India's tech industry defends H-1B

Date: Monday, July 14, 2003 6:40 PM

JOB DESTRUCTION NEWSLETTER

www.ZaZona.com

Recently NASSCOM hired the lie-for-hire PR firm Hills & Knowlton. They
also made some major new agreements with Harris Miller's ITAA to
cooperate on an organized press releases. Their intent is to initiate a
massive U.S. propaganda campaign to sell H-1B and outsourcing to the
American public. If these two articles are any indication, their
central thesis will be that H-1Bs and outsourcing create more jobs in
the USA than they destroy, and to abolish either one will damage our
economy. Their articles use typical free-trade arguements.

Judging by the media exposure that NASSCOM and the ITAA are getting
they are probably quite happy with the aggressive approach Hills &
Knowlton takes towards manipulating public opinion. Expect these three
articles to be just the beginning of their efforts.

http://www.theworkcircuit.com/story/OEG20030710S0050

India's tech industry defends H-1B, outsource roles
By K.C. Krishnadas, EE Times
July 10, 2003 (3:53 p.m. EST)

BANGALORE, India Fearful that the United States will restrict the use
of outsourcing services or limit the number of H-1B visas granted to
immigrant workers, India's National Association of Software and Service
Companies (Nasscom) is doing some proactive damage control, releasing a
report designed to allay industry concerns in both the United States
and India.

The United States continues to be the main market for Indian software
and technical services, but the Nasscom report reveals that the number
of H-1B visas used by Indian engineers traveling to the United States
fell by more than half between 2001 and 2002 and is expected to
decrease even further during 2003. Indian parliamentary delegations,
meanwhile, have been visiting the United States to lobby against bans
on outsourcing.

There has been a lot of interest . . . about the impact of a possible
reduction in visas and the introduction of anti-outsourcing bills.
There has been no immediate impact; it's business as usual for the
[Indian] industry. The issue is long-term, Nasscom states in the
report.

Nasscom argues that outsourcing has not caused layoffs but, on the
contrary, has helped some U.S. companies avert them. U.S. banks,
financial-services companies and insurance firms saved $6 billion in
the past four years by sourcing work to India, Nasscom says. During
that time, part of the money saved via outsourcing has gone toward the
addition of 125,000 jobs at those institutions.

Indian IT companies have [contributed] and continue to contribute to
the U.S. economy by employing nearly 60,000 people in the U.S. in 2001,
Nasscom states. Nearly 170 Indian IT companies have physical
establishments in the U.S.

Nasscom released findings of a study by global consulting firm McKinsey
& Co. to reaffirm the fact that outsourcing to India will continue.
While India's projected software and service exports to the United
States in 2003-04 are expected to come in at $8.5 billion, the savings
to the U.S. economy by outsourcing work to India over the period is
estimated at between $10 billion and $11 billion. And high-tech imports
into India from the United States (some of which will be used to write
software for export) are expected to total $3 billion.

The annual contribution by Indian engineers to the U.S. Social Security
system, meanwhile, totals about $500 million, and a similar amount in
income tax flows into U.S. coffers from Indian engineers working in the
United States, according to the study. Add the $1.8 billion that Indian
engineers will spend on U.S. goods and services while working for U.S.
companies, and the aggregate benefit to the U.S. economy is $16.8
billion, the report states.

The software export services industry here has the most to lose if cuts
are made in H-1B visas, especially in the wake of Germany's recent
decision to restrict the number of green cards issued annually to
foreign workers. Adding to the fears here, the United Kingdom is
similarly reviewing a fast-track visa scheme that currently affords
skilled professionals easier access to that country for jobs.

On the other hand, India's growing information technology-enabled
services industry, which includes call centers and business process
fulfillment, is more worried about the prospect of restrictions on
outsourcing.

Nasscom's report quotes a McKinsey & Co. analysis showing that the
IT-enabled services market will grow to $142 billion in 2009, against
the current cost to U.S. business of $532 billion for such services-the
difference, $390 billion, being the net savings the U.S. economy can
expect from outsourcing work offshore.

