L1 visas - The escape latch
L1 visas - The escape latch
Date: Tuesday, May 13, 2003 12:39 PM
JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
NASSCOM is allied with the Information Technology Association of
America to keep the current cap on H-1B at it's current high level.
They are using public relations campaigns and lobbying to insure that
their anti-American agenda will be supported by Congress. They seem
very confident that they will prevail over dissident groups such as the
IEEE-USA, the Washington Alliance of Technology Workers, Technical
employees of the AFL-CIO (probably CWA), and the Programmers Guild.
So what if they lose and Congress allows H-1B to go down to 65,000 in
September? Not to worry according to NASSCOM. They will just switch to
L-1s! These guys have it all figured out. Congress is truly under their
thumb.
Let's don't forget that 65,000 a year is way too many - and that's the
best scenario possible.
http://www.blonnet.com/ew/2003/04/30/stories/2003043000010100.htm
Financial Daily from THE HINDU group of publications
Wednesday, Apr 30, 2003
Both sides of the story
Krishnan Thiagarajan
If the US lowers the H1B visa cap, what will be the impact on the
Indian software companies? eWorld checks out both sides of the coin
why Indian companies appear unfazed right now and what could happen.
" ...if you look at the onsite centricity, it has actually been...
growing up, but not as large. It was 51 per cent as of March 2002 and
as of December 2002, it is 53 per cent. So over the entire nine-month
period, it has gone up two points but having said that what we are
doing is making sure that we have the ability to have many more
employees on an L1 visa and I think that is helping us out. The second
is that on the package implementation site, we continue to also hire
people locally and I think that prevents us from having to have visa
problems and finally... as things stand today, we are lobbying with the
governments to make sure that the H1B caps are at levels that we expect
them to be." Wipro's Vice-Chairman, Vivek Paul, responding to a query
on the implications of a possible reduction in the H1B visa cap from
1,95,000 to 65,000 from September 2003 during the Q3 earnings call held
on January 17, 2003.
IN the US, there has been a raging debate and even protests for the
reduction in the annual H1B visa cap from the current levels of
1,95,000 to the historical level of 65,000 which was prevalent in early
1998. As the existing visa cap of 1,95,000 is set to expire on
September 30, the US Congress is set to debate the visa cap retention
or reduction in May or June this year.
Citing the rampant unemployment in the US, several
associations/technology unions such as IEEE-USA, the Washington
Alliance of Technology Workers, Technical employees of the AFL-CIO and
Programmers Guild have stepped up protests against the liberal H1B visa
regime.
Putting up a brave front
Despite these protests, the Indian software companies, specially the
frontline ones such as Tata Consultancy Services, Infosys and Wipro,
are putting up a brave front. Increasingly (since the September 11,
2001 attacks on the US), it is being rumoured that the processing of
H1B and L1 (we will describe this type of visa in a moment) visas is
taking time and more cases are being taken up for scrutiny by the US
consulate authorities. Except for stray reports, even this aspect has
barely created a ripple in software circles so far. From speaking to a
cross-section of industry executives, one can attribute the relatively
calm stance of frontline software companies to:
Public relations campaign: The top Indian software companies have been
working with Nasscom, the apex association of the Indian software
industry, to lobby and sensitise the US political establishment about
the benefits of outsourcing and H1B visas which are an integral part of
this exercise.
For instance, the Executive Committee of Nasscom has appointed Hill &
Knowlton, a high-profile public affairs company which has been charged
with the responsibility of launching a media campaign, to ensure that
H1B visas remain at the existing level of 1,95,000. At the same time,
Nasscom is also working with the Information Technology Association of
America, one of the passionate advocates of a liberal H1B regime, to
keep the H1B visa either at the current level of 1,95,000 or to settle
at a median between 1,95,000 and the earlier authorised levels of
65,000.
Trend towards offshore: Almost all frontline companies and some
second-rung software companies feel that the outsourcing business is
increasingly moving offshore to countries such as India. In the past
year or so, atleast for frontline companies, the engagement sizes of
outsourcing contracts have been rising and offshore has clearly become
more mainstream and strategic to the operations of Fortune 500/Global
1000 companies. The reasonably strong growth in revenues between 25-35
per cent by frontline companies also testifies to this trend. This
effectively means that a reduction in the visa cap, say to 65,000, will
only spur more and more US corporations to direct more work on an
offshore basis to India.
L1 visas The escape latch: Atleast among frontline companies, the L1
visa is being increasingly used as a good alternative to H1B visas.
Technically, L1 is an intracompany transfer visa valid for seven years.
So as long as Indian companies have subsidiaries or branches or
affiliate companies in the US, they can use the L1 visa. After all, in
the early 1970s, this visa was introduced to allow US companies to
import employees from foreign subsidiaries, affiliates or parent
companies. Currently, to be eligible for the L1 visa, the employee must
be offered a position in the US as either a `Manager,' `Executive'
(under L1A category), or a person with `Specialised Knowledge' (under
L1B category). And the biggest advantage of this visa to Indian
software companies is that, at present, there are no limits to the
issue of such visas annually.
Concerns remain
Even though these factors ensure a measure of comfort, for the industry
as a whole, the following concerns will remain:
Economic recovery: In the last two years, 2001 and 2002 (
October-September year for annual visas), the H1B visas were not fully
used up. For instance, in 2001, the US Immigration and Naturalisation
Service issued 1,63, 600 visas and in 2002, only 79100 visas were
issued as against the annual visa cap of 1,95,000. But if the visa cap
were reduced to 65,000, a bounce-back in the US economy, say in
end-2003 or 2004 may result in a loss of business opportunities for
Indian companies. Moreover, even in an extremely weak economic
environment in the US, it utilised 79100 visas, higher than the
proposed limit of 65,000 from September 2003. In this scenario, some
medium-sized and small-sized companies who may not satisfy the criteria
for use of L1 visas will suffer badly.
Onsite projects: The Indian software companies have required an onsite
presence for two reasons. One, to undertake trial projects in the
initial phase of client engagement and post-project maintenance or
support work for clients. And two, to undertake work which is higher up
the value chain such as package implementation, systems integration or
process consulting. Almost all the frontline companies have derived
more than 50 per cent of their revenues from onsite projects. This may
also be applicable to the industry as a whole. If the proposed visa cap
is reduced to 65,000, it is likely that companies will have to maintain
a higher onsite bench to counter this problem. This will have an impact
on their operating margins going forward. Frontline companies with
their ability to hire local people and use L1 visas to send people
onsite may be better placed than the rest of the sector. But over a
two-year time frame, a higher wage and higher attrition levels will
begin to impact their operating margins also.
L1 visa pressures: Increasingly, attention is shifting towards the
underregulated L1 visas. Some of the technology associations/unions,
magazines both print and Net-based such as Computer World, Information
Week or eWeek in the US have removed the cloak of anonymity surrounding
these visas. From the SEC filings in the US, it is apparent that
frontline companies such as Infosys, Wipro and Satyam have been using
the L1 visas quite extensively. For instance, both Wipro and Satyam
have used a higher number of L1 visas compared to H1B visas. It is
likely that with an aggressive posture employed by anti-immigration
lobbies, there may be some action on the L1 front also such as a cap of
the L1 visas and more stringent conditions for visa issuance.
maverick@thehindu.co.in
This is the second and concluding article of the two-part series on the
H1B visa cap issue in the US. The first article appeared in eWorld
dated April 16, 2003.
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