Wednesday, August 11, 2010

Incremental Visa costs - Nth dimensional inference

Normally Software Engineers luv work on technical assignments but not on boring jobs ( documentation , bug fix ,reporting,code revamp/review etc) even if they know that it has a substantial intangible benefits. But when it trickles from the top ( அதான் பா மேனேஜர் ) we do it with a grudge
( இவன் என்ன சொன்னாலும் பண்ணுவான் ரொம்ப நல்லவன் ).
From Prem's

Its more evident in service industry where the work is more routine.The same industry is now forcibly given yet another un ceremonious work to accomplish. Software Engineers reaching US from India are given a new assignment of high National Security recently by US lawmakers. Yes they are suppose to take care of notorious US-Mexican border.Interesting isnt it . A extra levy of $2000 for all L1 / H1B visas , proceeds of which will be directed to border security. I am sure that people still prefer this fees rather than some boresome work :).

Coming to the point , this news has triggered a lot of alarm bells in India . Everyone considers it as a unfair trade practice and a unethical one.External affairs ministry promises to object it in WTO if the bill passes through to become a law.

Let see in reality how much will this fees will affect Infosys ( the ideal role model of this industry) and the industry as a whole

AS per FY2010 financial reports of Infosys
Renvue 22,000 Crores
PBT 7,900 Crores

Assuming that Infosys will apply for around 5000 visas per year( actually last year it received less than 1500 ) at a extra cost of $2000 each, total incremental cost will be around 50 Crores.This will affect PBT by a margin of 0.63% or 63 basis points which is not so significant. On the large scale the entire levy is suppose to add $200 Million extra cost to the Indian re software industry has a revenue of $60 Billion.Here too the impact is paltry(0.33%) . If you keep a close tab on software sector you should be aware of the fact that even 15 paise depreciation of rupee against dollar can offset this.

Now it doesnt sound so bad compared to when you read it first on the news paper right ?

Even now if you are not convinced lets see what happens in other sectors. Recently India has slapped anti dumping duty on imports to tires from China/Thailand as high as $99 on a set of TTF (tyre/tube/flab) ,based on the fact that imports of cheap tyres are affecting Indian tire Industry.Doesn't a software engineer deem 20 times premium than a damn tire :)

Lets come top another side of the coin. Predominantly we have grown up hearing news of type that World Bank ,US etc providing aid to improvised south east Asian countries (including India) to help them eradicate poverty, epidemics, natural calamities , AIDS etc. Now the wind has started to blow in the other direction , albeit slowly. Now its the turn Big bother who wants our resources ( although forcefully) to solve his issues .US's position as single global superpower has been weakening slowly.Still its the single most powerful nation by any counts,no doubts. But it has reached its tipping point. Second World war (and dropping of Fat Man/Little Boy to be precise ) marked the start of an new era ( commonly called as cold war) during which superpower tag moved from Great Britan to USA. Might be the recent Financial crisis could be one of such once in millennium trigger to start an era for another leadership change.

From Prem's

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