Tag Archives: Immigration

Immigration Blog, India Business, India-US Relations Blog

The Good, The Bad, and The Ugly

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A draft of a new US immigration law likely to be announced this week, holds mixed fortunes for international IT services companies and American businesses.

Globally competitive firms with offices in America, often send a number of foreign skilled workers on H-1B Visas to service American clients.  This helps boost operating margins and reduces costs on to American consumers.  The number of these Visas are currently capped  at 65,000 per year.

The legislation is seeking to increase the cap on H-1B Visas to 110,000, with an extra 25,000 for those who have earned advanced STEM degrees in the US.  This part of the bill has been warmly received by businesses and America’s friends and partners overseas.

However as part of a deal to create a pathway to citizenship for over 11 million people living in the U.S. illegally, other proposals in the bill will dictate to employers that they must pay workers on the highly skilled program on par with onshore workers and require businesses to advertise open jobs for 30 days on a U.S. Department of Labor website before they could bring in a foreign workers.

The result is that many U.S. business who have a significant contingent of overseas employees would be forced to pay significantly higher fees and endure larger operating costs.  For service based businesses like IT management, most of the operating costs are purely from labor.  Changing the pay rules may in effect drive many onshore companies out of business entirely, lowering tax revenues and in effect driving operations offshore completely.  In a growing migration to cloud based IT management, that possibility is ever more likely.

Concern is also being voiced that these provisions have been made for the specific purpose of targeting Asian individuals in the United States and overseas, and that campaigns for comprehensive immigration reform will merely descend into a vote-bank exercise for future elections.

Immigration Blog

The H-1B conundrum

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A new legislation intends to check H-1 B related frauds

Guest post by Madhu Nair

Ever since the 2008 economic crash, Americans have been accusing the H-1 B visa as an instrument used to steal their jobs. The United States is battling a high unemployment rate and the voice for a pro-American job policy is increasing day by day. With critics crying foul over the provisions of the policy and its abuse by technology majors, America’s H-1B visa policy has run into troubled waters.

According to a recent report, Senator Chuck Grassley, a ranking member of the Senate Judiciary Committee, has introduced a legislation which aims to eliminate fraud and abuse of the H-1B visa policy. The legislation intends to make reforms to increase enforcement, modify wage requirements and ensure protection of visa holders and American workers. Grassley says that the legislation will not only benefit American workers, but also help U.S. companies to get quality specialized workers from abroad.

Grassley adds, “Somewhere along the line, the H-1B program got side-tracked. The program was never meant to replace qualified American workers, but it was instead intended as a means to fill gaps in highly specialized areas of employment. When times are tough, like they are now, it’s especially important that Americans get every consideration before an employer looks to hire from abroad.”

The legislation, if passed, may affect jobseekers from India and elsewhere. The recently passed H-1B and L-1 Visa Reform Act of 2013 ensures that an H-1B application filed by a company employing 50 or more U.S. workers will not be accepted unless the employer attests that less than 50% of the its workforce are H-1B and L-1 visa holders. This, in addition, to the legislation introduced by Grassley could mean trouble for companies who seek cheap and quality workers, largely from developing economies. A recently published article had also highlighted that many of the H-1B hires do not belong to the “best and the brightest” category. This further pushed the need to reform the policy which has gained a political face of late.

With a cap of 65,000 H-1B visas a year, Indian companies were seen scrambling for approvals with over 50,000 applications being filed on the very first day of screening. Market analysts say that the cap on visas and other such compulsions will impact the margins of companies adversely. The increasing unemployment has also forced companies in the U.S. to take to sub-contracting and local hiring. This further adds pressure on companies to take to other means in order to achieve their ambitions.

While a short-term impact looks imminent, it would be better to come out with options to avoid such situations in the future. The global economy changed remarkably after the 2008 crisis with the world turning towards developing economies to pave the path ahead. India, with its growing young and abundant workforce, has an edge over other countries in reaping the benefits. But it would be rather cynical to neglect developed economies while doing so. The only way forward is to find a middle ground where countries can work together for a sustainable future.

Immigration Blog

H1B applicants not the best?

