Springtime Push for Higher Visa Cap

Date: Thursday, February 20, 2003 5:40 PM

H-1B and JOB DESTRUCTION NEWSLETTER

www.ZaZona.com

This set off my alarm bells:

While this debate on the veracity of the ITAA's projection continue,
the Arlington, Virginia-based ITAA and the Oakbrook Terrace,
Illinois-based Computing Technology Industry Association have indicated
that they will begin lobbying in the spring to boost the number of H-1B
visas. Nobody is yet making their position public, but the IT industry
expectation is that the introduction of a bill would either keep the
H-1B visa cap high or eliminate it altogether.

http://www.atimes.com/atimes/South_Asia/EB21Df01.html

South Asia

India's IT sector braces for US backlash

By Jayanthi Iyengar

"US economy in the worst hiring slump in 20 years"
- New York Times, February 2003

"1.1 million IT jobs to be created in India by 2008"
- Cyber News Service, February, 2003

NEW DELHI - The Business Process Outsourcing (BPO) controversy first
started as a limited protest against US government orders and jobs
going to outsiders, particularly to India and Indians. It was kicked
off by Senator Shirley K Turner, who moved a bill last year in New
Jersey seeking a ban on government technology-related work from going
to countries like India. This bill is yet to be passed, but the idea
mooted by Turner is fast gaining ground.

Four more states, including Maryland, Missouri, Wisconsin and
Connecticut are now reportedly contemplating similar bills. US labor
unions, too, have joined in the fray, egged on undoubtedly by
continuous lay-offs, worker frustration and attention-grabbing
headlines, which have created the impression that India's IT growth is
at the cost of the US worker.

Such impressions have changed the complexion of the debate, taking the
focus off US government tech business going to India. Instead, it is
fast taking on the shape of greedy, profit-hungry, US multinationals
collaborating with overseas partners and foreign migrants to deny the
American public its due.

Fueling such sentiments is the sustained US slowdown. The overall
unemployment level has touched 6 percent. In Silicon Valley, it has
reached 8 percent. Laid-off workers, particularly immigrants, have
flooded US universities, hoping to sit out the slowdown rather than
return home. The potential of a war in the Middle East has exacerbated
uncertainty, adding to the overall uneasiness.

The net result is that US senators, politicians, labor leaders and
pressure groups are now demanding more than legislative intervention to
stop what they see as profit-crazy multinationals from relocating
operations abroad, benefiting foreign nationals. And the focus has
spread to the larger issues of migration, globalization and raising
entry barriers by slashing H-1B visas (US work permits).
Leading such a campaign are web sites like www.H1B.info, which claim
that they are not anti-immigrant, but seek to educate the American
people on how "the H-1B technical visa program is costing American jobs
and undercutting your wages". The portal, sponsored by Representative
Tom Tancredo (Colorado and chairman of the Immigration Reform Caucus)
and Representative Cass Ballenger (Republican, North Carolina),
explains, "The H-1B visa program allows American companies and
universities to import foreign scientists, engineers and programmers.
Unfortunately, it has no serious safeguards to protect American workers
from being replaced and is abused to provide cheap foreign labor.

"Moreover, H-1B workers continue to flood a terrible job market. In
October 2000, Congress bowed to high-tech lobbyists' claims of a
desperate worker shortage and raised the H-1B visa cap to 195,000. Now,
despite widespread unemployment, the number of H-1B visas continues to
grow. 163,000 new visas were issued in 2001 and 79,100 in 2002. It's
ridiculous to import so many foreign workers during a period of high
unemployment. Congress needs to increase domestic worker safeguards,
significantly reduce the number of H-1B visas issued and crackdown on
visa violations and fraud."

The portal, which surely reflects to a great extent the average
unemployed American's concerns, further spells out a five-point formula
for what a US national could do. These measures include "telling" the
US area senator and representative the following:

Reduce the maximum number of H-1B visas to 15,000 annually and tie any
potential increase to improvements in the unemployment rate.

Don't let President George W Bush cancel the H-1B domestic worker
training program and use its money for expedited processing of foreign
worker visas, like he's proposed in the 2003 budget.

Require all employers to certify that no domestic workers are available
before hiring an H-1B, and require recertification after a major
layoff. No exceptions.

