The Hindu Business Line : Visa issues

THE FILLING UP of the annual quota of 65,000 H1B visas on the opening day is a reflection of the outsourcing momentum the Indian software companies have seen over the past six months. This was only to be expected as the pipeline of applications for visas has been building since April. And for the first time in the last six years, only 65,000 visas were to be issued, scaled down from 1,95,000 till recently. However, this development is unlikely to affect the large and medium software companies which are comfortably placed on the H1B visa front. Anyway, these companies can use the L1 visa (intra-company branch transfers) option to make up for any shortfall in staff requirements. The small software companies and start-ups may face a squeeze as they apply for visas only on a `need-to' basis rather than stock up for onsite demands.

Even as the Silicon Valley is heading towards jobless recovery, using the frenzy whipped up by the technology unions and associations over the loss of employment opportunities for American professionals, the US Government has, in the election year, scaled down the H1B cap dramatically. But this is an over-reaction as the fears of severe job losses are vastly exaggerated. Cato Institute, a progressive think-tank, has categorically stated that the wild claims that offshoring will curtail IT sector employment in the US are totally at odds with reality. Going by the reports of research outfits Forrester or McKinsey Global Institute, offshoring to low-cost countries is likely to help American workers move to high-value jobs. Also, research studies have estimated that for every $1 offshored, the overall value created in the US economy is $1.12-1.14. So, any protectionist barrier against offshoring can only be counterproductive for the US.

Even as offshoring is getting strategic, Nasscom, representing Indian software companies, is right in stepping up efforts to increase the visa numbers to at least one lakh. Nasscom's attempts are prudent for some fundamental reasons: Since the outsourcing volumes are set to rise sharply this year, the onsite efforts, which typically constitute 30 per cent of the business will also rise. This will entail more Indian engineers working in the US and the H1B cap will become a constraint. Two, as Indian companies undertake more complex projects, such as systems integration, infrastructure outsourcing or consulting, the onsite-centric nature of work may go up. Three, the claims by some technology associations that bringing in H1B workers is a hidden subsidy offered by the US government is baseless as most top-rung Indian IT companies are paying salaries in line with that paid in the US. Finally, most Indian companies, especially the mid-tier ones, claim they no longer enjoy the same flexibility in using L1 visas as in the past.

To infuse confidence, Indian software companies will also have to go the extra mile in reworking their India-centric nature of operations. They will have to examine seriously the setting up of more near-shore centres in Mexico or Canada to service the US market. In turn, this will send the right signals that outsourcing is truly a global phenomenon that can help companies, investors and consumers reap substantial productivity gains.