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Guest post by Madhu Nair

By definition, the H1B is a non-immigrant visa issued by the U.S. allowing companies to recruit foreign nationals in specialty occupations under the Immigration and Nationality Act. The act, practiced by a number of multi-national companies, has been their gateway to some of the best talents in the world. Aspiring workers from emerging economies like India and China have been quick to catch in on the rush. The practice gave companies an edge over their peers as it reduced their working capital, increased efficiency and scaled up their businesses. For employees, on the other hand, this was an opportunity to realize and live the American Dream.

But if a recent report is to be believed, the quality of H1B workers does not fit the category of “the best and the brightest”. Norman Matloff, professor of computer science at the University of California in Davis along with the Economic Policy Institute, published a study which compared U.S. and foreign IT workers’ salaries, rates of PhD awards, doctorates earned and employment in research and development to determine if H1B visa holders had skills beyond those of U.S. IT workers. As per Matloff, the study did not give any indication of exceptional talent among the H1B holders. He says, “We thus see that no best and brightest trend was found for the former foreign students in either computer science or electrical engineering,” He further writes, “On the contrary, in the CS case the former foreign students appear to be somewhat less talented on average, as indicated by their lower wages, than the Americans.”

Nevertheless, managers at top companies insist they still are not able to source the best minds domestically, forcing them to look beyond boundaries. For Peter Cappelli, professor of management and director of the Center for Human Resources at the Wharton School, this does not sound reasonable enough. In a Wall Street Journal article in October 2011, he argues, “Some of the complaints about skill shortages boil down to the fact that employers can’t get candidates to accept jobs at the wages offered. That’s an affordability problem, not a skill shortage.”

For countries such as India and China, who account for a major share in the H1B program, this should set alarm bells ringing as it may affect their nationals directly. Coming to India, the number of H1B visa approvals saw an upward trend for the year 2012. In the fiscal year 2012, 130,000 H category visas were issued as against 114,000 issued in FY 2011, an increase of 15%. The year, however, saw a 26% increase in denial rate with respect to the number of applications. The rise in denials was mainly attributed to the growing concerns over the business models used by Indian IT consulting companies. This led to heightened scrutiny by the consulate officials which saw the number of approvals go down.

With U.S. still recovering from the 2008 crash and Eurozone yet to come out of the sovereign debt crisis, the current scenario does not look good either. While there is no immediate threat to H1B workers, a relook at the quality of education may perhaps save them the axe. India and China both boast of a large number of highly skilled workers. However, with the current report out, officials and analysts in the U.S. may hesitate to hire anybody from these countries.

The solution, however complex it may be, lies in accurately nipping the problem at the source. There is a need for governments to work together towards a future void of any such conflicts that may lead to a human resource problem. The interests of US’ domestic workers need to be protected, whereas those of H1B applicants also need to be carefully studied. A pragmatic and sensible solution will not only prevent discontent among many, but also lead to a better environment at workplaces.

 

India-US Relations Blog

An Immigration Deal with India

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An agreement not only makes sound economic sense, but would also strengthen the foundation of U.S.-India relations.

From the maelstrom of legislative gridlock that is Washington, at least one ray of bipartisan comity has emerged. In a nearly unanimous vote, the House of Representatives has passed a bill to allow more skilled immigrants from India and China to become legal permanent residents. At a time of rising protectionist sentiments, the move is important recognition that U.S. economic vitality requires greater access to the global pool of human capital.

The bill is now being considered by the Senate. Its arrival is particularly timely. The United States has been able to maintain its global preeminence in no small part due to the influx of foreign science and engineering professionals and students. High-skilled immigrants are a significant driving force of American prosperity and innovation, most famously in Silicon Valley. Research indicates, for instance, that Indian immigrant entrepreneurs play a leading role in founding some of the most dynamic high-tech companies.

America’s dependence on foreign-born technology professionals will shortly become all the greater. Since younger native-born workers tend to lack the skill levels of their baby boomer parents now nearing retirement age, the United States could face broad and substantial skill shortages in the coming decade.

But U.S. policymakers should go one step better by signing a bilateral agreement with New Delhi guaranteeing a set number of temporary work visas for high-skill Indian professionals. The U.S. has crafted similar agreements with a select number of other countries, including the TN temporary visa program (created via the North American Free Trade Agreement) that exempts qualified Canadian and Mexican professionals from the annual quota on H-1B work permits.

With India a major source of high-skill professionals and the U.S. needing to draw on foreign talent to fortify its own science and engineering workforce, both countries have a keen mutual interest in cooperating in the area of human capital, the most critical resource in the dawning global innovation economy.

