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H-1B Visa Battle – US v Indian Companies

There is a raging battle for US Immigration Reform in 2013 going on between the American people at large, Democrats v Republicans, the US Senate v the US House of Representatives, President Obama v the US Congress as a whole, the various Political Lobby Groups, Chamber of Commerce & Major Workers Unions. However in the midst of all these battles there is another battle going on for the terms and conditions around the H-1B visa reform portion of US Immigration and even the current guidelines as they stand.

It is actually not a minor fight at all because it actually is pitting multinational Indian giants like Tata, InfoSys, Wipro & Cognizant against US heavy weights like IBM, Accenture, Deloitte, etc. with multi billion dollar IT contracts in the US at stake. In fact because of the monetary and political clout of these companies the battle has risen all the way to the top of both the US and Indian governments with many issues possibly going to have to be resolved by the World Trade Organization (WTO).

What is at Stake?

The H-1B visa as mini review is the major work visa used by companies to sponsor foreign professionals into the US and the industries of IT, Finance and Consulting are the biggest users of these visas to gain foreign national talent. There is large shortage of skilled workers in these fields in the US so the companies in question amongst many others crave these visas like rare gold and currently there are only 85,000 annually and in 2013 these were gone within a week of H-1B visa applications opening on April 1.

Using this foreign talent along with the rest of their workforce and expertise they can then bid on large scale private and government projects, invest in R&D, grow their footprint globally and otherwise grow revenues and their business. Now in general this is of benefit to the US economy at large to a great degree, however the US which is the most vocal proponent of free trade on the global stage is writing rules that while have an intention to protect abuse of the US Immigration system actually also amount to protectionism for US Industry and companies.

Of course this as a result of heavy lobbying by the major US companies and major campaign contributions to key political figures. Foreign companies are somewhat limited in their political clout within the US, however when it comes to International trade this may spark a war where companies like IBM face increasing scrutiny by the Indian government with their operations there in retaliation. This type of protectionist trade war ends up hurting everybody and thus a compromise is needed.

What is the point of contention?

The new US Immigration reform has called for an increase to the quota to 110,000 H-1B visas initially (up from 65,000 currently in the main cap) with a flexible moving target up to 180,000 depending on some key performance indicators like past year’s demand, US economic and unemployment numbers, etc. Additionally many people who qualify under the additional quota of Advanced Degree Exemption of 20,000 currently will have a new quota of 25,000 but exclusively for STEM (Science, Technology, Engineering, Math) Master’s graduates from US institutions.

To go along with this increased quota is increased fees and penalties for new criteria where no more than 50% of a workforce can be foreign graduate based and if so heavy penalties may apply along with barring from following year’s H-1B visa period.

On face value this seems fair given a company operating in the US should have more local based employees, however restrictive conditions are not imposed to the satellite offices of IBM and Accenture in India. Those “offshore” offices are key for the operations of both businesses allowing them to scale and bid aggressively on multi-national contracts. Both those companies hire thousands of people in India and if the Indian government pressured by their IT giants viewed US legislative action as hostile to their companies could enact legislation to make companies like IBM hiring people in India more costly and thus we will have a protectionist system start to occur around the world, meaning costs rise for all of us eventually.

It is getting so bad that Indian companies are actually hoping for the bill’s demise in Congress because the current Immigration status quo is the lesser of two evils. This is against the better interests of so many Indian nationals in the US (and outside) caught in purgatory and decades long waits with the current Immigration system. There is already enough people opposed to Immigration reform and with additional money and support behind the anti-reform effort, the chances of anything passing decreases even more from the tenuous current position.

A Solution?

Unfortunately I don’t have an easy one for this because it is a case where the political and sovereign realities of nations and their populace clash with the competitive corporate battles occurring across the world. The easy answer would be to say the Indian companies are wrong in regards to US Immigration and imposing their will on another nation wanting more free hiring abilities regardless of nationality given they are already paying premium to hire foreigners. However the problem with that argument is then you would have to also agree that the same companies and India itself are also within their rights to impose strict conditions on US Companies taking advantage of comparatively cheaper labor in India to grow revenues and their markets around the world.

I agree the US should be allowed to impose criteria that mandates minimum levels of hiring of US citizens and residents. However if the US wants they could charge a large excess premium for any companies wanting to exceed these levels up to a certain poin rather than outright forbidding and future penalties from visa sponsorship. Those funds could specifically to education and retraining of US workers wanting to switch to high demand industries like technology.