Immigration Reform Splits Tech Industry Afflicted by Outsourcing

Bloomberg

By David Lynch

April 29, 2013

http://www.bloomberg.com/news/2013-04-29/immigration-reform-splits-tech-industry-afflicted-by-outsourcing.html

As both worker and boss, Neeraj Gupta has profited from the H-1B U.S. immigration program.

The visa, intended for skilled workers, allowed him to stay in the U.S. after earning a master’s degree in electrical engineering from the University of Alabama in 1991. Later, the H-1B provided a steady supply of foreign-born employees for a technology-services company where he worked as an executive.

Today, Gupta is an outspoken critic of the program that helped start his career and that technology moguls, including Microsoft Corp. (MSFT)’s Bill Gates and Facebook Inc. (FB)’s Mark Zuckerberg, want Congress to expand.

“Somewhere along the way, the program’s been hijacked,” says Gupta, 45, chief executive officer of Systems in Motion, a closely held company based in Newark, California.

As lawmakers consider the first major overhaul of U.S. immigration law since 1986, the high-technology industry is divided over the H-1B program. While both industry leaders and startups seek the world’s most innovative thinkers, outsourcing firms, hired by corporate clients to help cut costs, got more than half the 85,000 visas available last year.

Gupta, a native of India who’s now a U.S. citizen, says the H-1B is leading to “economic abuse.” Outsourcing companies -- such as Cognizant Technology Solutions Corp. and Infosys Ltd. (INFO) -- use the program to import thousands of lower-paid information- technology workers instead of employing Americans, even as the program fails to meet the talent demand at firms such as Google Inc. (GOOG) and Facebook, he says.

His company -- using American workers based in Ann Arbor, Michigan -- competes against the outsourcing companies.

Surging Demand

The demand for the visas was underscored this month, when companies exceeded the annual H-1B cap within five days of the start of the annual application process, meaning a government lottery will be held later this year to determine visa winners.

The outsourcing companies’ dominance of the H-1B visa pool is “creating a big squeeze,” says Luis Arbulu, managing director of Hattery, a San Francisco-based venture capital and product-development firm. “It’s putting pressure on everyone, from the Googles and Intels of the world to startups.”

The inflow of H-1Bs -- more than enough workers each year to staff a new Apple or Google -- also is hurting American workers, some studies show. Skilled immigrants using H-1Bs and other visas take one-third to one-half of new IT jobs each year, and their presence is keeping inflation-adjusted industry wages at late-1990s levels, according to a study by the labor union- funded Economic Policy Institute in Washington.

Raising Cap

Congress created the H-1B program in 1990 to help U.S. companies fill job vacancies with skilled foreign workers. Proposed legislation drafted by a bipartisan group of eight senators would raise the annual visa cap to 135,000 and allow for further expansion to 180,000 depending upon economic conditions.

The draft bill also aims to discourage companies from outsourcing computer jobs via the H-1B route by barring the program’s heaviest users from obtaining additional visas and raising fees for “H-1B-dependent” employers. And it would require companies to advertise the jobs first before hiring foreign workers.

“More home-grown American talent is something we all should applaud,” Senator Richard Durbin of Illinois said at a Judiciary Committee hearing on April 22.

Two Populations

From its inception, the H-1B program has included two different populations: global all-stars who command salaries well in excess of $100,000 to develop products, and journeymen engineers working for outsourcing firms that take over computer operations for clients, including JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Commerzbank AG.

“We’re very, very different companies,” says Damien Patton, chief executive of social media startup Banjo, which employs several H-1B holders. “We’re your innovators. They’re your -- I don’t know -- your labor pools.”

Cognizant, of Teaneck, New Jersey, the largest single user of H-1B visas in fiscal 2012, says its use of employees based in both the U.S. and India allows its more than 820 clients to benefit from “intellectual arbitrage” -- the ability to tap technology specialists in both countries. The company’s share price has doubled over the past five years while the Standard & Poor’s 500 Stock Index has risen less than 14 percent.

More H-1Bs are needed because the tech industry can’t find enough top American computer experts, industry executives say. The jobless rate in March for workers in computer and mathematical occupations was 3.5 percent, according to the Bureau of Labor Statistics, compared with the national figure of 7.6 percent.

