bigstock-Immigration-3151682August 20, 2010

A proposed bill that would significantly raise H-1B and L1 visa application fees for companies with more than 50 percent of their work force on H-1B or L1 status with more than 50 employees was passed in the Senate Friday, August 6, and the House Tuesday, August 10. H1B visas are used for professionals coming to the United States to work for U.S. employers. L1 visas are intra-company transfer visas, for employees of companies that operate in the U.S. and abroad. USCIS wasted no time and announced on Aug 19th that new applications must immediately pay the fee or explain why the fee is inapplicable.

This law raise the application fee for visas for skilled workers by at least $2,000. The H-1B visa will be raised to $2,320 from $320, and the L1 visa will be raised to $2,570 from $320. The fees will apply to companies who use visas for more than 50 percent of its employees. The additional $600 million that will be generated by the fee hike will be used to construct operating bases and deploy surveillance drones in efforts to secure the U.S.-Mexico border. The bill passed by the House was slightly different than that of the Senate, It was back to the Senate for approval and has been signed into law by President Obama.

Implications

The big question is, how will this decision impact the U.S. economy and foreign relations. Some view the bill as discriminatory, as other companies may not be able to justify bringing employees to the U.S. at such a high cost. Just one day after the bill passed in the House, India’s Commerce Minister Anand Sharma claimed that the bill unfairly targets Indian companies because the bill will primarily affect Indian firms even though they represent only 12 percent of the visas that are issued. The increases would cost these firms an estimated additional $200 million a year. U.S. firms, such as Microsoft, use a much greater number of visas, but are not subject to the fee increase due to the fact that less than 50 percent of its employees are on H1B or L1 visas.

The bill will affect foreign companies, such as Tata, Infosys, Satyam and Wipro (all listed in the Senate bill), that were said to have exploited U.S. visa programs. Outraged over Sen. Charles E. Schumer (D-N.Y.) comments that the increase will decrease the outsourcing of high-paying American technical jobs to immigrants who are willing to work for less, some have argued that the fee increases are a punitive measure against India companies, rather than truly to cover the cost for the emergency border security project.

Whether the bill is functional to cover costs or a punitive measure, it will surely impact the companies that heavily rely on visas for employees and the U.S. economy. Investors have already taken note of the bill, which seems to have had an effect on IT stocks. Since the bill passed both the Senate and the House, Wipro has lost 2.12 percent, Infosys is down 1.41 percent and TCS is down 1.56 percent, according to the BSE Benchmark Sensex.