Nasscom also cited figures to assuage fears that visiting engineers are
taking jobs from U.S. engineers. India accounted for 77,000 H-1B visas
in 2001 but only 33,000 in 2002, and the total is expected to drop to
30,000 this year, the report states.

As of March 2003, India's software exports industry has approximately
120,000 H-1B visas and 15,000 L1 visas. These are a fraction of 195,000
H-1B and 315,000 L1 visas issued in a year by the U.S., Nasscom states.
The report adds that about 40,000 Indian H-1B visa holders have
returned to India in the past two years as the U.S. economy has
slumped.

http://zdnet.com.com/2100-1104-1025410.html

India group: Outsourcing saves U.S. jobs

By Winston Chai
Special to ZDNet
July 14, 2003, 7:19 AM PT

Sending software coding and business process jobs out to India have
improved employment figures in the United States, says an Indian IT
association.

Nasscom (National Association of Software and Services Companies) said
it wanted to tell its side of the story by "placing the facts and
figures in perspective."

Citing statistics from market research firms such as McKinsey, the body
said the United States stands to save over $300 billion over the next
six years by shifting some business operations overseas.

"The ITES (IT Enabled Services) /BPO (Business Process Outsourcing)
market is likely to touch $142 billion in 2009, against the current
cost of $532 billion for these services. The difference of $390 billion
represents the net saving the U.S. economy can expect from
outsourcing," Nasscom said on its Web site.

According to a recent report from IT analyst Gartner, India will gain
the most from this wave and is expected to soak up more than half the
world's offshore business outsourcing revenue this year. India's
revenue from BPO will grow from slightly under $1 billion in 2002 to
$1.2 billion in 2003 and will represent 66 percent of the offshore BPO
market, Gartner predicted.

"US banks, financial services and insurance companies have saved $6
billion to $8 billion in the past four years owing to IT outsourcing to
India," Nasscom claimed. "Helped by these savings, companies have
prevented layoffs and instead added 125,000 more jobs."

This revelation is expected to add more fuel to the debate on the
impact of outsourcing to local economies and the workforce.

Labor groups in the US have long protested the trend of offshore
outsourcing. Besides fears of job losses in the US, they have
questioned the skill levels of foreign IT workers. In the longer term,
they fear the move will also erode the country's technological
leadership.

Most recently, Microsoft's plans to relocate its customer support work
in Texas and North Carolina to India has raised the ire of unions such
as the Seattle-based Washington Alliance of Technology Workers, which
claimed that hundreds of US jobs could be lost as a result of the move.

When Oracle said last week that it planned to double its workforce in
India, it took pains to add that the new jobs would not mean that US
jobs would be lost. In Australia, a survey of IT managers has found
that an overwhelming majority of them would not recommend IT as a
career, mostly due to the poor domestic conditions caused by
outsourcing.

Governments have also contributed to the outsourcing saga, with the New
Jersey state senate recently approving a bill requiring that only
citizens or legal residents of the United States work on certain state
contracts.

"Instead of being understood and utilized with maximum efficiency,
outsourcing is being talked of as an unhealthy epidemic, which is out
to take jobs and ruin economies," Nasscom said.

In addition, the body stressed recent legislative moves in the US and
the possible reduction of overseas H1B and L1 work visas stand
testament to the "low awareness about how Indian IT industry and its
professionals have benefited global organizations."

