The Outsourcing Visa

Date: Monday, April 16, 2007 6:21 PM

<<<<< JOB DESTRUCTION NEWSLETTER No. 1674 -- 4/16/2007 >>>>>

I have often made the claim that H-1B facilitates offshoring. One effective
way to cripple the offshoring trend is to put severe limits on H-1B visas
and its variants. Of course most economists and politicians in the U.S.
claim that without H-1B they will engage in more offshoring.

Bill Gates constantly threatens to move his operations overseas if he can't
get more H-1B visas. Nevermind that everytime he has gotten more H-1B visas
he has accelerated his moves to India and China. Gates recently testified
to the Senate that limiting H-1B visas forces companies to offshore:

"Barring high-skilled immigrants from entry to the U.S., and
forcing the ones that are here to leave because they cannot
obtain a visa, ultimately forces U.S. employers to shift
development work and other critical projects offshore."

The article below shows a stark contrast to the corporate PR that we are
constantly bombarded with from spin doctors like Bill Gates. Kamal Nath
says that H-1B is the "outsourcing visa".

"It has become the outsourcing visa," the Indian commerce minister,
Kamal Nath, said by telephone this week while attending global
trade talks in New Delhi, at which India is pushing the United
States for a larger H-1B quota.

"If at one point you had X amount of outsourcing," he said, "and
now you have a much higher quantum of outsourcing, you need that
many more visas."

Ramalinga Raju goes as far as saying that H-1B visa holders are
"outsourcing ambassadors".

Thousands of H-1B visas every year are being won by individuals
acting as outsourcing ambassadors. Highly skilled and easily meeting
the objective standards for excellence that the law requires, the
employees interact with U.S. companies like Morgan Stanley and
Boeing, gathering an outsourcing mandate and lubricating the flow of
tasks to an Indian back office.

"To deliver the solutions from a remote environment," said B.
Ramalinga Raju, chairman of Satyam Computer Services, a leading
Indian vendor, "you need a certain number of people being with
a customer, understanding his needs and collecting the
requirements."

+++++++++++++++++++++++++++++++++++++++++++++++++++

http://www.iht.com/articles/2007/04/12/business/visa.php

Outsourcers corner market for U.S. skilled worker visas
By Anand Giridharadas Published: April 12, 2007

MUMBAI: After four years at Harvard, many foreign students there will have
to leave the United States this summer. Some of them, wielding lucrative
offers from Wall Street investment banks and other American businesses,
will have to start at those companies' overseas offices thousands of miles
away.

Few of the students may think to blame far-off foreign companies for their
plight, which was first reported by The Harvard Crimson, the college
newspaper. But India's thriving outsourcing industry is guzzling ever more
of the coveted H-1B visas that the Harvard graduates and thousands of
others would need to stay in the United States.

Enacted in 1990, the H-1B visa law allows skilled, specialized foreigners
to work in America for up to six years and then pursue permanent residency.

The visa has been championed as a way to attract the world's best and
brightest to America to study, work, start families and, like Sergey Brin,
co-founder of Google, stumble upon innovations that generate vast wealth
and jobs.

"Where innovation and innovators go," Bill Gates, the Microsoft chairman,
said recently, "jobs are soon to follow."

"It has become the outsourcing visa," the Indian commerce minister, Kamal
Nath, said by telephone this week while attending global trade talks in New
Delhi, at which India is pushing the United States for a larger H-1B quota.

"If at one point you had X amount of outsourcing," he said, "and now you
have a much higher quantum of outsourcing, you need that many more visas."

This month, the annual quota of 65,000 H-1B visas evaporated in a single
day after U.S. officials received more than 133,000 applications. Last
year, the quota lasted nearly 60 days.

If the past is any guide, many of those applications were for people with
no intention of staying in the United States for the long term. Eight of
the 10 largest H-1B applicants last year were outsourcing firms with major
operations in India, according to a tabulation of U.S. Labor Department
statistics by Ronil Hira, a professor at the Rochester Institute of
Technology in Rochester, New York, and a critic of the visas. A year
earlier, the figure was four in ten.

