Skip the navigation

U.S. firms say H-1B restrictions may help them

But analysts say H-1B restrictions are unlikely to affect global forces

April 19, 2013 06:01 AM ET

Computerworld - IT support services firm Caleris has this message on its home page: "Outsource to Iowa. Not India," against a picture of a corn field and farm houses.

Caleris's message could not be clearer. The company is competing from rural Iowa, with its lower cost-of-living, against India's offshore providers, and those in many other countries as well.

But Caleris's founders, Sheldon Ohringer and Rick Grewell, two native Iowans, believe the U.S. Senate's comprehensive immigration bill may help them.

The bill, released this week, seeks restrictions on the use of H-1B and L-1 workers, and will likely raise the costs of offshore IT service providers.

Ohringer hasn't lobbied elected officials on behalf of his company, which was founded nine years ago with 25 workers and has since grown to 400 in four different centers. He isn't versed in the details of the Senate bill, but he understands the intent.

"If the costs go up to do it in India or offshore, that is a positive for us," Ohringer said.

One of the bill's provisions prohibits users of a large number of visas from having more than 50% of their U.S.-based employees on temporary visas, the so-called 50-50 rule.

Wells Fargo, in a recent research note released before the Senate bill was introduced, said the 50-50 rule could hurt operating margins and reduce the earnings per share of offshore services providers by 1% to 5% next year.

Brian Keane, the CEO of IT services company Ameritas Technologies, said the Senate bill will be good for domestic IT services providers. "Encouraging U.S. IT development "is the right thing for the United States for maintaining its technological self-sufficiency," Keane said.

Ameritas opened its first center in Baton Rouge in July. Brian Keane is the former CEO of Keane, a $1 billion IT services company that became a subsidiary of NTT Data Corp. in 2011.

Ameritas and Caleris officials believe they are already competitive with offshore providers, when total costs are considered and productivity is factored in. The Senate bill faces an uncertain future. Although the tech industry is pleased with the increase in H-1B visas in the bill, from 65,000 to upward of 180,000, the industry isn't happy with the bill's enforcement provisions and requirement that employers recruit U.S. workers prior to hiring visa holders.

Norm Matloff, a professor of computer science at the University of California at Davis and a leading H-1B critic, summarized the Senate bill, in his recent newsletter, as an overall "disaster," for U.S. STEM workers (people employed in science, technology, engineering and math-related disciplines). He pointed to the "massive" H-1B increase and loopholes in the bill.

Our Commenting Policies