LinkedIn Twitter
Founder and Chief Executive Officer of HfS Research, the leading global research analyst organization covering global sourcing strategies. Acclaimed Industry Analyst and Consultant who scribes the leading blog for the services industry "Horses for Sources".  Previously worked  at AMR Research (Gartner Inc),  Deloitte Consulting’s BPO Advisory Services, the  Everest Group and  IDC .  In 2010, Phil was named “IIAR Analyst of the Year” by the Institute of Industry Analyst Relations (IIAR). This is the most coveted global award for industry analysts in technology and services.

5 responses to “Clarifying the Chucky chop shop issue: what should the US government do?”

  1. Bob

    The legistlation is somewhat weak but it is better than nothing. I don’t see how the visa fee hike will “create more offshoring” since it’s targeted at companies who have minimal American staff in the first place. The idea that companies who want to do business here be required to hire Americans is “protectionist” is rather demented. If the politicians had a spine they could call the corporation’s bluff on moving jobs out of the country in response to “protectionist” measures. That is, they could say “go ahead, replace Americans with foreign staff overseas. However, we’re going to slap a VAT tax or tariff on your goods when you try to bring them back stateside to sell to the US market.” You can call that “protectionist” if you want, but I consider your philosophies that encourage American job destruction suicidal and the height of stupidity in terms of national policy.

    1. Phil Fersht

      Bob – you need to look at the dynamics of how global IT services function to see how this visa free-hike is will have negative (and toothless) impact on creating US onshore IT jobs:

      1) Indian IT services providers will attempt to conduct more IT work offshore / outside of the US, whereas in the past they would have conducted the work locally with either a US employee, or an Indian visa holder in the US. Impact: more work moves offshore as opposed to onshore work being created

      2) Indian IT service providers have been investing heavily in hiring onshore staff, and have been creating local employment. However, the new visa taxes will only help to accelerate the movement of more complex IT work offshore. The Indian providers have a proven successful strategy of taking on complex IT projects and “learning on the job” with their offshore personnel. This new fee will only encourage them to take bolder steps to take more work offshore. Impact: more work moves offshore as opposed to onshore work being created

      3) When Obama was elected and voiced potential moves to slowdown offshoring, several Indian IT providers made investments in locations such as Canada (especially Ontatio) and Latin America. They will now look to leverage these investments more aggressively. This is great news for the developing nearshore IT services markets. Impact: more work moves offshore and nearshore, as opposed to onshore work being created

      4) With the global IT services industry poised for consolidation, this may encourage several of the leading Indian IT giants to acquire onshore US firms, now they have more financial incentive to do so – which would likely have further negative ramifications for the US IT job market. When Indian firms acquire US IT services firms, they will seek to rationalize the existing onshore staff to support their offshore operations, while keeping salary costs at a minimum. Impact: more work moves offshore as opposed to onshore work being created

      5) The US IT and hi-tech industries grew up bringing talent into the country that added new skills and ability – and was often more affordable. By further discouraging bring the talent to the states, Schumer and co are driving the next wave of IT development out of the country. Impact: innovation moves offshore, and more vacant office-lots in Silicon Valley.

  2. BB

    the $2,000 fee is not nearly high enough to remove the enormous advantages to employers of hiring indentured labor. The H1B gives employers the ability to immediately deport any H1B employee. This amount of power over employees represents a violation of the 13th Amendment to the U.S. Constitution (the amendment that freed the slaves):

    “Section 1. Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.

    Section 2. Congress shall have power to enforce this article by appropriate legislation.”

    Some claim that the H-1B program helps to create American jobs, but it is currently being used by some companies to outsource American jobs to foreign countries. Under current law, an outsourcing company can use American workers to train H-1B guest-workers, fire the American workers and outsource the H-1B workers to a foreign country where they will do the same job for a much lower wage. In fact, Indian Commerce Minister Kamal Nath has referred to the H-1B as “the outsourcing visa.”

    Employers can legally discriminate against qualified Americans by firing them without cause and recruiting only H-1B guest-workers to replace them. The U.S. Department of Labor (DOL) has said: “H-1B workers may be hired even when a qualified U.S. worker wants the job, and a U.S. worker can be displaced from the job in favor of a foreign worker.” Some companies that discriminate against American workers are so brazen that their job advertisements say “H-1B visa holders only.” And some companies in the United States have workforces that consist almost entirely of H-1B guest-workers.

  3. James

    India is a giant slum with a billion people trying to get out. The better educated and wealthier are trying to exit to Western countries that have built a high standard of living, rather than try to fix their own country. A lot easier. The issue with I T talent will resolve itself eventually. I have worked with many Indians in a variety of countries. I have yet to meet one that wasnt work shy, could meet deadlines and produced quality. Their work ethics are not very high. Most of these I T companies are used to export people. They are almost if not are, merely operating as immigration consultants. In years to come, our children will wonder what we were thinking allowing ourselves to be colonized by these people who dont share our values, merely our desire for wealth. The will become voting blocks, they will make legislation for themselves, they will increase the numbers in the welfare line, medical and school standards will slip. This will happen with the 2nd and 3rd generations and with their families joining them bringing the slum dwellers.