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Could the new H-1B bill hurt Indian IT firms?

The Grassley-Durbin bill proposes a new system for allocating skilled-worker visas, tougher eligibility standards, new minimum wage standards and other employer obligations, and limiting the ability of employers to place H-1B and L-1 employees at third-party worksites. Photo: Priyanka Parashar/MintPremium
The Grassley-Durbin bill proposes a new system for allocating skilled-worker visas, tougher eligibility standards, new minimum wage standards and other employer obligations, and limiting the ability of employers to place H-1B and L-1 employees at third-party worksites. Photo: Priyanka Parashar/Mint

Bill that seeks to restrict movement ofIndian tech professionals to US may hurt growth, inflate cost of industry, say experts

Bengaluru: A new bill introduced in the US Senate in the second week of November that seeks to restrict the movement of Indian technology professionals to that country is worrying the outsourcing industry, which has been lobbying for favourable immigration regulation in one of its largest markets.

Industry experts and immigration lawyers fear a new bipartisan bill, called H-1 and L-I Reform Act, 2015, introduced by senators Chuck Grassley, chairman of the Senate Judiciary Committee, and Dick Durbin, Assistant Democratic Leader, could presage a hawkish skilled-worker immigration regulation. That could seriously hamper the growth and inflate the cost of operations of India’s outsourcing services industry that earns more than half of its $100 billion software export revenue from the US.

The Grassley-Durbin bill retains most of the restrictions on skilled migration proposed in a previous legislation in 2013, besides proposing a new system for allocating skilled-worker visas, tougher eligibility standards, new minimum wage standards and other employer obligations, and limiting the ability of employers to place H-1B and L-1 employees at third-party worksites or otherwise contract for their services.

Indian outsourcing firms such as Tata Consultancy Services Ltd (TCS), Infosys Ltd and Wipro Ltd send thousands of engineers to the US on the hard-to-get skilled-worker, or H-1B, visas to work on technology projects of their clients. L-1 visas are mainly used by firms to transfer staff to their branches in the US.

A lobbyist for outsourcing companies, who declined to be named, said there is little chance of the new bill becoming law. “It is highly unlikely that this bill will even come to the Senate for vote, given the damage it would do to the US economy. There is no way to bring a bill to the Senate that deals with just the high-skilled part of immigration regulations," the lobbyist said.

Still, industry and immigration experts are concerned: “These senior legislators are some of the most respected names and, therefore, it is likely to influence future legislative debate," said Gagan Sabharwal, director for global trade development at the National Association of Software and Services Companies, or Nasscom. “Our only concern is some of the stringent provisions which are already there should not be taken in consideration in the real debate when the comprehensive immigration reforms invigorates."

“Many of these proposed provisions have been introduced repeatedly by Senators Durbin and Grassley," said Scott Fitzgerald, a partner at immigration services firm Fragomen, Del Rey, Bernsen and Loewy, LLP.

“It is very likely that many of its components will be prominent topics for debate on any future business immigration legislation," he said.

For Indian IT companies, a shortage of H-1B visas remains a perennial problem. They are trying to address this problem by hiring more employees locally in the US. “At one level, it is a political thing because in the run-up to elections (in the US), we keep on hearing about these things," said U.B. Pravin Rao, chief operating officer of Infosys. “And we have to deal with it. We cannot wish it away."

Rao said Infosys was trying to increase the count of local employees in the US.

“Whatever happens, one thing is clear and that is we have to become much more global," he said.

A spokeswoman for TCS declined to comment. A representative for Wipro didn’t immediately respond.

Senators Grassley and Durbin have in the past introduced a number of bills to restrict the use of H-1B visas. In 2013, Senator Grassley introduced a bill called H-1B and L-1 Visa Reform Act of 2013, with several restrictive clauses on skilled migration.

Many of those curbs eventually made it to the draft of the comprehensive immigration reforms bill introduced in 2013 that caught the industry by surprise. The IT industry has since been lobbying hard with the US legislators to take out a favourable set of immigration regulations.

Some of the provisions of that bill included caps on the number of employees each company could bring to the US, restrictions on replacing a US worker with a H-1B visa holder, among others.

A version of that bill that stripped off many of those damaging clauses on skilled migration was later pulled from the floor of the House after legislators failed to reach a consensus on the larger issue of legalizing the millions of illegal immigrants in the US.

“For years, foreign outsourcing companies have used loopholes in the laws to displace qualified American workers and facilitate the outsourcing of American jobs. The H-1B and L-1 Visa Reform Act would end these abuses and protect American and foreign workers from exploitation," Senator Durbin said in a statement posted on the official page of Senator Grassley on 10 November.

The industry has already stepped up efforts to reach out to legislators in the US. Earlier this year, Nasscom released a report that said Indian IT industry supported more than 400,000 jobs in the US and has generated roughly $20 billion in taxes in the last five years.

To be sure, some dismiss the latest bill as mere rhetoric ahead of the presidential election due next year. “There have been at least six bills introduced in the US over the last several years, and all of them have failed to progress," said Arup Roy, research director at technology advisory firm Gartner. “From an industry impact standpoint, I don’t think there is any unforeseen risk that we should be envisaging at this point," he said.

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