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Tech firms decry proposed H1-B visa limits
First Published Jul 12 2013 11:17 am • Last Updated Jul 12 2013 11:17 am

WASHINGTON • U.S. and Indian information technology companies are protesting provisions in a Senate immigration bill that would impose new restrictions on firms that rely heavily on highly skilled foreign workers, prompting fears that the issue could harm trade relations between the two countries.

Industry officials said the regulations, if made law, would limit the ability of American outsourcing companies to hire technology workers from abroad and place them with clients for temporary assignments, such as installing new computer software and updating e-mail systems. That could drive up costs for businesses, which could be passed on to consumers, the officials said.

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Indian firms, too, fear the repercussions on that nation’s fast-growing technology sector, which sends tens of thousands of workers to the United States on H-1B temporary worker visas.

"What this does for American firms’ relationship with global IT firms in India is it disrupts the business model," said Ron Somers, president of the U.S.-India Business Council, which represents 350 U.S. companies and has hired the law firm Patton Boggs to lobby lawmakers. "This is bad for U.S. businesses, it’s bad for the global IT industry, and it’s bad for the larger India-U.S. partnership."

The fight over the high-tech provisions in the Senate plan is a sub-drama in the larger Capitol Hill battle over comprehensive immigration reform. The Republican-controlled House is pursuing an alternative course focused on passing smaller bills, casting doubt on the chances for a broad overhaul.

The roots of the dispute over high-tech visas date to long-standing concerns among U.S. technology firms that there are not enough skilled workers in the country and that they must be imported. Unions and many Democrats counter that the system is used to avoid hiring American workers because of cost concerns.

During months of negotiations over the Senate bill, Republicans pushed successfully to sharply expand H-1B visas for highly skilled workers from the current annual limit of 65,000 to as many as 180,000. In return, Democrats secured provisions aimed at ensuring that American workers get the first shot at high-paying technology jobs.

Under the plan, outsourcing firms with more than 15 percent of their skilled employees on H-1B visas must wait a year before replacing an American worker with a foreigner and pay that worker higher wages, and they are forbidden from placing such workers with U.S. employers.

A Democratic aide said Sen. Richard Durbin, D-Ill., led the fight for the restrictions because he believes the visa program has been exploited for years by some U.S. outsourcing firms. Although many Indian workers remain in the United States to work at client sites, many others are sent back to their home country after receiving training on temporary visas and open satellite offices that handle operations from afar .

Durbin’s position is that "H-1B visas have been, and still are, outsourcing visas," said the aide, who spoke on the condition of anonymity to discuss details of the legislation. "India officials have bragged that these are outsourcing visas with limited oversight and limited transparency."

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The technology companies reject that characterization, emphasizing that Indian workers are returning home because of changes in business structures for large, multinational companies. Having workers offshore helps ensure round-the-clock service and support for U.S. clients, they said.

"These provisions undermine the ability of U.S. companies to compete in the global economy," said John Procter, a spokesman for Cognizant, a leading outsourcing firm with 157,000 employees, 1,000 clients worldwide and an annual revenue of $7.4 billion.

Three Indian technology firms are among the top 10 recipients of H-1B visas, and the Senate bill has received extensive coverage in the Indian news media. In April, Finance Minister P. Chidambaram told reporters that he raised the issue with Treasury Secretary Jacob Lew.

Chidambaram said the "temporary relocation of knowledge workers" was fundamentally different than other immigration issues.

A recent study by JP Morgan predicted that the Senate rules could lower India’s gross domestic product by up to 0.4 percent in 2015.

Sheela Murthy, an immigration lawyer in Maryland who emigrated from India, said she has received calls from outsourcing companies concerned about the future of their businesses.

"They’re telling me they will go out of business," she said. "Thousands in the United States will be laid off. Thousands more than that in India will be impacted."

U.S.-India trade has grown five-fold since 2000, reaching $100 billion annually, said Karl Inderfurth, a U.S. assistant secretary of state in the Clinton administration who is now at the Center for Strategic and International Studies.

Some U.S. firms fear that the disagreements could prompt India to impose new sanctions on American companies trying to do more business in that country. In Friday’s meeting, U.S. officials are prepared to raise their concerns with Indian Commerce and Industry Minister Anand Sharma about property rights violations by Indian companies and caps on foreign investment in India’s insurance industry, according to analysts.

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