Admittedly, important constituencies in both countries regard the global talent pool as a zero-sum proposition. In the United States, some argue that increased mobility of foreign high-skill workers will displace or depress wages of native professionals. The empirical evidence, however, suggests that greater numbers of talented immigrants actually supports job creation in the United States.

India likewise would stand to benefit from the increased mobility of its technology professionals. Instead of causing “brain drain,” the global innovation economy is actually generating “brain circulation” or a “brain chain,” in which expatriate talent returns home with acquired capital, skills and knowledge, as well as personal links to transnational entrepreneurial and technological networks. Obviously, some of the high-skill Indians who benefit from the bilateral immigration accord will choose to remain permanently in the United States, though they would in time contribute a significant stream of remittance income and serve an important bridging function between Indian innovators and entrepreneurs and those in other countries. But others, empowered by new ideas and experiences, will return in time and play a direct role in the nation’s development.

The United States and India are prime constituents in the brain circulation process. Far from seeing access to the global talent pool as a zero-sum proposition, the interdependency of their skills base requires them to act in a cooperative way. Doing so not only makes sound economic sense, but would also strengthen the foundation of U.S.-India relations.

Immigration Blog

Borderless Economics and the Indian Diaspora

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A new book by Robert Guest, business editor for The Economist, focuses on Indian and Chinese immigrants and their connections to India and China. The book is called Borderless Economics.

Personal Connections

The author begins his discussion of Indian immigrants by relating a conversation with Vish Mishra, a venture capitalist.  Mishra related that personal introductions were “absolutely critical” in his line of work. According to Mishra, “If you cold-call, you start from nowhere, it’s laborious and tedious. If you know someone, you can move faster. The advantage of any network is you get to see things you might not otherwise see.”

Guest points to a Kauffman Foundation study that “returning Indian entrepreneurs maintain at least monthly contact with family and friends in America, and 66 percent are in contact at least that often with former colleagues.” The subjects most discussed are customers, markets, technical information and financing.

The Diaspora Helps India

Guest argues against the idea of a “brain drain” hurting home countries. “Nonresident Indians bring ideas and investment back,” writes Guest. “But arguably the biggest favor the diaspora has done for India was to persuade it to open up to the world in the first place. They were not the only force – four decades of stagnation alerted India’s leaders to the possibility that something was wrong with their economic model. But the diaspora was highly influential.”

In the book, Palaniappan Chidambaram, a former finance minister in India, is quoted crediting the emigration of Indians for changing policies inside India: “First, the phenomenal success achieved by Indians abroad by practicing free enterprise meant that if Indians were allowed to function in an open market, they could replicate some of that success here [in India]. Secondly, by 1991 sons and daughters of political leaders and senior civil servants were all going abroad and studying abroad and living and working abroad. I think they played a great part in influencing the thinking of their parents.”

Networks of Innovation

An entire chapter of the book is devoted to how the connections between Indians abroad and those back in India help create innovations. “When ethnic Indians in different countries talk to each other, ideas bounce across borders,” writes Guest. “There is another benefit to the constant nattering that goes on within ethnic networks. As good ideas are passed around, they evolve. Insights are taken apart and recombined in millions of individual brains. Then they are fed back into the network. After a while, new ideas emerge.”

The subtitle of the book is “Chinese Sea Turtles, Indian Fridges and the New Fruits of Global Capitalism.” The “Indian Fridges” referred to in the book comes from the efforts of Indians to build an inexpensive refrigerator that poor people could afford. He describes how Godrej & Boyce Manufacturing, based in Mumbai, developed a refrigerator that costs $69. “The engineering miracle was conceived through a marriage of ideas generated by Indians in India and by Indians overseas,” notes Guest.

Patriotism

While much of the book is devoted to the reality of economics and the benefits of mutual exchange, at one point the author moves away from finance to the patriotism at the core of a naturalization ceremony in America. He describes his initial uneasiness watching a citizenship ceremony in Miami and the boisterous rendition of ‘God Bless the USA” playing at the ceremony’s end. “Where we come from, memories of patriotism warping into something terrible remain vivid,” writes Guest. “But as I look around the hall full of cheering, hugging new Cuban, Venezuelan, Haitian and Russian Americans, I am suddenly swept away by the crowd’s happy frenzy. To my surprise, I feel a tear rolling down my cheek.”