India adjusts to tightened US worker
visas By Raju Bist
Sharon
Scott is a clinical social worker in Salem, United
States. When she is through with her social obligations,
she sits in front of her computer and fumes about what
she perceives to be great injustice. "Should we even
encourage our children to seek engineering careers?
Should we throw money into their college educations?"
she asked in a recent edition of the Salem-based
Statesmanjournal.com, the online outlet of the Statesman
Journal.
Scott blames the revision of the
Immigration Act of 1990 for allowing American
corporations to bring "at an alarming rate" low-paid
engineers into the US. And she zeroes in on the H-1B
visa program, used to employ skilled workers - mostly IT
professionals. The H-1B is temporary, allowing US
employment with a sponsoring firm. The visa is valid for
six years, although it must be renewed after three.
According to this mother of an Oregon State
engineering student, the program has resulted in the
influx of about 1.1 million immigrants, many from India,
in the last five years. "There are supposed to be
certain criteria for corporations to be allowed to
import the workers. These include having tried to hire
American engineers. There is no strict monitoring of the
requirements, so corporate abuse is rampant," she
claims.
Such backlash is sweet music to the ears
of patriotic Americans alarmed at the dominance of
foreigners in the knowledge-based industries in the US.
But it sounds strident to the majority of engineering
students in India, many of whom plan to emigrate to the
US immediately after their graduation ceremony.
Their aspirations received a further jolt in
October when the US cut back the annual H-1B quota from
195,000 to 65,000, the ceiling for the program in 1998
although it was ultimately increased to 195,000 on the
strength of the dotcom boom. The subsequent dotcom bust,
growing unemployment and the upcoming presidential
elections have all contributed to the visa cutbacks. By
one estimate, 900,000 H-1B visa holders are in the US,
35 percent from India. It is said - only half in jest -
that a prospective Indian groom's dowry expectations
double the moment he receives a H-1B visa.
While
the critics argue that American corporations are
replacing employees with less-expensive foreign
employees, the companies themselves argue that the
program is essential to help maintain global economic
competitiveness. The H-1B debate is not cut-and-dried.
It's not as if all Americans cheered their government
when the cutback was announced. Similarly, there are
many in India who feel that the cutback is a blessing in
disguise and that the Indian information technology (IT)
industry stands to gain in the long run.
Among
the first to complain about the cutback was the American
Electronics Association (AEA), the nation's largest
high-tech trade association, which represents more than
3,000 companies with 1.8 million employees. The AEA
contended via a press release that well-qualified
immigrants were a dire necessity since a shortage of
highly skilled workers is restraining US high-tech
companies from competing and innovating to their fullest
potential.
The dilemma, the association added,
is that the US does not generate enough highly skilled
graduates, so companies look overseas. According to the
AEA, the number of students with undergraduate,
graduate, and doctoral high-tech degrees has dropped
five percent over the last six years. Bachelors' degrees
in electrical engineering fell 33 percent during that
period and degrees in computer and information sciences
shrank 27 percent.
But by 2006, the US Labor
Department estimates the demand for database
administrators, computer support specialists, and
computer scientists will accelerate 118 percent, to
461,000. The demand for computer engineers is expected
to increase 109 percent, to 451,000; and the demand for
systems analysts to double, to more than a million.
The Technology Network (TechNet) is also in
support of the program, arguing that H-1B visa workers
play a vital role in keeping the US technology industry
globally competitive. TechNet is a bipartisan network of
150 CEOs that promotes the growth of technology
industries and the economy by building long-term
relationships between technology leaders and
policymakers and advocating a targeted policy agenda.
TechNet nodes are located in California, Massachusetts,
Texas and Washington.
"Studies have estimated
that every additional skilled immigrant supports the
creation of three to five new Silicon Valley jobs for
American employees," Roberta Katz, the chief executive
officer of the Technology Network, has been quoted as
saying.