Set minimum salaries for H-1B workers based on the Bureau of Labor
Statistics occupational wage data averages rather than rely on business
to determine the prevailing wage.

Enforce existing laws that prohibit unemployed H-1B workers from
staying and seeking reemployment.

Clearly, in just weeks, the mood has shifted from just being anti-BPO
to anti-foreign workers, particularly tech workers. This is beginning
to make countries such as India - one of the largest beneficiaries of
BPO and the IT services wave - nervous, despite Indian IT pressure
group, NASSCOM, and the Indian Minister for IT and Communications, Arun
Shourie, maintaining until recently that the New Jersey bill is
unimportant since the bulk of India's BPO business is "non government"
in nature.

The Indian position has thus far been backed by expert opinions.
International IT outsourcing and BPO consultants such as Michael F
Corbett, who holds the view that outsourcing is "one of the greatest
organizational and industry structure shifts of the century" have made
the point that while government outsourcing (privatization) itself grew
by 65 percent during 1996-2001 to touch US$400 billion in the US alone,
it still remains "a good 10 years behind private sector outsourcing
across the globe".

The solace drawn from such statements is, however, beginning to wane,
with significant changes to the BPO controversy. Already, there is talk
of a quiet government-to-government dialogue between India and the US
on the issue. Some of the arguments that the Indian side is arming
itself with include non-compatibility of trade barriers with the World
Trade Organization (WTO) and the subtle threat that India could take
the US to the WTO redressal disputes forum if the federal government
hampers market access (ie, prevents US companies from outsourcing to
India.)

Simultaneously, anti-liberalization sentiment within India has begun
mounting its onslaught on how the developed nations should resist
globalization when it impacts their interests. Providing grist to this
mill are developments in Europe, with the United Kingdom and Germany
also now considering restrictive action to safeguard domestic
interests. Such a move is being considered through a protectionist
measure called TUPE (Transfer of Undertakings and Protection of
Employees), which could negatively impact IT flow to India.

Meanwhile, die-hard trade and pro-globalization economists like Jagdish
N Bhagwati, University of Columbia, have begun promoting the idea that
since migration cannot be stopped, it would be better for countries
which face a brain drain to tax nationals who migrate, while importing
nations should assimilate and accommodate the new population. The
taxation idea has so far not found takers. Nor has the idea of adoption
of the migrant population found immediate favor with importing nations.

Also, industry pressure groups in India and the US have joined hands to
stem the tide of popular opinion against India and the Indian
technology worker. NASSCOM has begun a campaign to "educate" the
American people and policymakers on the aggregate benefits to the US
economy as a result of collaboration with Indian IT companies. Sunil
Mehta, vice-president (research), NASSCOM, recently made statements to
the effect that "after an internal analysis on the respective benefits
to the US economy, NASSCOM has begun a relentless campaign in that
country. The banking and financial sector alone has been able to save
around $8 billion in the last four years due to outsourcing their
requirements, " he said.

Mehta's views have been seconded by international outsourcing
consultant Nigel Roxbough. Speaking at the same seminar as Corbett in
Chennai, Roxbough noted that IT infrastructure and BPO cut costs by 12
percent and offshore outsourcings offered 40 to 50 percent cost
reductions. The seminars at which Roxbough and Corbett made their
presentations were, predictably, organized by NASSCOM.

Interestingly, NASSCOM's lobbying is finding resonance at the US end
with the Information Technology Association of America (ITAA) launching
its own pro-BPO campaign. The ITAA represents the interests of the US
technology industry, which stands to lose as much by legislative curbs
on outsourcing, offshoring or importing of tech-savvy manpower into the
US.

The ITAA recently released a report that highlighted the fact that the
IT workforce in the US was stabilizing. "Both hiring and dismissals are
far below January numbers, which may signal a stabilization of the IT
workforce after the roller coaster of recent year," ITAA president
Harris Miller said, in a tone aimed at pacifying detractors. "We're
also seeing more optimism than last quarter on the part of hiring
managers as they anticipate their needs over the next year." ITAA's
report shows that US tech recruitment has gone up by 2 percent during
the first nine months of 2002, up from 9.9 million in January to 10.1
million in October.