10,000 Openings

Four companies -- International Business Machines Corp. (IBM), Intel Corp. (INTC), Microsoft and Oracle Corp. (ORCL) -- have 10,000 U.S. job openings, according to the Silicon Valley Leadership Group, an industry lobby.

Potential workers with the best credentials enjoy a seller’s market. On the Palo Alto campus of Stanford University, recruiters line up outside the Gates Computer Science Building - - named for Microsoft co-founder Bill Gates -- to hand out pamphlets advertising job openings.

“I got one,” said Mehran Sahami, an associate professor of computer science. “I said, ‘I already have a job!’ But, our students come out with multiple job offers.”

H-1Bs provide significant numbers of skilled workers for some of the country’s top technology firms. About 5 percent of Intel’s 53,000 U.S. employees hold such visas, according to Peter Muller, government-relations director for the computer chip maker. “We depend on it,” he said in a phone interview.

Constant Search

Skilled workers from overseas can be especially critical for startups, which have less of a margin for error in filling out their small staffs.

At Banjo, Patton employs 16 corporate recruiters and a team of immigration attorneys in a constant search for employees. The company, which makes a location-based social media application, competes with Google, Netflix Inc. (NFLX) and PayPal Inc. for talent and often can’t find American workers with the skills it needs.

Banjo requires computer specialists conversant in state-of- the-art programming languages. Many American workers have outdated skills or are older and thus unlikely to adapt to the demands of a startup, he says.

“We won’t hire someone who’s marginal,” Patton says. “We don’t hire 6s or 7s. We hire 9s and 10s.”

About one-quarter of the 20-month old startup’s 25-person staff holds an H-1B visa.

Dying Languages

Hattery’s Arbulu, 39, a veteran of six years at Google, says he can’t use middle-aged computer scientists who cut their teeth on dead or dying programming languages such as Cobol or Fortran.

“Now, it’s Python, HTML 5, Ruby-on-Rails,” he says, referring to three cutting-edge programming tools. “They didn’t exist 10 years ago.”

The startups’ argument is echoed by a 2012 Microsoft strategy paper that identifies “the best and the brightest innovators in the world” as the intended recipients of the additional H-1B visas.

Yet Microsoft and other major companies only get a minority of the annual H-1B allotment. The biggest users of the program are tech-outsourcing companies, such as Cognizant (CTSH), Tata Consultancy Services and Infosys.

Cognizant has streamlined IT operations for six of the top 10 U.S. banks, including JPMorgan, which named the company one of its top suppliers for 2005. Four of the 10 largest European Union institutions also rely on Cognizant.

Indian Nationals

“The vast majority” of the business and technology relying on visas and work permits, the company said in its 2012 10-K filing.

Alan Alper, a Cognizant spokesman, declined to answer questions about H-1Bs beyond a prepared statement saying the proposed legislation would “do more harm than good to our economic recovery, global competitiveness and customer service.”

Spokesmen for Tata and Infosys weren’t immediately available for comment.

Critics of the H-1B program, such as Ron Hira, a professor at the Rochester Institute of Technology in New York, say those companies capitalize on immigration-law loopholes to undercut American workers.

They do so by employing computer specialists from India who earn 15 percent to 20 percent less than comparable U.S. workers, according to Norman Matloff, a computer science professor at the University of California, Davis. A 2011 Government Accountability Office report found that 54 percent of H-1Bs went to workers who were paid “entry-level wages.”

Wage Pressure

For American workers, the availability of foreign labor puts pressure on wages and working conditions.

Lee Cook, 58, of Durham, North Carolina, has felt the effects firsthand. Since taking early retirement from IBM in 2009, Cook has worked on contract jobs performing IT assignments for employers such as Bank of America Corp. and the U.S. Department of Homeland Security.

The availability of H-1B visa holders allows employers to offer less and demand more, he says. If Cook balks at relocating or working without benefits, foreign competitors will be happy to accept.

“They’ll be in the North Pole on Monday if there’s a job,” Cook says.

Almost four years ago, Gupta opted to put his knowledge of outsourcing to work building a business model based on domestic labor. Instead of using foreign workers, he hires a mix of new college graduates and laid-off automotive engineers to handle IT projects.