Surprisingly, even a few in government
have adopted a soft approach towards the issue. The Wall
Street Journal reported on October 27 that Senate
Judiciary Committee Chairman Republican Senator Orin
Hatch is pushing a plan to circumvent the 65,000 cap on
H-1B temporary worker visas. The Journal reported on
growing concern among US multinationals and high-tech
companies that the current cap will prevent thousands of
expert foreign workers needed by US business and
industry from entering the US next year. US tech
companies are pushing to raise the annual visa limit to
more than 100,000, it added.
A spokeswoman for
Hatch said any plan would include some added protection
for US workers, including reinstating a US$1,000 fee for
each visa that would be used to pay for retraining
American workers. According to the paper, an idea being
pressed by Intel Corp, the giant computer chip-maker, is
getting the most attention. Intel's plan recommends
exempting foreign students with graduate technical
degrees from the visa cap.
Predictably, most
Indian software companies will root for Hatch and other
like-minded politicians. That's because slightly over
half of the revenue of frontline Indian companies comes
from on-site work (carried out at the clients' sites in
various cities). And the US is by far the biggest IT
market, accounting for around 70 percent of the revenue
of most active Indian companies.
Already,
established software giants are sounding alarmed. For
instance, Wipro Ltd, the $902 million (in sales) IT
powerhouse, has indicated that restrictions on
immigration may affect its ability to compete for and
provide services to clients in the US, which in turn
could hamper its growth, resulting in declining
revenues.
"If US immigration laws make it more
difficult for us to obtain H-1B visas for our employees,
our ability to compete for and provide services to
clients in the US could be impaired," Wipro said in its
recent filing to the US Securities and Exchange
Commission. Wipro was one of the first Indian hi-tech
companies to be listed on the NYSE.
Well aware
that India's IT industry is fueling much of India's
economic "feel good" factor, the government has now got
into the act, using its influence to seek a higher H-1B
quota. In October, while on a visit to the US, a
delegation of the Indian Ministry of Information
Technology took up the issue with its American
counterpart. The same month, the Indian Commerce
Ministry pushed for higher quotas at the World Trade
Organization's services negotiations in Geneva,
Switzerland.
The Indian government is getting
much of its inputs from the National Association of
Software and Service Companies (Nasscom). According to
this New Delhi-based organization, the Indian software
sector prefers an easing of the cap on H-1B visas to
around 120,000. "The limits should be more realistic -
not so high that the visas remain unused, nor so less
that companies are unable to send people on projects,"
says a Nasscom official.
The organization is
also making direct attempts to sensitize the US about
the quota cut's adverse effect on Indo-US business and
the US companies. Nasscom has said that it would seek
help of the Information Technology Association of
America - a passionate advocate of a liberal H-1B
regime. The Executive Committee of Nasscom has also
appointed Hill & Knowlton, a high-profile public
affairs company, to launch a media campaign in the US to
explain the Indian position.
But a large number
of Americans, reeling under the impact of nagging
unemployment, may refuse to be conciliatory. According
to one estimate, unemployment for electrical and
electronic engineers reached 7 percent last year.
Figures for computer engineers and computer hardware
engineers were 6.5 percent and 7.5 percent,
respectively. The US electronic industry shed 560,000
high-paying manufacturing and service jobs between
January 1, 2001 and December 31, 2002. Bureau of Labor
Statistics figures reveal that some 230,000 US workers
in 12 engineering and computer job classifications were
unemployed in the second quarter of this year.
Spearheading the diatribe of the anti-visa camp
are politicians like Sen Christopher Dodd, who are in
favor of further tightening provisions on the visas,
giving employers less flexibility in using them and
making them a riskier bet for foreign employees seeking
a long-term future in America. The Democratic senator
from Connecticut says loopholes in the current law allow
companies to bring in foreigners, "pay them less and
replace good paying American jobs, otherwise held by
American citizens."
But the US General
Accounting Office (GAO), in a September report,
disagrees. Among the issues that the GAO sought to
determine were what factors affect employers' decisions
about hiring H-1B workers or US workers. A majority of
the H-1B employers that the GAO spoke to said that they
recruited, hired, and retained workers based on skills
required, rather than the applicant's citizenship or
visa status.
