MUMBAI ? A new American immigration bill threatens the future of Indian outsourcing, Indian companies say, because it will limit the number of foreign workers they can bring to the United States.
The Senate immigration bill, which is currently pending in the United States Congress, would make it more expensive for foreign outsourcing firms to bring over temporary foreign workers on H-1B visas, while giving American companies access to a larger pool of those visas to bring over their own foreign workers.
Under the bill, which is being backed by executives from American technology firms, the total number of H-1B visas will increase to 110,000 from 65,000. However, the bill will limit the overall percentage of foreign workers that outsourcing companies like Wipro, Tata Consultancy Services or Infosys can have in the United States, and will require companies that have 30 to 50 percent of their workforce on temporary visas to pay $5,000 for every new foreign worker they hire.
After 2014, companies that employ more than 75 percent of their workers in the United States on temporary visas will not be granted new H-1B visas, and by 2016 that threshold will be brought down to 50 percent.
The bill does not specifically target Indian outsourcing companies, but because foreign workers typically make up 50 to 75 percent of these companies? staff in the United States, the legislation will greatly limit their hiring practices.
Many Indian outsourcing firms have been expanding their operations in the United States, even as the economy there has slowed in recent years. Indian companies have invested $820 million in total in the United States to set up offices closer to their American clients, according to a report by the Confederation of Indian Industry published last year.
?The people who have drafted this bill have rightfully looked at the needs of the United States, but they have also tried to create discriminatory conditions which act like trade barriers and inhibit the free movement of people between the United States and India,? said Som Mittal, president of the National Association of Software and Services Companies, known as Nasscom, a group lobbying Washington for modifications to the bill. ?If the bill does go through with the conditions that it has today, it will significantly impact our businesses and our capability to compete.?
The bill presents another significant problem for Indian companies: foreign workers on temporary visas would not be allowed to work on ?outplacements,? which means working at the offices of their customers, a practice that analysts say is essential to their model.
The bill also has provisions for visa fee of $10,000 for companies that have temporary foreign employees making up over 50 percent of its workforce in the United States, and it requires companies to follow strict guidelines when advertising jobs in the United States.
?These proposed changes, if enforced, will increase the visa and wage cost for Indian IT outsourcing companies and impact their margin considerably,? said Niral Dalal, lead research analyst at Fortune Financial Services who specializes in information technology.
The Indian technology industry is waiting to see what happens next. ?Like many companies, we are watching the developments of the proposed immigration legislation to determine how it may affect our business,? said Infosys in an e-mailed response.
Industry bodies like Nasscom and the Confederation of Indian Industry are lobbying for changes in the proposed bill. The latter said in a statement that the provisions dealing with temporary works would be ?against the interests of Indian companies? and ?create an unequal playing field for them.?
?Any such restrictions, including new ones, on non-immigrant visas, if adopted, should apply uniformly to all applicants,? said Chandrajit Banerjee, the confederation?s director general. ?Action specifically targeting Indian companies would not be in accord with our growing strategic partnership.?
In the long run, if the bill as proposed becomes law, analysts say that Indian companies will be forced to adapt and alter their business model. Sujan Hajra, chief economist and executive director of institutional equity at Anand Rathi Financial Services in Mumbai, said companies would eventually have to resort to hiring more people in India and reducing their workforce in the United States.
Some argue that the provisions of the bill could harm American businesses that outsource their work to Indian companies.
?I am especially worried that U.S. competitiveness will be hurt if the bill is adopted as drafted,? said Ron Somers, president of the U.S.-India Business Council. His group is lobbying in Washington to ?educate lawmakers about the benefit of the U.S. -India commercial relationship,? he said.
While the Indian information technology industry has been a keen supporter and benefactor of strong trade relations between India and the Unites States, the bill would deal a considerable blow to the industry.
?These are companies that in some ways have had the most vibrant relationship with the United States, and this would be seen as an unfriendly move towards them,? said Neelam Deo, director of Gateway House, a research institution in Mumbai, and a former ambassador to Denmark and C?te d?Ivoire.
With the Indian information technology industry carrying considerable clout in New Delhi, the issue threatens to complicate trade relations between India and the United States.
?This industry is important to the Indian government because contributes significantly to the gross domestic product and lowering our current account deficit, while creating employment for Indian people,? said Mr. Mittal of Nasscom. ?If the bill is passed with the current conditions then our own government will consider whatever options they have to react to these protectionist measures.?
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