Sunday, April 26, 2009

Nasscom in denial mode has an interview with the Nascomm chief to discuss the implications of the new Grassley/Durbin legislation on H-1B visa curbs. I find Nasscom defense to be absolutely weak and even a 10 year old will  have the IQ to understand why it holds no water. The bigger story here is the abuse of the L-1 visa by IT companies to shop Indian bodies to the US. Increased scrutiny of those applications will have bigger implications then the H-1b visa where according to Nasscom only 30% of the visa's are granted to Indian IT companies.
How this affect property prices in tech capitals is another story.

Don't see new H1B proposal turning into an Act: NASSCOM

Published on Fri, Apr 24, 2009 at 20:50 , Updated at Sat, Apr 25, 2009 at 17:32 
Source : CNBC-TV18

US lawmakers have introduced a new bill with additional restrictions on H1 B visas. Ganesh Natarajan, Chairman of the National Association of Software and Services Companies (NASSCOM), said if this proposal passes in the current format then it will have a fairly disastrous impact on the IT sector.

“But I am hopeful that over the next three-months we will not see this really becoming an Act.”

Meanwhile, Commerce Minister Kamal Nath said he is concerned by the contents of H1B visa bill by Senator Durbin and Senator Grassley. "The bill will restrict the ability of Indian IT companies to compete in the US market place. The bill is not in line with US President Barack Obama's stand against protectionism at the G20 meet and not in line with our desire to mainstream development in the Dohanegotiations."

Also Read:

US's new H1-B proposal anti-trade: NASSCOM 

New H1-B bill wants Indian IT cos to hire more in US

Here is a verbatim transcript of the exclusive interview with Ganesh Natarajan on CNBC-TV18. Also watch the accompanying video.

Q: This is not law as yet and it is only presented for legislation but what kind of an impact does this likely to have?

A: If it passes the way it is, obviously it is going to have fairly disastrous impact because this particular piece of legislation is very different from the last time they presented. 

This proposal also includes a provision called 50/50, which means that if you employ more than 50% of your people who are visa dependent, then you cannot employ more people with visas. So that’s very problematic.

We have spent a lot of time with Senator Grassley and Senator Durbin and we hope that they understand the implications.

The implications being that this kind of fly in the face of free trade, it primarily will target Indian companies. So I am very hopeful that over the next three-months we will not see this really becoming an act.

Q: If this does go through what does this do to cost structures because this gives on site off shore a completely new meaning especially given the 50-50 provision?

A: If a company is employing 5,000 employees in the US on a normal basis, 70% of them could be H1 or L1 Visas, it could literally mean that you will have to find replacement of about 1500 people and its not just the difficulty of finding the replacement but training them the cost involved, there could be a lot of business discontinuity and I personally feel that people will realize it when they go for the debate in the house, it wont get passed atleast certainly the way its being filed.

Q: A lot of people in the US might be viewing this as a restrictive trade practice what Indian IT companies are doing in terms of explaining the situation as far as our position is concerned?

A: We have had 3-4 meetings we worked with Tech-America which is the local association there, we have had sit down meetings with various people and they understand this. We even mentioned that this will specifically be seen as against India which is not a good thing and they have heard us and I think atleast the indication that we got was okay let this get filed, we will discuss it whether the US legislation discusses it before during and after the event, so that’s why I am not particularly perturbed, it could be disastrous if its passed in the current format but I am pretty sure that it wont.


Anonymous said...

Gross Domestic Product

2007: GDP 9.3%
2008: GDP 7.3%
OECD (March): India GDP will grow at 4.3% for 2009.
IMF(APR) : India GDP will grow at 4.5% for 2009.
World Bank (March): India GDP will grow at 4% for 2009.

GDP & growth Indicators

India's country rating vulnerable to further setbacks“Expressing concern at the rapid deterioration of the fiscal situation in the country, global rating agency Moody's has said India's sovereign credit rating is vulnerable to further setbacks.”

So guys let it fall then only pick up, minimum 50% price cut is guarantee.


Anonymous said...

H1B restriction is more of a political agenda than economic decision. It’s the same stance as reservations in India, to woo the voters.

Global Balance

US Fed Print Money => US Funds

Fund Inflow
US Funds => Investment in Indian RE => IT Buyers

Services Outflow
US Corporate <= IT Services <= IT workers

If one will take out IT from the cycle then who will convert the fiat Money into real Money?

In short run, the H1B restrictions will damage the IT companies & techies but in long run it’s much more damaging to US economy. In long run Indian RE will not receive any foreign funds, no speculations & no bubble.

NOTE: U.S. is getting more returns in foreign investments, than the returns earned by foreigners in US investments.


Anonymous said...

In 2007 despite the GDP growing around 9% people over here had predicted a fall in RE.

Now they use GDP numbers to convience us :-)

Buy now if you can afford.

Minumum 50% increase in three years.

Dont time, dont time dont time.

Bindas Bhai

Priyank said...

Bindaas Bhai , are they 2 of them here ? one says buy buy, other says wait for correction !

when GDP was at 9% in 2007 people were predicting falls because of the bubble factor, now the GDP is half of that, the fall is inevitable, of course if one is getting property at 30-40% discount from peak go for it, however in Mumbai most places have come down only 10-20% as of now..

Anonymous said...


Prices have increased from 07 to 08 when the astrologers over here predicted a fall.

I think these guys knew about the US turmoil much to the surprise of Lehman brothers and Fed.