Nasscom currently has a membership of over 800 IT companies, including
Indian communications giant Tata Telecom, as well as software and
services provider Infosys Technologies.

http://www.eweek.com/article2/0,3959,1191925,00.asp

July 14, 2003
IT Knows No Borders

By Harris Miller

If a rising tide lifts all boats, a receding tide has the opposite
effect. Right now, the economic tide is out for many U.S. IT workers
facing uncertainty in their careers. Some blame foreign workers. That
is a mistake. Fraudulent or abusive use of temporary immigration
business visas must be punished, but targeting these long-standing
programs, which bring limited numbers of workers to the United States,
misses the much bigger challenge: the growing strength of IT
competitors around the world. The globalization that U.S. hardware
companies have faced for decades has now hit the U.S. software and
services industries. While this chal-

lenge has been building for years, the boom of the late 1990s hid it.
That was then; this is now. The rise of non- U.S.-based software
development, often-inadequate domestic work force education and
training, and reductions in IT spending by U.S. and non-U.S. businesses
have squeezed U.S. IT workers and many U.S. IT services companies.

Several factors have accelerated offshore IT outsourcing. The global
telecommunications revolution allows instant access to information
workers everywhere. Countries have spent billions training their people
in contemporary IT skills. Companies in the United Statesand other
developed economiesnow frequently send work to offshore partners,
suppliers or subsidiaries; establish business operations in foreign
countries; or combine these approaches. Research by the Information
Technology Association of America shows that more companies plan to
initiate offshore practices.

How should we respond to the challenge? First, recognize its existence.
Just as the U.S. car industry ignored the challenge from foreign
competitors in the '60s until a crisis arose, too many in our country
have missed the global IT competition or focused only on foreign
workers coming to the United States rather than the millions being
trained globally to compete with U.S. workers.

Second, join major stakeholders in a dialogue. U.S. IT vendors and
customers, the government, and the IT education community must address
the challenge. Third, focus on best value in addition to best price.
Best value covers innovation, quality, productivity, total cost of
ownership, suitability and customization.

Fourth, create new models for partnering. U.S. projects and offshore
work can coexist. Fifth, support opening foreign markets to U.S. IT
offerings. Sixth, build on the strengths of U.S. IT resources. An
increased focus on education and training is needed.

We can act like King Canute and order back the tide, or we can start
building frameworks that maintain U.S. economic strength through
technology leadership.

Harris Miller is president of the ITAA, a trade group based in
Arlington, Va., representing the IT industry. Send your comments to
free_spectrum@ziffdavis.com.

http://economictimes.indiatimes.com/cms.dll/xml/uncomp/articleshow?msid=73165

Time to influence US policies

ISHANI DUTTAGUPTA

TIMES NEWS NETWORK[ SUNDAY, JULY 13, 2003 05:50:34 AM ]
While Indian American doctors, hoteliers and diamond merchants have
been successfully lobbying for influence on Capitol Hill through strong
associations like American Association of Physicians of Indian Origin
(AAPI), Asian American Hotel Owners Association (AAHOA) and Indian
Diamond & Colorstone Association (IDCA), its now time for the Indian
American hi-tech industry to get its act together and become an
influencer as far as US government policy is concerned. In fact, as a
first step in this direction, recently, Indian American owned IT
businesses have formed a task force under the US India Political Action
Committee (USINPAC) to focus on key issues related to the US government
contracting sector.

The main issues that the newly formed GOVCON task force will seek to
address are contract debundling or calling upon Congress to debundle
contracts awarded to prime contractors, helping mid-sized companies
grow into large prime (billion dollar) contractors by creating new
policy which will give them competitive advantage in the bidding
process and encouraging large, small and mid-sized Indian American
owned businesses.

We have been mostly small in government contracting because we all
stayed away when the commercial sector offered better return on
investment. But now, the federal government is the only game in town
and probably so for the next few years. And even large Indian companies
have a hard time competing with big prime contractors like CSC,
Northup, EDS and TRW in the US. In the end, Indian owned companies end
up selling out or merging and the owners cash out under pressure. We
would like to change the situation by instituting policy to help our
large ($300 million plus government contracting companies) grow to $
billion status,'' says Sumanth C Krishnamurthy. CEO of Advantec
Solutions, Inc and also part of the founding team of USINPAC and
director, member initiatives, USINPAC. He is the co-chairman of the
GOVCON task force. US government contracts are big and long term and
thus provide solid growth opportunities. The budgets are growing every
year with over $200 billion in procurement in 2002.