The Systems in Motion website advertised 25 separate job openings one day this month, including positions for entry-level and senior quality-assurance positions. Many of the openings shared a single admonishment: “We do not sponsor H-1B visas.”

www.beverlyhillsimmigrationlaw.com

Asylum and Entry/Exit Systems Get Another Look in Congress After Boston

National Journal

By Fawn Johnson

April 28, 2013

http://www.nationaljournal.com/daily/asylum-and-entry-exit-systems-get-another-look-in-congress-after-boston-20130428?mrefid=site_search

If the political stars had been aligned differently, the home-made bombs that exploded at the Boston Marathon finish line earlier this month would have derailed the fast-moving immigration effort on Capitol Hill. It is not uncommon for lawmakers to shy away from hard-nosed legislative deal-making on controversial issues in the wake of such unexpected catastrophes.

However, fearing backlash from the Hispanic voting bloc for not doing something about the 11 million undocumented immigrants in the United States, lawmakers are forging ahead with a wide-ranging bill.

The impact of the bombings on the immigration debate has narrowed in on two isolated policy arenas—the screenings that take place for foreigners fleeing political persecution and a yet-to-be-implemented system for tracking which foreigners are in the United States at any given time.

The Tsarnaev brothers alleged to have carried out the Boston attack were immigrants. They were granted asylum from the war-torn Chechnya region in Russia more than 10 years ago as “derivatives” (i.e., minor children) of their father. After a year, under the law, they were given green cards. Nearly 10 years went by, and both brothers applied for citizenship. The younger brother, Dzhokhar, became a naturalized citizen in September. The application for Tamerlan, the older brother, was still pending when he died.

No one on Capitol Hill opposes the idea that foreigners should be granted asylum if they face persecution in their home countries. In the wake of the bombings, however, lawmakers are saying they want to be sure that those refugees are properly vetted. House Judiciary Committee Chairman Bob Goodlatte, R-Va., said Thursday that he wants applicants who are “engaging in aggressive tactics” against an oppressor in their home countries to be screened in terms of their susceptibility to “doing the same thing elsewhere."

"That obviously ought to be a part of our consideration in granting political asylum,” he said.

Sen. Dianne Feinstein, D-Calif., expressed concern at a hearing Tuesday about whether asylum applicants are “adequately screened for national security threats.” The Senate immigration bill would ease the timing on granting asylum to applicants, and she wants to be sure the claims of “credible fear” in their home countries don’t get short shrift.

Sen. Chuck Grassley, R-Iowa, is among the first on Capitol Hill to point out the shortcomings of the travel-tracking system highlighted by the bombing, in which a clerical error allowed the elder bombing suspect, Tamerlan Tsarnaev, to come back into the United States from Russia without U.S. officials knowing it. “It just kind of highlighted it more than anything else,” Grassley told National Journal Daily, speaking about the weak entry/exit tracking system. “It would still be an issue even if the bombing hadn’t happened.”

The entry/exit tracking concept is a holdover from the Sept. 11, 2001, terrorist attacks, when policymakers said the United States authorities should know which foreigners enter the country and which foreigners leave the country. It turned out to be a nightmare to implement, especially on the “exit” side. Remember the sad-looking, unused US-VISIT terminals that populated airports in the mid-2000s? That was the Department of Homeland Security’s purported solution for keeping track of the “exiters.” They were supposed to take the time--voluntarily, perhaps by standing in line--to swipe their passports into the machine before they left. It doesn’t take much of an imagination to understand why it didn’t work.

The entry/exit system would get a makeover under the Senate immigration proposal put forth by the “Gang of Eight” Republicans and Democrats. The bill would require air and sea carriers to report foreigner exits to the federal government using machine-readable visas and passports. So far, so good, although it is not clear what would happen to people like Tamerlan Tsarnaev, who carried a Russian passport.

Sen. John McCain, R-Ariz., is one of several “gang” members who say the bombing incident provides an opportunity for lawmakers to improve the system through a thorough examination of what happened with the elder Tsarnaev, providing an object lesson in what needs to be changed. “That shouldn’t hold up the bill,” he said.