As Indian outsourcing companies have become the leading consumers of the
visa, they have used it to further their primary mission, which is to gain
the expertise necessary to take on critical tasks performed by Western
companies, and perform them in India at a fraction of the cost. Thousands
of H-1B visas every year are being won by individuals acting as outsourcing
ambassadors. Highly skilled and easily meeting the objective standards for
excellence that the law requires, the employees interact with U.S.
companies like Morgan Stanley and Boeing, gathering an outsourcing mandate
and lubricating the flow of tasks to an Indian back office.

"To deliver the solutions from a remote environment," said B. Ramalinga
Raju, chairman of Satyam Computer Services, a leading Indian vendor, "you
need a certain number of people being with a customer, understanding his
needs and collecting the requirements."

Indian vendors have helped lift the proportion of H-1Bs going to Indian
nationals to more than half in 2006 from 7.5 percent in 1992. Last year,
Indians received 43,167 of the 65,000 visas allotted.

Many Indian vendors now itemize the cost of visa fees in their annual
reports. Infosys Technologies, a vendor based in Bangalore, noted last year
that it had doubled spending on visas over the previous year, to $15
million - more than it spends on fiber optic and satellite connections to
the West.

Filings with the U.S. Securities and Exchange Commission reveal that
Infosys had 6,800 U.S. employees on H-1Bs as of last September. In 1998,
the figure was 231.

The H-1B's metamorphosis into "the outsourcing visa" is a principal reason
why American lawmakers have resisted raising the quota above 65,000.

"Our immigration policy should seek to complement our U.S. work force, not
replace it," Senator Richard Durbin, an Illinois Democrat, said in a recent
statement as he proposed legislation to restrict use of the visas.

Because it was designed to create jobs, firms with 15 percent or more of
their U.S. work force on H-1Bs must attest in legal filings that they have
not displaced a U.S. worker. But Hira, the academic, said he believed that
most of the Indian outsourcing firms, by the intrinsic nature of their
business, were violating those attestations.

"Rather than preventing the outsourcing of jobs, the H-1B program acts in
just the opposite way, by accelerating the outsourcing of high-wage,
high-skill jobs to low-cost countries," Hira wrote in a paper published
last month by the Economic Policy Institute, a left-leaning research group
in Washington.

With the exception of Satyam, leading Indian vendors - including Infosys,
Wipro, Tata Consultancy Services and HCL Technologies - declined to comment
for this article.

U.S. and Indian companies, as well as the Indian government, have been
lobbying hard for a larger H-1B quota, arguing that U.S. immigration
restrictions are smothering the innovative synergies needed to sustain a
modern knowledge economy.

"America should be doing all it can to attract the world's best and
brightest," Gates, of Microsoft, told a U.S. Senate hearing last month.
"Instead, we are shutting them out and discouraging those already here from
staying and contributing to our economic prosperity."

Indian vendors cast their fight in similar terms. A visa shortage "is
detrimental not only to the interests of companies established in India,"
said Raju, of Satyam, "but even more so for companies, consumers and
investors in the United States." But critics argue that Indian vendors have
motives antithetical to those behind the congressional authorization of the
H-1B legislation.

Rather than building a thriving community of experts and innovators in the
United States, the Indian firms seek to funnel work - and expertise - away
from the country. While Gates, in his Senate testimony, argued that the
goal for H-1B holders should be permanent U.S. residency, the option means
little to Indian outsourcing firms, which usually rotate their H-1B workers
in and out of the country every few years.

Consider the deployment of Atul Pevekar, a 29-year-old Indian engineer for
Tata Consultancy Services, an outsourcing vendor. A year ago, and five
years out of college, he was sent to Minnesota on an H-1B. His assignment:
to work with a U.S. retailer to relay its information technology needs back
to TCS's Indian staff, to which the retailer has outsourced scores of jobs.

"I am a link between the people who are doing coding in India and the
client," Pevekar said by telephone.

He earns $60,000 a year, five times his pay in India. But he must leave the
country within a year or two. Like many Indian vendors, TCS does not seek
permanent residency for most employees, even though the H-1B lets companies
do so.

And so he will not join, at least not now, that narrative of the
industrious outsider who makes a fresh start in the United States, brings
his zeal and drive, invents something grand, creates jobs and pays taxes.
Instead, he will empty his bank account, take his savings home and vanish
from the country as quietly as he arrived.

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