The new consortium, which already has 10 members is seeking a critical
mass of about 20-30 strong companies to generate strong issue papers
and influence policy with the US Congress. The strategy that is being
followed by the task force is to strengthen communications channels
with Capitol Hill.

Of course, Indian IT entrepreneurs in the US are already well
represented by The IndUS Entrepreneurs (TiE). However, while the GOVCON
Task force is keen on creating policy impact, the leadership of TiE
feels that organisations like AAPI and AAHOA were launched by doctors
and hoteliers who needed to come together to fight discrimination,
while IT entrepreneurs in the US from the very start were seen not as
minorities but as mainstream. Says Kanwal Rekhi, president & CEO Ensim
Inc and founding member of TiE: In most cases, the majority of the
employee base was or is not Indo-Americans. TiE from the very outset
stayed out of anything other than its primary focus on
entrepreneurship. It has especially stayed out of politics as it was
considered very divisive.'' But the Washington DC chapter of TiE, which
is successor to an organisation called the Indian Hi-tech CEO Council,
is more politically inclined. It has, in fact, become the region's
leading networking organisation with more than 2,700 executives as
members.

Most of the Indian American IT companies believe that there's need for
both political and trade organisations. In the Washington DC area, both
the Indian CEO High-Tech Council as well as USINPAC are becoming
increasingly powerful bodies. The agenda is very clear, for the Indian
American hi-tech community to organise ourselves for funds and power.
We need to learn from the experience of groups like the Jews. In fact,
at the last CEO Council meet the leader of the Jewish community,'' says
Sandeep Sahai, managing partner of Techspan who is based in the East
Coast of American and in Washington DC very often on work. He thinks
Indians should leverage the growing influence in the DC area. Agrees
Arjun Malhotra chairman & CEO, TechSpan Inc, USA, who is himself based
in Silicon Valley: As one of America's largest immigrant ethnic groups,
Indians have always only attempted to influence policy on an individual
basis or via the Indian government. With such a huge impact on the
American economy, India and Americans of Indian-origin have no choice
but to get involved politically. On issues of Indo-US strategic
relations, business relations, immigration reform, small business and
entrepreneurship, and appointment of Indian Americans in the US
government action must happen on all lobbying posts, he feels.

Malhotra, in fact, feels that lobbying by doctors rubs off on hoteliers
and what the hoteliers say or do has an impact on IT professionals.
Therefore, a loose integration of these efforts is a must, he
adds.

In fact, the current backlash against outsourcing of jobs to India in
the US is one of the main reasons for concern and could bring Indian
American IT companies together as well. Says Malhotra: Till now, Indian
IT was comfortable. The recent controversy on outsourcing has shaken it
up and out of comfort zone, which is positive. Already, USINPAC, CII
and Nasscom have done some good work. There are clear signs that the
Indian American IT industry is entering the political mainstream.

Agrees Kumar Malavalli co-founder and strategic advisor of Silicon
Valley based Brocade Technologies, venture capitalist and director of
TiEs sponsorship chair: In 1999-2000, the dotcom frenzy had all the
attention of the Indian American IT entrepreneurs and no one made
efforts to create a lobbying group. But today with various issues like
the backlash against outsourcing and visas, something needs to be done.

But given the different shades of opinion within hi-tech Indian
companies in the US, it's still uncertain how much India Inc, which is
looking for champions over the backlash against outsourcing, will gain.
Feels Ashok Mehan, CEO Adezza Federal Consulting based in Maryland and
one of the leaders of the Indian American Leadership Incubator: India
is on the way to emerging the leader in outsourcing and will become a
powerhouse in its own rights. No amount of lobbying or politics will be
able to stop that. And even as India emerges as the leader in this
space, the Indians in IT are likely to form a group that will command
respect much like the Japanese and Jews and be called upon by Senators
and Congressmen for IT thought leadership.'' In any case, its
advantage India, sooner or later.

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Rob Sanchez is board member of NAEA - www.NAEA.US

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