As far as asylum, the current screening process is fairly rigorous. Applicants’ identities, complete with fingerprints, are verified and checked against all law enforcement databases, including those in the Department of Defense, said Homeland Security Secretary Janet Napolitano. For Tamerlan, who was briefly under investigation by the FBI, DHS’s warning note probably would have popped up in the process, except he was a teenager at the time.

www.beverlyhillsimmigrationlaw.com

Immigration Bill Grants Amnesty to Employers of Illegals; No Prosecution for Bogus IDs

Washington Times

By Stephen Dinan

April 29, 2013

http://www.washingtontimes.com/news/2013/apr/29/immigration-bill-grants-amnesty-employers-illegals/?page=all#pagebreak

The debate is raging over whether the latest immigration bill is an amnesty for illegal immigrants, but one part is clear: The legislation would forgive businesses that have employed those immigrants illegally.

Employers who have allowed illegal immigrants to work off the books can come forward safely and provide their work history without fear of prosecution, and businesses that knowingly employed someone using a bogus or stolen Social Security number likewise would get a pass, according to an analysis of the bill by the Center for Immigration Studies, a think tank that wants a crackdown on immigration.

“The illegal workers at least have to pay a token fine. The employers of illegal immigrants who violated a whole list of laws themselves don’t even have to pay,” said Mark Krikorian, executive director of the center. “It’s the business side of the amnesty that doesn’t get a lot of focus.”

Business groups’ support is considered critical to getting a bill passed this year, but attention has been focused mostly on a guest worker program and requirements that all employers would have to meet, such as using an electronic verification system to check potential hires.

Indeed, it wasn’t until business groups, led by the U.S. Chamber of Commerce, struck a deal with the AFL-CIO on a guest worker program that the final Senate bill came together.

The chamber said the provisions exempting businesses from penalties “had nothing to do” with earning their support.”Our focus in assessing the bill was looking to the good faith compliance and safe harbor provisions and other terms of the E-Verify mandate, the revisions to the high-skilled worker program, and the creation of a workable low-skilled worker program,” said Blair Holmes, a chamber spokeswoman.

The crux of the Senate bill, negotiated by four Republican senators and four Democrats, would legalize most of the estimated 11 million illegal immigrants in the U.S., but withhold a full pathway to citizenship for most of them until after the Homeland Security Department takes more steps to secure the border and implements the electronic verification system for employers.

All sides are still combing through the 844-page bill, trying to figure out what it would do. One major fight is over how many foreigners would be let into the country as a result of higher caps on legal immigration.

The Center for Immigration Studies says more attention should be given to the free pass for businesses. It counts four different ways businesses get a break: Employers who have illegal immigrants on their payroll can keep them there with no penalty; there is no assessment of back taxes for their employees who worked off the books; those who paid unfair wages will not be prosecuted; and those who aided fraud by accepting bogus Social Security numbers won’t face a penalty.

“It lets businesses that knowingly violated the law off the hook,” Mr. Krikorian said. “If they were not withholding payroll taxes, they’re held harmless. If they were violating labor laws, they’re held harmless. So this is a boon for crooked business.”

The word “amnesty” itself is loaded. The bill’s backers argue that it isn’t an amnesty for illegal immigrants because it imposes a penalty of a long wait for citizenship and a nominal fine. Opponents say illegal immigrants are almost immediately safe from deportation, which amounts to an amnesty.

The backers appear to be winning the public relations battle. A poll by MWR Strategies, released last week, found that 38 percent of voters labeled the Senate bill as “immigration reform,” compared with 30 percent who labeled it “amnesty.”

What to do about businesses that hire illegal immigrants has long been a sticking point in the debate.

The last time Congress granted an amnesty, in 1986, lawmakers legalized millions of immigrants but vowed to secure the borders and crack down on businesses that were magnets for the flow of people.

Knowingly hiring illegal immigrants became illegal and is punishable by fines ranging from $250 per employee for a first offense up to $10,000 per employee for a third offense. If prosecutors can demonstrate a pattern, employers can face up to six months in jail.

The current bill again promises to crack down on employers with fines and the potential for jail time.

Numbers are difficult to come by, but the Center for Immigration Studies estimates that 55 percent to 60 percent of illegal immigrants are working on the books, which means their taxes are being paid — though they are credited to bogus or stolen Social Security numbers.

The Obama administration has stepped up enforcement against employers compared with its predecessor, conducting far more reviews of businesses’ immigration records.