Uncertainty and offcourse sentiments are down and hence no sale; prices will correct in areas only where there is excess supply or huge land bank. Builders who are in thick shit due to over trading will also reduce the price.

As per the survey of a very reputed firm, Mumbai (does not include Thane , New Mumbai and beyond Borivali) has 35% unsold flats out of which less then 4% is ready and lying vacant.

Now who on earth will reduce the price when the inventory for ready flats are so low. If the builder is having problem then he does Nirmal or HDIL style. Reduce the price say around 30 to 40% take cash and use for other projects. These guys are very hopeful that the markets will pick up if not now at least in 18 months.

Most of the builders are not going for redevelopment of societies and it is just matter of time we will see scarcity of good product.

As mentioned earlier in 98(after the crash) typically we needed over 22 years salary to buy a house but today it is less then 6 years. Today even our spouses are working.

Mumbai will see minimum 50% increase in property prices in 3 years.

Dont time, Dont time, Dont time.

Bindas Bhai

Anonymous said...

not everyone is having 15L salary to buy 1 crore properties at 6 times annual salary.

Anonymous said...

Half of the bears will vanish from this blog if Congress comes back to Power.

Wait n watch it can swing either side.

Fingers crossed!!! :-)

Anonymous said...

Typically in Mumbai the majority of flats sold during 98 was 1 BHK and even today you get the same around 40 Lakhs in most of the suburbs in Mumbai. I am quiet sure that a lot of people in Mumbai earn around 7 Lakhs PA, leave alone their spouses income.

98 Dewan housing and other financial institute used to finance loan around 18%+. Today you get the same at half the rate.

Mumbai will see minimum 50% increase in property prices in 3 years.

Dont time, Dont time, Dont time.

Bindas Bhai

Anonymous said...

"Mumbai will see minimum 50% increase in property prices in 3 years." Bindas Bhai ...go and buy more housing properties....

The Indian IT services sector may see up to one lakh job cutsNew Delhi: The Indian IT services sector may see up to 5% layoffs -- amounting to more than one lakh job cuts -- over the next six months as companies focus more on cost-cutting due to persisting weakness in global demand, experts say.

Companies may reduce workforce in this fiscal, mostly based on stringent performance criteria, experts added.

“We expect the knowledge industry (IT) to see 3-5% non-voluntary exits in the first two quarters of the financial year mainly in senior and middle levels,” Deloitte Touche Tohmatsu senior director (Management Consultancy Services) P. Thiruvengadam said.

Vik said...

Keep pumping Bindas Bhai. Mumbai specially will fall easily 50%. Even after that it will be the most expensve city in the country.
If someone wants to become debtors for life like the poor Vidarbha farmer be my guest. Take a 11% loan, pay interest to the bank for the rest of your life to live in Mumbai. for others, they can move top Pune, Bangalore, Hyderabad, Chennai where real estate is 1/2 that of Mumbai.

Vik said...

Most tech companies have opened sop outside mumbai. Before 2000, Mumbai was one of the top destinations for IT companies.
In 2009 we have

Pune : Hinjewadi
Chennai : OMR and GST
Hyderabad : Gachibowli
Bangalore : Electronics City/Outer ring road/Hebbal
Delhi NCR - Noida/Gurgoan

All these cities have 4x capacity then Mumbai.

All that is left in Mumbai some IT companies in Seepz, some in Malad and others in Khoperhairane/Airoli Navi Mumbai area, not to mention overpriced Bandra Kurla complex area.

Why would a CFO rent in BKC at 200 rs per sq/ft when he can rent for Rs 30s in Hinjewadi.

I used to work in SEEPZ in the early 90's. I never understood why the Maharashtra govt never encouraged something on the lines of Bangalore.

Now the city is paying the price. But Mumbai's loss is somebody else's gain.

The charm of the Mumbai in the movies is long gone. All that is left is slums and the uber rich. The middle class has no place for themselves in Mumbai

Anonymous said...


Thats your perception, Mumbai was never perceived as an IT Hub, it was always Bangalore, Hyd, Gurgaon and now Pune. I still feel there is no city like Mumbai, which continues to pay more than 25% income tax, and it will continue to attract investments.

I am very bullish and i repeat "50%increase in property prices im Mumbai in three years.

Dont Time, Dont Time, Dont Time

BTW will H1 visa problem increase outsourcing jobs in India? I dont know, can someone guide me on this.

Kind Regards,

Bindas Bhai

The Boss said...

Nasscom is an industry lobby and they are there to pump up the prospects of IT sector. But even if we discount that, it is still irrational to say that IT sector will be down in dumps and that would somehow hasten the real estate crash.
So as far as IT sector is concerned, bears and NASSCOM are two sides of the same coin: irrational and exaggerated predictions about IT industry.

Anonymous said...

@ The Boss 10:14 AM

it is still irrational to say that IT sector will be down in dumps and that would somehow hasten the real estate crash. ~ Ignorance more frequently begets confidence than does knowledge.

Anonymous said...

What is wrong for one country to act in its interests? I fully support US decision to get out of WTO, NAFTA etc., if it is in the interest of Americans. India should not have dependency on USA and it should adjust itself. How will Indians feel if Bangladesh claims that its public are not welcomed in India or harassed in India. Who the fuck asked them to come here? I guess that is what you will think. Why can't US do the same? At least US is not asking its permanant residents or citizens of foreign origin to get out. It is just trying to restrict future immigration and is not actually a racist decision.

Anonymous said...