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Do Indian Outsourcers Misuse The H-1B Visa Programs?

Does it help international trade--or hurt American workers?

Indian outsourcing firms are under scrutiny as federal legislators investigate the use--and alleged abuse--of the H-1B foreign worker visa.

Sens. Dick Durbin, D-Ill., and Chuck Grassley, R-Iowa, both members of the Senate Judiciary Subcommittee on Immigration, sent letters to the CEOs of nine Indian firms--including Infosys Technologies, Satyam Computer Services, Tata Consultancy Services, and Wipro Technologies--requesting details on their use of H-1B visas. Grassley and Durbin claim that the Indian firms are skirting federal regulations and using the visas to stock their U.S. operations with low-paid Indian nationals. They also maintain that the companies use the program to expose their workers to customer service operations in the United States, easing the process of moving that work offshore and displacing American workers.

In their letters to the companies, Durbin and Grassley asked for information on the average ages of their H-1B workers, their wages, and the companies' efforts to recruit Americans for those positions. The companies have yet to respond, a Durbin spokesman says.

Indian outsourcers are conspicuous in their use of H-1B visas. According to a government list, Indian firms represent five of the top 10 firms granted H-1B visas last year. In a recent interview, Tata said it employs about 8,000 H-1B workers. In Securities and Exchange Commission filings, Infosys says it has at least 7,100 H-1B workers, and Wipro and Satyam note that H-1B workers make up most of their U.S. staffs.

Last month, Durbin and Grassley introduced a visa reform bill intended to crack down on abuses by foreign outsourcing firms. The bill, aimed at both the H-1B and L-1 visa programs--L-1 visas aren't capped and are designed for managers at multinational companies--breaks new ground by barring companies from using the visas simply to train short-term workers who are shipped back home to do outsourced work. It would require all employers with H-1B workers to pledge that they made "good faith" efforts to fill those jobs with American workers, something that's required now only of companies with 15% or more of their employees on H-1Bs. The bill also would require employers to advertise jobs on a Labor Department Web site for 30 days, and post summaries of all H-1B applications.

The Indian outsourcers wouldn't comment, but the National Association of Software and Services Companies, a lobbying group, defended their use of H-1B visas as a business issue. "Work permits are primarily a tool for facilitating trade and allow global companies to bring key staff to the U.S. on temporary assignments, just as U.S. staff often travel across the world for temporary assignments," Nasscom said in a statement.

Another H-1B visa reform bill was introduced last week by Sens. Joseph Lieberman, Ind-Conn., and Chuck Hagel, R-Neb. The Skilled Worker Immigration and Fairness Act of 2007 aims to raise the annual number of H-1B visas granted from 65,000 to 115,000, up to a max of 180,000, depending on market conditions. It features provisions to address visa abuse and fraud, including prohibiting employers from advertising jobs as exclusively open to H-1B visa holders. However, critics contend that the Lieberman-Hagel bill is a watered-down version of Durbin and Grassley's, excluding important provisions related to wages and ensuring American workers aren't unfairly displaced.

Immigration policy has been a hot button issue during President Bush's second term. A comprehensive bipartisan immigration reform bill proposed last week could favor companies eager for tech workers by expanding "employment-based" immigration and introducing a point system that would weigh an individual's skills and advanced degrees. Though not addressing H-1B abuse specifically, the bill could pave the way for raising the cap on the visas.

By Marianne Kolbasuk McGee Chris Murphy (InformationWeek)
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