In 2006, for example, George W. Bush’s administration didn’t issue any final orders imposing penalties on businesses. But the Obama administration in 2011 issued 385 final orders, for a total of $10.5 million in fines.Mr. Krikorian said one question is whether it would be worth the cost to the government to try to go after business scofflaws for back taxes or other penalties. He said that would be difficult given the short time frames written into the Senate bill. If Congress writes a longer-term bill that requires Internal Revenue Service audits of illegal immigrants and businesses, he said, it might be possible.

The Senate Judiciary Committee will begin voting on amendments to the bill next week, once lawmakers return from a weeklong vacation.

The business amnesty could prove tricky to navigate when the bill comes to the Senate floor. Amendments imposing penalties on businesses that broke the law could be attractive for many lawmakers but could upset the delicate balance of the bill.

www.beverlyhillsimmigrationlaw.com

House Immigration Differences Emerge

Wall Street Journal

By Corey Boles and Sara Murray

April 25, 2013

http://online.wsj.com/article/SB10001424127887323789704578444740448623164.html

Tensions between the House and Senate approaches to overhauling immigration law emerged Thursday, as a House committee chairman said he would undertake a piecemeal approach rather than pursue a single comprehensive measure, as the Senate is considering.

Rep. Robert Goodlatte (R., Va.), who leads the House Judiciary Committee, said he plans to start with a measure creating an agricultural guest-worker program, followed by a bill requiring employers to use a federal system to determine prospective employees' legal status.

Mr. Goodlatte declined to say how many bills he would pursue or whether one would provide a pathway to legal residency for the estimated 11 million illegal immigrants currently residing in the U.S. He said he doesn't back granting citizenship to the group—as the Senate legislation would allow—but would be in favor of some form of legal status.

His approach raised the prospect that the House could pass provisions toughening border security or which help businesses gain access to temporary labor from abroad before dealing with the status of those in the country illegally.

Senators who favor an overhaul say the best approach is to put everything in one bill, so that no interest group feels left behind. "You can't do individual bills, because the problem is people say, 'What about me?' " Sen. Charles Schumer (D., N.Y.), who helped craft the bipartisan Senate immigration bill, said at a Christian Science Monitor breakfast Thursday. "The best way to pass immigration legislation is actually a comprehensive bill, because that can achieve more balance. Everybody can get much, but not all, of what they want."

Mr. Goodlatte didn't rule out eventually stitching House bills together into a single legislative package that could move to the floor. He made it clear the House would take its time considering proposals.

The differing approaches in the two chambers point to the long legislative process any immigration overhaul could face. While the Senate Judiciary Committee will begin debating a bill on May 9, the House has moved more slowly. A bipartisan group in the House has yet to unveil a plan that it has been developing for several years.

A bipartisan group of eight senators crafted a bill that would increase border security, create new work-visa programs and offer a path to citizenship for unauthorized immigrants in the U.S.

The top House Democrat said she doubted any members of her party in the House would support legislation without a pathway to citizenship for illegal immigrants in the country. "I don't think we want America to be a place where we have two kinds of people in our country," said Rep. Nancy Pelosi (D., Calif.), the House minority leader. "We always make comments about other countries where they have workers coming in and are in a different category. I don't see House Democrats supporting legislation of that kind."

Ms. Pelosi said that she supported the Senate bill and hoped there would be bipartisan support for that legislation, if the Senate sent it to the House.

Members of the Senate immigration group also saw flaws in any House approach that doesn't offer a path to citizenship.

"Any attempt to say, in the House, that you will not have a path citizenship will be a nonstarter," Mr. Schumer said. "I'd say that, unequivocally, it will not pass the Senate. I don't think it would get a Democratic vote."

Sen. John McCain (R., Ariz.) echoed Mr. Schumer. He added that offering a permanent legal status to illegal immigrants without any chance of citizenship "offends our fundamental principles of fairness in our society."

The two senators set a high bar for their legislation in the Senate: They hope to win 70 votes in the chamber, where Democratic and independent senators account for 55 votes and Republicans hold 45 votes. Passing the bill with just a handful of Republican senators "would bode poorly'' for the legislation once it moved to the House, Mr. Schumer said.

