How US immigration bill is delaying IT deals

BANGALORE: Certain clauses in the US Comprehensive Immigration Bill are causing confusion among customers and providers, delaying deal closures. According to the draft bill, employees on H-1 B visas may be restricted from working at customer sites. The bill also proposes to significantly increase the fees for employers who are H-1 B dependant. 

There is also confusion regarding the on-site-offshore ratio and pricing. As a result, the pipeline for Indian IT companies has a large number of uncooked deals. Leading Indian tech firms have dozens of such half-done deals as closure is taking longer than usual due to these uncertainties, say analysts. Typically, offshore-onsite ratios are decided based on many factors, including the nature of the work, criticality of contract, the amount of interaction the project demands and time zone preferences. Now, the customers are not under any undue pressure to bring down the offshore portion, say those familiar with the market. 

"Clarity on on-site offshore mix and pricing are critical issues around any deal. These are basic negotiation elements. Lack of clarity in these can obviously cause delays in deal closures," said Sanjay Dhawan, leader, technology , PWC India. 

The final bill may take many quarters to be passed. But prima facie, it is costprohibitive and burdensome for Indian tech players , saidNasscom. "There is lack of clarity in the market. There is a lot of confusion and concern over the impact of the bill in the minds of customers and providers alike," said Som Mittal, president, Nasscom. 

Pradeep Udhas, partner & head, IT/ITeS, at KPMG India, said, "Customers want to be clear about pricing and on-site-offshore ratio before they commit on deals that are of 3 to 5 years." 

Some say such delays will continue to happen till all fears around the bill are dispelled. Some even fear that it might impact the performance of IT companies in the coming quarters.