Wall Street Journal:
By Laura Meckler and Laura Stevens
February 9, 2017
WASHINGTON—Silicon Valley technology firms, worried about their ability to bring foreign workers to the U.S. under President Donald Trump, are distancing themselves from Indian outsourcing firms, which are heavy users of the same visa program that U.S. tech firms rely on.
U.S. tech companies hope that any new restrictions on the H-1B visa program, which provides visas for highly skilled foreign workers, will be directed at the Indian firms and that U.S. tech companies can escape with more minimal changes to their practices.
“I’m supportive of an executive order that would close H-1B loopholes to prevent those few companies from abusing the program for cost-cutting and outsourcing that negatively impact American jobs,” GoDaddy Inc. Chief Executive Blake Irving said.
Already, there is bipartisan criticism in Congress over the model used by Indian outsourcing firms. These companies, which win a large share of the H-1B visas offered through an annual government-run lottery, bring workers into the U.S. from overseas to serve American companies that have spun off technology operations.
Companies—both foreign and domestic—that seek H-1Bs say they are recruiting in other countries because of a high-skill labor shortage in the U.S. Critics say that the outsourcers cycle Indian workers in and out on low salaries without attempting to find American talent first.
Tata Consultancy Services Ltd. and Infosys Ltd., two of the largest Indian outsourcing firms, stand to be among the losers depending on how the rules play out. Both companies declined to comment
There are also U.S.-based outsourcing companies, such as IBM Corp., with a similar business model, but these firms employ many more Americans in other divisions.
Immigration has emerged as the hottest issue for the new president, with the White House embroiled in controversy surrounding its effort to ban entry to the U.S. by people from seven Muslim-majority nations, citing terrorism concerns, and its suspension of the refugee program. Mr. Trump’s orders laying the groundwork for construction of a border wall or barrier with Mexico and increased deportations have also drawn fire.
The president and some of his top advisers also have long argued for reducing the number of foreign workers who are admitted to the country.
In particular, Mr. Trump has said that the H-1B program—which each year grants 65,000 visas for highly skilled workers and another 20,000 for people with advanced degrees—has been abused. Demand badly outstrips supply. For the last four years, the number of applications surpassed the number of visas available in less than a week.
A draft of an executive order for Mr. Trump’s consideration calls for a regulation to “restore the integrity” of employment-based visa programs and calls for ensuring the H-1B program benefits “the best and the brightest,” which could portend changes that push more visas to high-paying tech firms. The White House declined to comment on the draft.
There are other possible changes that would hurt Silicon Valley. For instance, many expect the Trump administration to reverse Obama-era rules that allow spouses of H-1B visa holders to work and that extend the legal work period for a foreign student who has graduated from a U.S. university.
Still, there is a sense among some tech lobbyists that it is in their interest to separate themselves from the outsourcers.
One tech lobbyist said interests were aligned when everyone was pushing for more visas. Now that the question is how to restrict—not grow—the program, tech firms don’t want to be in a position of defending the foreign-based outsourcers, the lobbyist said. A second lobbyist agreed and said the tech firms are “absolutely” going to “throw (the outsourcers) overboard.”
In December, tech executives met with Mr. Trump in New York, where they discussed replacing the existing lottery with one that would award visas based on the highest salaries, according to one person familiar with the meeting.
Generally, the bigger high-tech firms pay more for top staff, with Silicon Valley starting salaries for certain positions typically at about $120,000. This likely would mean they would get more of the available visas under such a system.
The union of electrical engineers, which says Indian workers have driven down wages, has endorsed a salary-based lottery.
Current rules require that firms with at least 15% of their workers on H-1B visas show they tried to hire American workers. But firms can escape the requirement if they pay salaries of at least $60,000 a year. Many outsourcing firms pay their workers near this minimum.
In the House, at least two bills would increase this minimum salary. Sponsors come from both parties. Rep. Zoe Lofgren (D., Calif.), whose bill would more than double the minimum salary to $130,000, described it as a “market-based solution that gives priority to those companies willing to pay the most.”
All of the top 10 H-1B employers in 2014 were firms that rely heavily on IT workers from India, according to Ron Hira, an associate professor of public policy at Howard University and a critic of these companies. Between 2005 and 2014, 15 outsourcing employers brought in more than 190,000 new H-1B workers, he said, meaning “hundreds of thousands of American jobs were lost and many were offshored.”
Indian IT industry-trade group Nasscom said its companies have created American jobs and India-based companies take just a fraction of the visas. Still, they’re bracing for a hit.
The group’s president, R. Chandrashekhar, said he plans to travel to Washington, D.C., this month to present his case to the administration and lawmakers. Nasscom already has cut its growth forecast for India’s $108 billion technology-outsourcing industry, and stocks of some leading outsourcers have been depressed in recent days.
In anticipation of possible changes, some companies say they are ramping up recruitment on U.S. college campuses, so they can rely less on winning visas.
There are downsides to cracking down on Indian firms, said Stuart Anderson, executive director of the Washington think tank National Foundation for American Policy, a free-market-oriented research group.
He said prioritizing companies that pay more will concentrate the visas in places with the highest cost of living and hurt workers with less experience, who tend to earn less. He also argued that choking off the outsourcers’ access to visas will simply shift those jobs overseas.
“People don’t understand,” he said. “Labor will move abroad if you don’t let companies bring people in.”
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