How our IT firms wrecked the HIB visa program

DHEERENDRA GOPAL” writes: Later this year, the US Congress will sit down to discus reforms to the high-skill immigration policy. But if someone is to be held responsible for the current sorry state of affairs in the H1B visa area, it is Indian IT firms.

The H1B program was started in “Good Faith” by the United States to help people from “all over the world” to come to and work in the US.

Supporters of the program claimed that the H1-B helped meet the shortfall of scientists and engineers by allowing the import of guest workers, thus preventing the “outsourcing” of high-wage, high-skill jobs to low-cost countries. And they claimed the program paved the way for the immigration of the “best and the brightest” foreigners.

But large Indian IT houses have overexploited the loopholes in the HIB program to such an extent that they have made nonsense of its original intentions.

In their greed for higher and higher profits (every Indian firm hits 30% profits every quarter) they have spoiled a perfectly working program a few years ago to such a state that now getting an H1B has got less nothing to do with talent but has become like buying a supperlotto ticket.

A very good article by Ron Hira in the March 28 issue of the “Economic Policy Institute” exposes how Indian IT firms are playing around with the HIB program.

On the one hand, the HIB program, as is being used, is not encouraging the immigration of the “best and brightest”.

“The largest users of the H-1B program are offshore outsourcing firms, whose business model depends on moving as much work overseas as possible. And these firms do not use the program as a bridge to immigration, for they sponsor very few of their workers for green cards. For example, in 2006, Wipro Technologies applied for 19,450 H1B positions but only for 69 green cards, a 0.004 green card to H1B application ratio.”

And on the other hand, the Indian IT firms are blatantly using HIB for labour arbitrage. The H1B program’s primary safeguard for US as well as H1B workers was the requirement that an H-1B worker be paid the prevailing wage.

Tata Consultancy Services (TCS) has a vast majority of its personnel in the US on either H1B or L1 visas. But its vice-president Phiroze Vandrewala has told Businessworld how his company derives a competitive advantage by paying its visa holders below-market wages.

“Our wage per employee is 20-25 percent lesser than U.S. wage for a simlar employee. Typically, for a TCS employee with five years experience, the annual cost to the company is $60,000-70,000, while a local American employee might cost $80,000-100,000. This (labour arbitrage) is a fact of doing work onsite. It’s a fact that Indian IT companies have an advantage here and there’s nothing wrong in that….The issue is that of getting workers in the U.S. on wages far lower than local wage rate.”

I cannot help agree with the facts in this article. I totally agree that firms like these which abuse the system ought to be severely punished and blacklisted, so that genuine US companies can get their required workers, when they need them.

Read the full story here: Outsourcing America’s technology and knowledge jobs