The US tech industry association is also predicting that the IT
industry's human resources demand will touch an additional 1.1 million
workers in the coming months, which is being dismissed by independent
technology recruiters like Frances Quittel, better known on the
Internet as Careerbabe. Speaking to Information Week, Quittel states,
"Companies are waiting, they are not making any plans, they are in hold
mode and are trying to figure out how they can wrap up the fourth
quarter before moving along." She further adds that companies are not
innovating; there's no new technology that companies feel compelled to
have, as they felt compelled to implement the Internet in the 1990s.
"When you're in maintenance mode, you don't need to hire a lot of IT
people. You can outsource those jobs. There is nothing driving this
economy that is a huge wave of must-have technology," she states.

While this debate on the veracity of the ITAA's projection continue,
the Arlington, Virginia-based ITAA and the Oakbrook Terrace,
Illinois-based Computing Technology Industry Association have indicated
that they will begin lobbying in the spring to boost the number of H-1B
visas. Nobody is yet making their position public, but the IT industry
expectation is that the introduction of a bill would either keep the
H-1B visa cap high or eliminate it altogether.

In the US, the IT industry is considered powerful and there are
expectations that it could swing the verdict in its favor. Soon after
the H1B quotes were enhanced in 2000, an editorial in the Christian
Science Monitor noted, "Such generosity to one industry - albeit one
driving the economy - is thanks largely to its increasing political
clout. The industry gives campaign contributions to Democrats and
Republicans in roughly equal amounts. The total will exceed $22 million
this year, more than double the $8.9 million of four years ago."

Not to be left out, the Indian media, too, have jumped into the fray to
"protect" Indian interests. Just a week ago, the Economic Times,
India's largest-selling daily, for instance, splashed expert opinion
from Sidney Weiss, president, US Customs and International Trade Bar
Association, to the effect that legislation such as the New Jersey bill
fundamentally "violates the provisions of the US constitution and the
WTO agreement". Weiss told the Economic Times that Indian companies or
representative industry organizations could challenge the bill if it
were enacted in the US and before the WTO. "The constitution does not
grant powers to the states to enact laws that are under the realm of
the federal government," he said.

Weiss further said that the US Chamber of Commerce is interested in
negotiating free trade agreements with about 12 countries, including
India. "The federal government understands the importance of
international trade and would not allow any adverse move," he said. His
statement is now being read by India's IT industry as a proof of the
federal government's endorsement of offshoring, outsourcing and import
of technical workforce into the US, even if the states are opposed to
such a move.

Significantly, despite such statements, the issue is likely to hinge
largely on how the US economy performs. As Vin O'Neill, senior
legislative representative for the Institute of Electrical and
Electronics Engineers, a Washington, DC-based professional group told
COI Magazine, "If unemployment continues, Congress will be more
attentive." The institute's 235,000 members hold the distinction of
having lobbied Congress to study the effects of H-1Bs and offshore
outsourcing.

The US president has also spelt out his priorities for the coming year.
In his State of the Union address early this month, Bush termed
improvement of the job market his "first goal" for the coming year and
asked Congress to pass a $670 billion, 10-year tax cut. "We must have
an economy that grows fast enough to employ every man and woman who
seeks a job," he said. "With unemployment rising, our nation needs more
small businesses to open, more companies to invest and expand, more
employers to put up the sign that says, 'Help Wanted'."

For India, any significant change in the US position on offshoring,
outsourcing and technology worker imports could spell disaster. A
NASSCOM survey on IT industry employment in India has projected a 24.4
percent growth in 2002-03, up from 522,250 jobs in 2001-02 to 650,000
IT jobs in 2002-03. Of these, 205,000 would be in IT software exports,
160,000 in IT enabled services, 25,000 in the domestic software market.
Another 260,000 jobs would be in user organizations. NASSCOM has
further predicted that the IT services growth would touch the magic
figure 1 million IT jobs by the year 2008.

BPO, worth about $1.6 billion a year in India, has become an important
driver of IT services in the country. Last year, India's IT services as
a whole grew 29 percent. This is the fastest in the world, but slow as
compared to the over 60 percent growth notched during the previous
decade. Interestingly, the 29 percent overall growth hides a variance.
IT services, such as software development, grew only by 22 percent, but
IT-enabled services, such as outsourcing, have notched an over 65
percent growth. Indian companies that have recorded phenomenal BPO
revenues include Wipro's Spectramind, HCL's BPO subsidiary E-Serve,
Mphasis' MsourcE and Citigroup's E-serve International.

()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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