Q&A: India trade group chief criticizes proposed H-1B bill
Nasscom's Som Mittol says Grassley-Durbin bill could push more U.S. IT work offshore
Computerworld - Many people in India's IT industry are calling pending U.S. Senate legislation that would restrict the use of H-1B visas protectionist and anti-competitive, according to Som Mittol, the president of the National Association of Software and Services Companies (Nasscom), an Indian trade group. The bill, sponsored by Sens. Dick Durbin (D-Ill.) and Chuck Grassley (R-Idaho), would limit the number of H-1B and L1 visa workers to 50% of a company's U.S. workforce. Such a limit would likely impact top Indian services companies like Infosys Technologies Ltd., which on March 31 employed 8,900 people in the U.S. with H-1B visas, and 1,400 with L-1 visas, according to U.S. Securities and Exchange Commission filings. In an interview with Computerworld last week, Mittol argued that Indian companies are trying to hire more U.S. workers, but he said they face myriad obstacles -- especially when they compete against top U.S.-based companies for the most talented workers. He warns that the legislation could prompt U.S. companies to move more work offshore.
What specific parts of the Durbin-Grassley bill are most troubling to you? The bill was intended to prevent fraud and misuse, and we fully support any measure that would do that. However, instead of focusing only on that, [the bill] has a condition that any company with more than 50 employees [in the U.S.] will not be entitled to any more visas if more than 50% of the employees have H-1B and L1 visas.
The majority of [Indian] companies that operate here have significantly more [than] 50% of their workers on H-1B/L1 visas. Hence this bill would mean that we won't be able to get anyone over. That is the killer provision. If this bill gets passed, it will completely disrupt our business model. It will also impact our customers, because it will cause problems at all those projects that need a physical presence. And clearly, since it would seemingly impact our ability to compete in the U.S. with other service providers, it is an indirect trade barrier and would be seen as protectionist measure in our country. Putting up a restriction like that is clearly impacting only Indian companies.
Japanese automakers reacted to criticism some 20 or 30 years ago by building assembly plants here and hiring American workers to build cars. People look at your success in the U.S. and wonder why Indian firms don't increase their presence in the U.S. and hire more U.S. workers. Are their concerns valid? In the Japanese example, the entire manufacturing process was happening in the U.S., so they could hire those permanent workers. [In our case,] the majority of the manufacturing happens in an offshore center somewhere. People come here on a temporary basis. There are positions that could be permanent, such as sales and solution architects. And clearly the choice would be to hire locals because they understand the environment and they understand the customers.
Unlike the auto model, [Indian companies] need people to come here on a short-term basis and then go back. Having said that, our success rate has been low in the attempts that we made to hire in the U.S. The acceptance rate was less than 25% of the offers made because these applicants had the choice of either joining a U.S. company or an Indian firm, and they always went [to a U.S. company]. Currently there may be a little more ease in resources, and that gives us an opportunity to hire local people. Before this meltdown happened, companies like Microsoft and Cisco had, at any point in time, more than 4,000 open jobs. [And] because they couldn't fill them [locally], they were hiring people from India.
And [Indian] companies such as TCS and Wipro announced centers [in the U.S.] before Durbin-Grassley [was filed] and are hiring [U.S. workers] already.
Part of the Durbin-Grassley bill responds to criticism that a lot of the contracting firms are paying low salaries to H-1B workers and are therefore able to win more contracts. Passage of the bill would change the way wages are calculated and likely increase wages for H-1B workers. Do you have a problem with that provision? I think the U.S. already had a robust [prevailing wage] process in the H-1B bill. I think that works quite well.
A recent study that found that the use of H-1B visas is decreasing the salaries of some technology jobs in the U.S. by as much as 6%. And New Jersey's CTO has said he believes that the widespread use of H-1B workers is lowering salaries. What are your thoughts on the impact of H-1B visas on technology worker wages? On average, Indian companies get 12,000 H-1B visas a year. People stay [in the U.S.] for an average of two years here; it isn't as if you are accumulating H-1B visas over time. How could a few thousand people impact the wages so much?
So you don't believe the H-1B visa is lowering the wages of U.S. workers? No, I would not say so. It's about the total cost of a company to get an H-1B visa person here. The total cost of these employees is not cheaper than like-to-like skills.
What do you think will happen if the Durbin-Grassley bill is approved? I think there will be business models that have to change. The work that was done on site will then move either to offshore back to India or to nearshore centers in Canada and Latin America if it has to stay in the same time zone. The global sourcing model will continue.
Do you think that the Indian firms will increase their hiring of permanent U.S. workers if the Grassley-Durbin bill is approved? If those highly skilled workers are available as Americans, then Indian companies would hire them. Does the downturn offer them an opportunity? Surely it does. The fact is that Wipro itself has more than 2,300 American workers. These are good jobs that have been created here by these Indian companies.
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