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US Senate approves restriction on H-1B hiring- Hit Indian IT firms

Los Angeles, Feb. 08, 2009
Gary Singh

On Friday, The US Senate voted to restrict the hiring of foreign workers by banks that are receiving government bailout funds while undergoing job cuts. If signed into law, it would apply to the more than 300 banks that have received money under the Troubled Assets Relief Programme (TRAP).

Most of the banks are in trouble and like to cut costs, would outsource more work to countries like India. New law amendment seeks to prevent this, and it could affect the fortunes of the Indian IT industry since outsourcing from the Banking, financial services and insurance sector accounts for almost 40 per cent of its revenue. The banks work force is made up of more than 15 percent foreign visa workers

Wall Street is also in crisis, millions of people lost jobs- including 100,000 in financial institutions. The bailed-out automakers would also in same boat

The H1B visa list is made up largely of Indian Companies, including Wipro, Infosys Technologies and Satyam Computer Services.

According to he U.S. Bureau of Citizenship and Immigration Services, the banks got visas for about one-quarter of the number of workers they initially sought permission to employ. In 2006, the banks filed more than 5,000 visa applications with Labor Department officials and ended up with about 1,200 new workers approved by the Citizenship and Immigration agency.

The amendment approved by the Senate was co-sponsored by independent Senator from Vermont, Bernie sanders and Republican Senator from Iowa, Chuck Grassley. To bring into law, Grassley and Sanders tried to become linient of their original proposal, a flat-out one-year ban on hiring foreign-visa workers, but also extended the measure to two years. This law will prevent replacement of Americans by foreigners working under the H-1B visa program, which allows employers to bring in workers for high-skilled and advanced-degree jobs.

Grassley said that the companies will still be able to hire H-1B visa holders, but must comply with the H-1B dependent employer rules which include attesting to actively recruiting American workers and not displacing or replacing laid off American workers with H-1B visa holders.

He also said with the unemployment rate at 7.6%, there is no need for companies to hire foreign guest workers through the H1-B programme when there are plenty of qualified Americans looking for jobs

Ken Greenberg was in high tech for 20 years and said:

  • He knows that many companies used tech workers with H1-B Visas as a way that get lower cost labor. During the boom, US tech workers took advantage of the run-up in salaries and were making very high wages, and hiring H1-B workers was a way for employers to manage their costs.
  • After the bust many H1-B workers could not find work in the U.S. and went back to their home countries. The tech "outsourcing" craze started shortly after, as many highly trained, skilled workers were willing to work remotely for less money than U.S. based workers.
  • As the economy improved the trend went back to bringing people to the US with H1-B visas. The reality is that everyone has lowered expectations these days, and I bet U.S. workers would be willing to work for more reasonable wages.
  • It may seem "protectionist" but to me it makes sense to keep the jobs in the U.S. and to offer bailout money only to companies that limit their hiring of people with H1-B visas

On February 3, 2009, SILICON ALLEY INSIDER wrote:

IBM To North American Employees: To Keep Your Job, Move To India -Information Week gets their hands on leaked IBM documents explaining the program:

IBM has established Project Match to help you locate potential job opportunities in growth markets where your skills are in demand," IBM says in an internal notice on the initiative. "Should you accept a position in one of these countries, IBM offers financial assistance to offset moving costs, provides immigration support, such as visa assistance, and other support to help ease the transition of an international move."

The document states that the program is limited to "satisfactory performers who have been notified of separation from IBM U.S. or Canada and are willing to work on local terms and conditions." The latter indicates that workers will be paid according to prevailing norms in the countries to which they relocate. In many cases, that could be substantially less than what they earned in North America...

"It's more of a vehicle for people who want to expand their life experience by working somewhere else," said [an IBM] spokesman. "A lot of people want to work in India."

IBM employees may have their own, more sinister explanations. Multiple IBM staffers have written in to SAI to claim the company has a program in place of demanding deliberately difficult relocations, with the company saying anyone who refuses to move will be considered a "voluntary departure" and denied severance benefits.

Senate votes to prohibit bailed-out banks on H1B curbs may hit Indian IT firms