Despite increases in unemployment,
most employers said that finding workers with the skills
needed in certain science-related occupations remains
difficult. Although some employers acknowledge that H-1B
workers might work for lower wages than their US
counterparts, the extent to which wage is a factor in
employment decisions is unknown, the GAO concluded.
The report acknowledges, however, that the
continuing use of H-1B visas remains a contentious
issue. It also makes a startling observation: The
Department of Homeland Security (DHS) has incomplete
information on H-1B worker entries, departures, and
changes in visa status. The department's ability to
provide information on H-1B workers is limited because
it has not issued consistent guidance or any regulations
on the legal status of unemployed H-1B workers seeking
new jobs. Allowing unemployed H-1B workers to remain in
the United States may have implications for the labor
force competition faced by US workers.
Dr Gene
Nelson, who has been campaigning for a reform of
American labor markets for two decades, is among the
more outspoken critics of the program. "The H-1B visa
program is the biggest American scam of recent times,"
he lashes out. "That visa is why you hear a foreign
voice with broken English when you call for high-tech
help. It's also your clue that another American citizen
is out of work."
Nelson, who has lobbied during
many visits to Washington, DC for reform of the special
visa programs, lays the blame squarely at the doors of
employers. "While employers raise the false claim that
positions are being ‘offshored', in reality, immigrants
from nations such as India, China, and Russia are
displacing American citizens while eroding American wage
scales. These employers covet fresh cheap young blood
from Third World nations. Even more shocking, employers
are now importing people to work in very sensitive
positions affecting our nation's infrastructure and
national defense."
Despite such harsh criticism,
a section of the Indian software industry feels that
various factors have limited the downside of the latest
US action on visas. First, the cut is not as big as it
looks. In the last US financial year, thanks to market
forces, only 79,100 H-1B visas were actually issued.
Assuming that the majority of H-1B visas were allotted
to Indians, the impact on India's software industry will
be less than the 14,000 difference between 2003 and 2004
(ie, 79,000 minus 65,000).
Secondly, the IT
world is switching over to offshoring and its chief
beneficiary is India. Fewer people will have to work at
the premises of the customer to get a particular job
done and in fact, as quota limits fall, the fungibility
of IT work allows US employers to simply export the jobs
overseas, which means that the US not only loses the
jobs but loses the multiplier effect of paying worker
salaries in the US, where they can be spent locally.
In the past year or so the engagement sizes of
outsourcing contracts have been rising. This effectively
means that a reduction in the visa cap will only spur
more and more US corporations to direct increasing
amounts of work on an offshore basis to India. With
pressure to cut IT costs and improve efficiency, global
firms have increased their focus on outsourcing their
software development and maintenance to low cost
countries, with India emerging as the "hotspot" with
proven expertise in providing quality work at
competitive prices.
Many leading Indian
companies like Patni Computer Systems Ltd and Cognizant
Technology Solutions have consciously moved their focus
to the offshore model in order to combat the impact. In
the case of the latter, offshore work has increased to
70 percent over the last six months. Of its 8,500
software professionals, Cognizant now has 6,500 in India
and the rest abroad.
What raises anxiety levels
about onsite work is the growing uncertainty in the US
over the future of L-1 visas as well. Valid for seven
years, the L-1 is an intra-company transfer visa, which
only allows the employee to remain in the US
temporarily. So as long as Indian companies have
subsidiaries or branches or affiliate companies in the
US, they can use the L-1 visa. To be eligible, the
employee must be offered a position in the US as a
manager, executive, or a person with "specialized
knowledge". The biggest advantage of Indian software
companies is that, at present, there are no limits to
the issue of such visas annually.
Frontline
Indian companies such as Infosys Technologies and Satyam
Computer Services have been using the L-1 visas quite
extensively. Both have used a higher number of L-1 visas
compared to H-1B visas.
But it is quite likely
that with the anti-immigration forces raising their
voices, some action may be taken against the L1 as well,
such as a cap and more stringent conditions for visa
issuance. Already, there have been reports of individual
legislators trying to change the rules of the game. If
this trend gains momentum, and if the L-1 route also
gets narrowed, then there could be a new serious
problem.
(Copyright 2003 Asia Times Online, Ltd.
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Dec 10, 2003
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