Big IT Companies Seek to Deny Indian Firms Many H-1B Visas

By David North on April 30, 2013

It's fun watching those exploitative H-1B employers fight …

Not the government;

Not the workers; but

Each other!

Normally, big business interests using foreign worker programs to lower wages and displace resident workers do so in harmony with each other; they unite to keep the workers in check and to fend off government regulations. And when they are all using the same program, they tend to move in lock-step with each other.

But that rule, as the Wall Street Journal has reported, was broken recently, with one group of H-1B users beating up on another group — and really cleaning their clocks, as the text of the Gang of Eight's massive immigration bill has shown.

The combatants are the big IT firms Microsoft, Intel, Google, etc. (called product firms in the trade because they actually produce things both visible and useful) on one side and placement firms (a.k.a. Indian outsourcing firms) who quietly provide rented IT staff and other services to major corporations on the other.

Both sides are enthusiastic proponents of the H-1B program, bring in large numbers of young, docile, alien college graduates and some advanced degree holders to write software and do similar tasks. Both realize that any union activity is highly unlikely, when each of the programmers is hoping that the company will sponsor them for a green card.

According to the Journal, the Indian companies, like Infosys and Tata, routinely staff their operations "with Indian expatriates who earn significantly less than their American counterparts".

It is heart-warming to see Rupert Murdoch's flagship newspaper write such things.

Quite recently, and behind closed doors, the big IT firms apparently decided that given the finite supply of H-1B visas and the fact that the Indian firms hired large numbers of them, it would be a good idea to use the big immigration bill (S.744) as a vehicle to cut "back sharply on the number of foreign workers these outsourcing companies can send to their U.S. offices", to quote the WSJ.

There are numerous, serious blows to the Indian companies in the bill; these firms, unlike the big IT companies, have apparently either not lobbied the Gang of Eight or did so unsuccessfully.

The biggest blow of all to the outsourcing firms is this provision in Section 4211 of the bill:

(d) Outplacement- Section 212(n)(1)(F) (8 U.S.C. 1182(n)(1)(F)) is amended to read as follows:

"(F)(I) An H-1B-dependent employer may not place, outsource, lease, or otherwise contract for the services or placement of an H-1B nonimmigrant employee.

"(ii) An employer that is not an H-1B-dependent employer and not described in paragraph (3)(A)(I) may not place, outsource, lease, or otherwise contract for the services or placement of an H-1B nonimmigrant employee unless the employer pays a fee of $500."

This provision, if enacted and enforced, would appear to eliminate the central activity of the Indian firms, as all are "H1-B-dependent" in that they have more than 15 percent of their staff recruited through the program. The dependency concept was written into an earlier law.

The same provision has no real impact on the big IT firms, who have large numbers of non-H-1B employees and typically less than 15 percent in the H-1B category. The $500 fee is pocket change to these big-time operators.

In addition to this perhaps fatal blow regarding placements, S.744, has various other arrangements that are much harder on the H1-B-dependent firms than the others.

For example:

  • There would be an upper limit on the percentage of H-1Bs a firm could have; starting at 75 percent soon, and moving over the next few years through 65 percent to 50 percent.

  • Further, there are benchmarks of 30 percent and 50 percent use of H-1Bs over the same period that would increase the fees on H-1B dependent employers by an extra $5,000 and $10,000 for new H-1B employees, respectively.

  • Also, an H-1B worker for whom the employer has sought green card status would not count toward H-1-dependency. Since the big IT firms often file for green cards and the outsourcing firms rarely do, this is another blow to latter group.

The Indian firms are now faced with the challenge of trying to get at least some of these provisions out of a bill that has gained a certain amount of momentum, at least in the Senate.

They go into this struggle without any apparent real lobbying power, no obvious friends on the Hill, and with no one in either chamber who is of Indian extraction. (There is one Hindu in the House, but she is a freshman from Hawaii and is part Samoan and mostly Caucasian.)

There is also a tendency among the big IT companies to blame the widely perceived problems of the H-1B program on the Indian firms, rather than on themselves, a useful public relations ploy which they would not want to lose.

The Indian firms seemingly are left with two allies: the government in New Delhi, which has been outspoken in the past on some H-1B issues, and the corporations that use the services of the outsourcing firms (and save money thereby). One can predict that the vigor of lobbying would be much greater from India than from the client firms.

Alternatively, as we suggested in an earlier blog, the Indian firms could restructure themselves into conglomerates including many resident workers, to avoid the H-1B-dependent tag — a huge loophole left for them, perhaps accidentally, perhaps on purpose, by the Gang of Eight. Such a maneuver would be a nuisance, and run up some legal fees for the outplacement firms, but it would be extremely beneficial to them.

It will be interesting to see how this plays out.