More Heat for Indian Outsourcers

Senators Grassley and Durbin release more data showing that Tata, Infosys, and others are using U.S. work visas to their advantage

As a revamped immigration reform bill heads to the Senate floor this week, opponents of outsourcing are again turning up the heat on companies they say are exploiting U.S. visa programs to send jobs abroad and to hire cheaper, non-American tech workers. On June 26, Senators Dick Durbin (D-Ill.) and Chuck Grassley (R-Iowa) released information revealing that foreign outsourcing firms that use the high-skilled H1-B visa program extensively are also among the heaviest users of another category, known as L visas.

Durbin and Grassley say these companies are abusing the L visa program, which is intended to allow multinationals to transfer foreign managers and specialists within a company to U.S. offices. The Senators allege that outsourcing firms are not engaging in transferring at all, but instead are hiring foreign workers expressly to bring them to the U.S.—and to take the place of American workers. The newly released data show that of the top 20 L visa users in fiscal year 2006, 14 are offshore outsourcing firms, including Tata Consultancy Services, Satyam Computer Services (SAY), Wipro (WIT), Infosys Technologies (INFY), Patni Computer Systems (PTI), and Accenture (ACN).

"Clear" Evidence

"It's clear that foreign outsourcing firms are abusing the system and we can't let that continue," said Senator Durbin in a statement. Representatives of Tata, Wipro, Infosys, and other top outsourcing firms could not be reached immediately for comment.

Durbin and Grassley obtained the information on L visa users from the U.S. Bureau of Citizenship & Immigration Services after requesting it in a June 13 letter. The data show, for example, that Mumbai-based Tata Consultancy obtained 4,887 L visas in fiscal year 2006, the most of any firm, American or Indian. "I find it hard to believe that any one company has that many individuals…legitimately being transferred within a single year," said Durbin.
A spokesman for Tata denies any wrongdoing and says that the company is willing to cooperate with Durbin to clear up any misunderstanding. "We're complying with the law and with the regulations," says the spokesman. "We want to work with Congress to address any issues they may have."

The Senators' latest missive comes just over a month after they launched their own investigation into the Indian outsourcers' activities in the U.S. On May 14, Durbin and Grassley sent letters to nine of the outsourcing firms, requesting information about how they use H-1B visas . That program was originally set up so U.S. companies could hire foreign workers with rare skills, but in recent years the most active users of the program have become outsourcing firms, led by Infosys and Wipro. Durbin and Grassley have said that this is evidence the program is being used to outsource American jobs to India.

Furious Reaction

Critics say the L visa program could allow for even more abuse than the H1-B program, which allows high-skilled workers to come to the U.S. for up to six years. While H1-B visas are capped at 65,000 per year, there is no annual limit to the number of L visas, and while H1-B visa workers must receive the prevailing wage, there is no such requirement for L visas. The number of such visas issued has increased from 39,886 in 2001 to 53,144 in 2006.
To address the problem, Durbin and Grassley are proposing an amendment to the revised comprehensive immigration reform bill, expected to reach the Senate floor for debate next week. The amendment calls for a prohibition on using the H1-B and L visas while outsourcing jobs abroad, and it limits a company's total H1-B and L visa use to no more than 50% of its workforce. The amendment also calls for the Labor Dept. to set the prevailing wage for visa workers, instead of employers, requiring employers to demonstrate a failure to hire Americans before being awarded visas. Durbin and Grassley originally tried to include these provisions in another amendment proposed by Senators Maria Cantwell (D-Wash.) and Jon Kyl (R-Ariz.). But ultimately they decided on a separate proposal with what they consider to be more stringent protections for U.S. workers.

The reaction from India has been furious. The Indian outsourcing firms feel they are the victims of political scapegoating and say that what they are doing is helping their American clients to become more competitive. Kamal Nath, India's commerce and industry minister, has said that the two senators are interfering with free trade, since one of India's most important exports is the services of its tech companies

Debate Continues

The Indian firms have also raised questions about whether Durbin and Grassley have any place in the current discussion. They say that the flow of Indian workers into the U.S. is essentially a trade issue and therefore should be negotiated by the Bush Administration under the rubric of the World Trade Organization. In a letter to Durbin and Grassley on May 30, Nasscom, the organization that represents India's software and services companies, pointedly noted that trade between the two countries flows both ways and that India's tech industry buys products from Hewlett-Packard (HPQ), Microsoft (MSFT), Oracle (ORCL), and Dell (DELL)
American tech companies have largely supported the idea of more visas for temporary workers, for themselves and for Indian tech companies. But that may be changing. Microsoft and Oracle have begun to voice support for the effort to reform of the visa system to prevent abuse . Still, Compete America, a coalition of tech companies that includes Microsoft and Oracle, issued a statement June 20 in support of the Cantwell-Kyl bill.

The debate is sure to intensify in the days ahead. On June 26, the Senate took the first step toward reconsideration of the comprehensive immigration bill—taken off the floor for retooling June 7. The senators voted to move forward on bringing the legislation to the Senate floor. There, in the coming days, the battle over the fate of immigrants, high-skilled and not, will be decided.