees

The higher fees and restrictions on employment visas “would be detrimental to Cognizant,’’ Gordon J. Coburn, president of Cognizant, said May 8 in an earnings call.

Cognizant was the top sponsor of H-1B visas in the fiscal year ended Sept. 30, receiving 9,336 new visas, according to U.S. Citizenship and Immigration Services data. The company declined a request to disclose the total number of U.S.-based employees holding H-1B visas.

“It’s not like our clients can go out and hire these people,’’ Coburn said. “These people don’t exist.’’

Under the Senate’s proposed fee structure, Dublin-based Accenture would have paid $10.1 million more in H-1B visa fees for fiscal 2012, according to data compiled by Bloomberg. Accenture spokeswoman Joanne Giordano declined to comment.

Immigration expenses for ­India-based outsourcing companies, including Infosys, Tata Consultancy Services and Wipro, would be up to 3.5 times as high if the Senate proposal became law, according to the data.

TCS, which was approved for 7,427 visas in 2012, would pay as much as $89.1 million annually to bring in the same number of foreign workers with technology skills.

Infosys would have paid an additional $67.5 million, and Wipro would have faced an additional $51.7 million bill for its visa applications.

That doesn’t include the estimated cost of renewing existing visas and legal fees that range from $1,000 to $3,000 per worker, according to the American Council on International Personnel, an Alexandria-based trade association for U.S. companies using overseas talent.

The Indian government has said fees on large H-1B employers discriminate against Indian companies and violate international trade rules. To pay for new drones and additional border patrol officers in a 2010 emergency border security law, Congress imposed a $2,000 fee on companies with more than 50 percent of their U.S. workforce on the visas. The Indian government said in May 2012 that it would consider challenging the fees in a trade case at the World Trade Organization.

The bill would increase penalties to as much as $10,000 per violation for companies that misrepresent facts in an application for an H-1B or L-1 visa.

Talent hunt

The boost in visa fees would be borne by companies that say they already face a shortage of engineers and information technology specialists.

The unemployment rate in the U.S. computer and mathematical occupations, which dominate H-1B visa applications, was 3.5 percent in the first three months of 2013, compared with the U.S. unemployment rate of 7.7 percent.

The American Council on International Personnel, the advocacy group, said it objects to using visa fees for security programs.

The group “supports ensuring our borders are properly secured, but we also believe that fees placed on compliant employers should be used to improve immigration services and U.S. competitiveness,’’ said Rebecca Peters, director and counsel for legislative affairs for the group, whose members include Intel and PricewaterhouseCoopers.

Some U.S. companies support higher fees to encourage students to pursue degrees in science and technology. Redmond, Wash.-based Microsoft proposed a $10,000 fee each for 20,000 additional H1-B visas in a report released in September 2012.The committee agreed to create a fund to encourage science and technology education by levying a $1,000 fee on employers seeking to sponsor temporary workers for permanent residency.

Senate Majority Leader Harry M. Reid (D-Nev.) said he wants the legislation to be debated by his chamber next month. If the Senate passes the bill, it faces opposition from some House Republicans over the citizenship option.

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