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H1-B visas: US gets it wrong
again
By Siddharth Srivastava
NEW DELHI - The US government's move to slash
H1-B visa entrants into the United States appears likely
to blow up in the faces of those who sought the October
1 cut from 195,000 skilled workers to 65,000.
While nobody is sure exactly how the dynamics
are going to play out, many analysts believe that
cutting the numbers of skilled information-technology
(IT) workers into the United States will result in US
companies sending the jobs overseas to much cheaper
countries. India, with its extensive IT operations in
such places as Bangalore, is almost guaranteed to be a
beneficiary.
The H1-B visa program has been
criticized by unemployed US professionals for "taking
away" their jobs. H1-B is the specialty-occupation visa
status under which a large number of IT firms send their
employees to the United States for on-site
project-development work, popularly known as
body-shopping.
The United States is the prime
export destination for the Indian software industry,
with export revenues jumping from US$164 million in 1991
to $10 billion in 2002, clocking an annual growth rate
of 45 percent. Almost 50 percent of the H1-B visas
issued worldwide last year by the US went to Indian
professionals. India is also currently the
second-largest source, after Mexico, of legal immigrants
to the US.
Some figures in India's
dollar-spinning software industry expressed concern
consequent to the cut. There are reports that some
companies are accumulating visa-ready people in the
belief that the non-availability of visas may upset
their customers' delivery schedules and hamper project
work.
"We are not really worried about its
impact on the Indian industry in the short term," Kiran
Karnik, president of the National Association of
Software and Services Companies (NASSCOM), told Asia
Times Online. "But if the level of 65,000 is maintained
for a long time, it will have fallout. The export
prospects of smaller and newer companies will be badly
hit," he added.
Karnik and many others in
industry, however, are optimistic about the United
States again raising the cap. "The US has been facing a
shortage in software skills along with other areas such
as health and academics. I am sure once the US economy
picks up, the H1-B visa cap may be increased," Karnik
said.
The other question, however, is whether
the reduced quota would actually result in giving any
unemployed Americans jobs, which was the original
intention of the cut as spelled out by Congressman Tom
Tancredo, a Colorado Republican who spearheaded the
movement against H1-B visa users. The indications are
negative.
A new study by the US General
Accounting Office (GAO), released in September, points
out that since March 2001, unemployment among "highly
educated individuals" in the United States increased by
about 400,000, resulting in total unemployment of 1.2
million people in that knowledge class. As the dot-com
bubble collapsed, employment "substantially decreased
within information-technology occupations, for which
employers often requested H-1B workers".
Overall, the GAO found, "despite increases in
unemployment, most employers said that finding workers
with the skills needed in certain science-related
occupations remains difficult". The question of whether
overseas workers are taking US jobs, the GAO said,
remains up in the air because there isn't enough
information available to make a decision.
The US
Chamber of Commerce has pleaded that the cap of 195,000
H1-B visas be retained to help maintain America's global
competitiveness. "It is unclear what, if any rationale,
was used in developing this cap. What is clear is that
the cap will cause great economic hardship to US
employers," a spokesperson for the chamber said.
The chamber disputes the theory that H1-B
workers displace US workers and lower US workers' wages
and working conditions in certain job sectors. "It is
hard to displace US workers when you don't have any US
workers to choose from," the spokesman told reporters.
"If the government refuses to recognize market needs and
demands, the only alternative for American companies
will be to move more of their operations offshore."
Indeed, some reports suggest that even US
President George W Bush was against the cut. At a
private reception in Jackson, Mississippi, Bush is
reported to have vehemently expressed his opposition to
the bill that Tancredo introduced to reduce the quota.
Bush is reported to have said, "Tancredo and I
are at opposite ends of the pole. I fully do not support
Congressman Tancredo's bill against H1-Bs." If this is
true, it is apparent that the president understands that
the current unemployment situation in his country is not
due to H1-B visa holders taking US jobs.
In
further voices that might not augur well for the United
States, several industry leaders in India have predicted
that the cut will help accelerate job exports to India.
Prasad Jagatjit, vice president for human
resources at i2 said the move would boost offshore work
done in the country. At a recent seminar on outsourcing
of IT work to India, KPIT-Cummins Infosystems chief Ravi
Pandit described this transition as the "maturing" of
the Indian IT industry as it moves from body-shopping to
the higher level of working on outsourced projects.
Avinash Vaishista, chief executive officer of
neoIT, an outsourcing advisory, said, "Putting a cap on
H1-B visas gives offshoring a big shot in the arm. The
restriction on importing skilled manpower will push
companies to do more offshoring work in India."
Karnik said employers in the United States
currently need and will continue to need H1-B workers.
"The H1-B visa program has been very useful for the US
companies. It's an issue for US industry to take up. By
reducing the cap from 195,000 to 65,000 you are
artificially suppressing the market forces," he said.
Several other industry leaders have expressed similar
sentiments.
To buttress Indian industry
confidence further, in a new survey by management
consulting firm A T Kearney, North American automotive
executives have picked India over China as the most
popular offshore destination for the migration of
business-processing activities.
It is becoming
increasingly clear that the cap on H1-B visas was an
emotional reaction to subvert the situation of high
unemployment in the United States. As they say in India,
the target was somewhere, the aim somewhere else.
(Copyright 2003 Asia Times Online Co, Ltd. All
rights reserved. Please contact content@atimes.com for
information on our sales and syndication policies.)
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