Visa power, getting IT right

The full quota of the H-1B visas being snapped up on the first day itself is a mixed blessing for the Indian IT industry. Those looking to do business in the US are worried. But it is good news for those seeking to expand outsourcing operations, writes Prerana Trehan

First it was the jobs that came to India, now, it appears, professionals will follow suit. The filling of the entire quota of 65,000 H-1B visas for the whole fiscal year on the day it opened last week, might just bring IT professionals — and their jobs — back home. And in the process end up doing just what the US government had hoped would not happen when it slashed the number of H-1B visas that could be issued in one year from 1,95,000 to 65,000 last year. While it is a cause of concern for Indian IT professionals and companies hoping do to business in the US, it is good news for those who see in this an opportunity to expand outsourcing operations. Says Sameer Goel, Regional Head, Infosys, SAS Nagar, "The Indian outsourcing industry will stand to gain." Some also feel that India will benefit from the decline in the number of professionals headed West. As Dr Sanjay Tyagi, Director, Software Technology Park, says, "This will limit the brain drain from the country."

Experts agree that slashing the number of visas makes more political than economic sense during a Presidential-election year in the US. Done ostensibly to control the unemployment in the US, how far this step will go in achieving its objective is open to debate. Says Arun Maheshwari, President and CEO of Computer Sciences Corporation, India Pvt Ltd, a 100 per cent subsidiary of CSC: "The US IT industry is suffering. Reduced quota may help a little but the already large number of Indians on H-1B visas in the US and the availability of alternative methods such as the L-1 visa means the opportunities for Americans will not become much better because of this restriction.."

Many feel that the step does not take into account the reality of the IT industry. "The reduction in the number of H-1B visas that can be issued in one year was a retrograde step," says Tyagi. "It is just a political issue which ignores the needs of the IT industry," he adds. "There is an increase in the IT business and professionals are needed in the US," says Rajan Vasudevan, Director, Safaltek, a company that is in the business of outsourcing. Add to this the fact that "it is not financially viable to make software in the US," as Tyagi points out, and it is easy to see why outsourcing is not only inevitable but also irreversible. "The lowering of the limit on H-1B visas has come as a blessing in disguise for the Indian IT industry. The only option available to American companies is to either set up offices in India or to outsource the work to companies that are already operating in that particular niche. If they don't allow our professionals to go there then the jobs will come here," he says. Vivek Attray, Director IT, Chandigarh, also feels that the "lowering of the cap is bound to boost the IT industry in India." Goel says, "Both India and the US stand to gain from Indian professionals going to work in the US. It is a tow-way relationship. In the short run, the filling up of the entire quota in one day and lowering the cap will negatively affect both the professionals who want to go to the US as well as the IT industry in the US which needs them."

For American companies, starved as these already are of skilled professionals, outsourcing may be the only recourse. Although these companies have been lobbying hard for raising the quota limit on H-1B visas, but the demand is a political hot potato in the John Kerry-George Bush election campaign. "Experts expect the cap on the number of visas to be raised once the elections are over," says Vasudevan. "The cut", says Kiran Karnik, President, NASSCOM, "was too huge and unrealistic". He, too, expects "some form of relaxation in the norms by January-February next." He adds, "US companies will have trouble getting IT professionals to service their requirements if the present cap on H-1B visas remains."

Outsourcing, for the moment, appears to be the only way these companies can tide over the shortage. The only other viable option is the L-1 visa route through which technology professionals can enter the US. However, to be eligible for the L-1 visa an employee has to have worked in a company's overseas office for at least one year. Hence, the usefulness of this visa is limited to companies that have operation both in the US and overseas. Naturally, this leaves many companies outside its scope and hence dependent on outsourcing. Pressure to use the L-1 visa route more frequently might force American companies to set up offices abroad, a move from which countries like India stand to gain.

Another silver lining for India is that both the lowering of the cap and the filling of the quota on the first day, will reduce the number of skilled professionals going abroad in search of greener pastures. Add to this the fact that the work environment in India now compares favourable with the best in the West and it is easy to see why many Indians are heading back home from the US. Not only this, "in the last couple of years there has been a decline in the number of people wanting to pursue a career in the US," says Attray. "While this will harm those wanting to go abroad, not many are. Many people are also coming back. These people will now work in Indian offices of the companies they are employed with," he adds.

It is, however, "bad news for Indian companies that send people abroad, that is those who are into body shopping," says Vasudevan. Adds Maheshwari: "The smaller quota means fewer Indians will get an opportunity to work in the US. Of course, there are alternatives such as the L-1 visa which will enable companies to send additional people to the US."

The exhaustion of the quota of H-1B visas on the first day itself will pose problems for new and start-up IT firms, says Karnik. The major companies usually have visa buffers which will help them tide over till the end of this fiscal year when fresh applications will again be entertained for H-1B visas. The smaller companies which haven't been able to get too many visas are likely to feel the pinch. Agrees Goel, "It will be a problem for the smaller players because they do not have a stock of visas. Bigger players do and they utilise these when needed." Bigger companies also have the option of using the L-1 visa route, an alternative which is not available to smaller companies which do not have the resources to set up offices in the US and are hence completely dependent on H-1B visas to meet their personnel requirements.

Not all, however, see the strategy of having a buffer stock of visas in a positive light. While smaller companies feel that this gives the big players an unfair advantage over them, others consider the practice misleading and unfair. Says Maheshwari: "The current system allows companies to apply for visa on a speculative basis. The exhaustion of the full annual quota in one day does not represent the need or demand for H-1B visas but is an overly aggressive strategy on the part of Indian IT companies to grab more than their fair share by applying for visa on a speculative basis rather than as needed. This disadvantages companies which apply for visas as needed."

The latest developments on the issue of foreign workers in the US bring in their wake both opportunities and threats for the IT industry. And while the industry waits for the dust to settle, it would pay to remember that as always, the game shall go to those players who spot and exploit the opportunities, instead of cribbing about the threats.

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