In August Congress passed a bill to fund enhanced border security which is now Public Law 111-230. The funding for this bill was achieved by increasing the visa fees for H-1B and L-1 visas by $2,000. The fees apply selectively to companies who employ more than 50 employees in the US and if 50% or more of those employees are not US citizens or permanent residents.
The bill was weird and wicked in multiple ways. It increased fees for companies conducting legitimate business for purposes completely unconnected with their business. And it was constructed cleverly so that American businesses would not be affected. Which meant that not only would Microsoft and Intel not pay the higher fees, IBM and Accenture, who are in the same business of offshore services that Infosys and Cognizant are in, would also not pay them. Indian companies had been surgically targeted.
As if that wasn’t enough, in the 9/11 Health Care Bill (scrolls to fees) the same fees, which were imposed for 4 years in PL 111-230 have been extended another year. It was easy. Like taking candy from a child.
When I wrote about the Borders Bill, I made light of it. Financially, it is not a big burden for companies. An extra $2,000 paid a couple of times over a six year work permit is less than a 1% uptick in costs. It is not going to even affect margins, leave alone changing the value prop. But the precedent this sets is wrong and dangerous to both India and the US. It needs to be called out.
While the bill doesn’t talk about Indian offshore services companies explicitly, there is no doubt that they were the target. American lawmakers regularly beat up American businesses that “outsource American jobs to India and China”. In these hard times, they are tapping into the angst that high unemployment creates. But they should know better.
Offshore outsourcing is trade. When Ricardo talked about the law of Comparative Advantage, he did not exclude outsourcing from it. Trade brings benefits to the both countries. It may be harder to picture the benefits that the US gets from outsourcing but it does nonetheless. It lowers the costs of goods and services to consumers. It makes American businesses more efficient and more competitive in the global market. As outsourcing creates prosperity in India and China, they consume more American goods. And so on.
Which is why when the US has constantly preached to developing countries like India to open their markets, it has received the support of economists everywhere. Trade is good for the world. All of it, including outsourcing.
But if it is too much to ask lawmakers to guide their actions based upon sound economic principles, then I’d ask them to do it in their own interest. There are very few US companies who would support legislators that targeted Indian companies. Not just because they like how Indian services companies make them more efficient. But because India is one of the few large growth markets in the world today. No company wants their own government to hobble their attempts to get the best access to this market.
So far, both bills put together don’t amount to much. But as in many of these things, its the optics that matter. Right now the optics are all bad – anti-outsourcing and by extension anti-India. One hopes that it stops right here.
Meanwhile, what of Indian companies? Every major company I have talked to recently has aggressive plans to increase hiring in the markets. It won’t happen overnight, but the direction is right.
Related articles
- India Outsourcers Feel Unloved in the U.S. (businessweek.com)
- How Obama Will Address Outsourcing in India (blogs.wsj.com)
- India: Urgent Emergence (designmind.frogdesign.com)
If you currently have pre-existing conditions like me that have prevented you from being able to qualify for health insurance for at least six months you will have coverage options under new health care. Check “Wise Health Insurance” to find how to get quality insurance for dollars.
I have no ethical problem with socking it to the H-1Bs in fees because they’re not supposed to be in America unless there is a skills shortage. Maybe during the go-go 90s, but no one can make that claim with a straight face now. Fact: dirty tricks have been played both by Desi bodyshop and by individual H-1Bs to get jobs away from Americans, and Americans are striking back. We would do the same or worse. Suck it up, Nasscom.
http://mutiny.wordpress.com/2007/03/15/industry-of-fake-resumes/
IT industry is quickly becoming filled with fake resumes. It recently appeared in the papers that
“Satyam computers has terminated 500 of its employees because they had fudged with their documents”
Several industry experts have expressed their concerns over this. Mohandas Pai, CFO of Infosys said
“Second peculiar challenge in India is that our ecosystem doesn’t support the growth we are experiencing. It is not matured enough to create a large body of people with high quality domain skills and leadership capability. As a result there is a shortage of people who have managed large industries, or have the domain expertise of complex systems.
The problem is being attacked in war footing, NASSCOMM launched the National Skill Registry program last year so that every company can keep a record of its employees in a database accessible to the whole industry. With the high attrition rate people find it convenient to lie about their experience and skill set and get into a job. The problem, I think, however is more deep rooted.
With more than 112,000 engineers graduating every year, it is important to consider their skill levels. Mass recruiters like Infosys and TCS employ engineers from all discipline, so its also important to answer whether the IT industry is that skill and talent driven or not. I had an opportunity to talk to the HR who had come to our university for placements as to why Infosys employs people with no IT exposure and background. The reply was something I was not prepared for, it seems that there is a tacit understanding in the industry that IT is something similar to number crunching and with a three month training a person is prepared to do exactly what a four year degree holder is capable of doing. With this attitude it is quite natural for the Indian IT industry to keep loitering in the services sector. Expecting intellectual products from an industry comprising make shift engineers is like asking for the moon (with good roads).
India has been surgically targeting America’s jobs since 1998 when we let them into the world economy. Before that:
1) USA was the #1 undisputed leader in IT and we had no competition. We were the envy of the world.
2) Everyone in America had a good job and could afford houses and cars. Not anymore. If you think killing your customer base in the name of increased profits is a good thing, have at it.
3) The software sector was 98% white American males. Perhaps nowhere else in the world has an entire industry been handed over to another race and country who didn’t lift a finger to create it.
4) America’s economy was booming out of control. Now it’s stagnant. Keep arguing that trade helps economies.
India banned Wal-Mart and Target from coming in in order to protect the local Indian workforce.
Anyone who knows Asians knows they hate the west and won’t buy our products if they can avoid it due to centuries-old deep-seated resentments against the British and the west.
The increased economic activity and “economic benefits” of globalization have not materialized for the USA. They have benefitted protectionist countries like India and China, but not wide open countries like the USA, which are now being drained by the likes of India.
Indian managers have been systematically cleansing white Americans who invented IT from the American workforce. We invented IT long before India ever saw a keyboard. Yet those who invented IT are now homeless while lazy people from the 3rd world come here and get trained by the very Americans they are throwing out of work. If you think that’s fair, or good for our economy, you are delusional. Punishing America’s most productive workers just because they are deemed “too expensive” is a very bad idea.
I’m admittedly a bit confused here. Why is india complaining about these visa hikes? If there is talent and innovation that exists within this ‘highly skilled’ workforce, shouldn’t they be able to have a go at it on their own at home? And succeed? Or are there worries?
What needs to be called out is that Indian companies staff their companies with greater than 50% Indian workforce – on OUR American soil.
Talk about hubris. We have 12% unemployment and you are complaining when we tax employers who aren’t even hiring American workers! Companies who are shipping jobs offshore. Incredible!
Indian companies should be barred from the H-1b program entirely. Your companies have been found to be the greatest abusers of the program, and you have converted a visa intended to fill shortages into a cheap labor program. Your practices discourage American students from seeking STEM degrees – in short you cause great harm to our nation and you don’t care!
I’ll sleep sounder at night when we finally kick all the abusive companies out of our nation. If you want a presence in the United States, hire our workers. It’s that simple.
I mean really, just how thick headed can you be when your write articles like this one? Honestly, I hope you keep at it because articles like this one are waking up the American people. It’s time we project our power once again, and dominate the IT services sector.
Without cheap labor, currency manipulation, and unbalanced trade and immigration laws the Indian IT services sector would be dead. The day we beat down the free traders politically is the day the Indian BPO sector dies. That day is coming. I get giddy just thinking about it.