A senior House Republican leadership aide said a more-narrow bill or a package of bills as envisaged by Mr. Goodlatte could be one strategy for moving forward, if the Senate were to pass its bill and Speaker John Boehner (R., Ohio) and other House leaders were to determine they need to pass legislation to kick start negotiations with the Senate on a final package.

www.beverlyhillsimmigrationlaw.com

House Republicans Offer Piecemeal Approach on Immigration

Los Angeles Times

By Lisa Moscaro

April 25, 2013

http://www.latimes.com/news/nationworld/nation/la-na-house-immigration-20130426,0,6677852.story

House Republicans announced the first in a series of immigration-related bills that would attempt to reshape the system one piece at a time, a contrast with the comprehensive approach the Senate is pursuing.

The chairman of the House Judiciary Committee, Rep. Robert W. Goodlatte of Virginia, was careful Thursday to say the two bills he would unveil this week — and "several" more after that — were simply starting points for debate. The effort does not preclude the broader overhauls being drafted by bipartisan groups in both chambers, he said.

"We think we can help move the process forward by beginning to examine the legislative details," said Goodlatte, an immigration lawyer. "No one should take the limited bills we're introducing this week to be in any way an indication of our overall interest in solving all of the various aspects of immigration reform that are before the House and Senate."

Nonetheless, some immigration reform advocates warned that the move in the House, where bipartisan negotiations on comprehensive legislation have stalled, could complicate efforts to pass an immigration bill this year. House members who oppose a comprehensive approach but who want to be able to say they voted for something could fall back on these more limited pieces of legislation, they said.

The array of measures from the House would provide an easier choice for conservative Republicans than the complex 844-page bill from the Senate, which involves a series of political trade-offs including enhanced border security, new guest-worker programs and the eventual chance for citizenship for most of the estimated 11 million people in the U.S. who entered the country illegally or overstayed their visas.

At the same time, however, the House bills could provide an important educational exercise for many newer GOP lawmakers as they learn the complexities of the immigration debate. Many Republicans represent congressional districts that have very small Latino or immigrant populations, leaving them unfamiliar with the issue. Republican leaders, however, believe that passing immigration reform legislation is vital to their future electoral strategy of attracting Latino voters.

Goodlatte and others have been conducting study sessions attended by 100 Republican lawmakers to bring them up to speed on immigration issues.

"I represent a district with less than 2% Latino voters, so this is not a political exercise for me," said Rep. Trey Gowdy (R-S.C.), a former prosecutor, who has been helping to lead the sessions. "I would like a remedy that sustains us for the remainder of my lifetime."

Details of the House bills were not fully aired Thursday, but the first two would deal with an agricultural guest-worker program and a requirement that employers confirm the legal status of workers using the E-Verify system. Other bills would probably involve border security, a top priority of Republicans.

Senators who helped negotiate the immigration reform package in their chamber warned against a piecemeal approach.

"The idea of doing separate bills is just not going to work — it's not worked in the past, it's not going to work in the future," said Sen. Charles E. Schumer (D-N.Y.), an architect of the Senate bill.

Republican Sen. John McCain of Arizona said there was "no way" an immigration overhaul could pass Congress and be signed into law unless it included a path to citizenship for those living in this county without legal status.

"It's totally unnecessary to have 11 million people — human beings, God's children — in our society without any of the rights or protections of citizenship, or at least a legal status," McCain said.

Goodlatte has said he would prefer not to provide a "special pathway" to citizenship.

Outside groups and lawmakers reacted coolly to the House action.

"I don't know if it helps or hurts," said Rep. Mario Diaz-Balart (R-Fla.), a member of the House group drafting a bipartisan bill. "The only thing I'm glad about is immigration is on the agenda."

Rep. Luis V. Gutierrez (D-Ill.), another member of the bipartisan House group, said Goodlatte's move confirmed "the new tone and new interest among Republicans. They want to solve the immigration policy issue and not just exploit it for partisan politics."

But one longtime immigration reform advocate, Frank Sharry of America's Voice, suggested the House move "makes it easier for opponents of broad reform to oppose comprehensive reform while claiming they support something."

Congress is about to take a weeklong recess. Immigration reform is scheduled to move to the forefront when lawmakers return in May.

www.beverlyhillsimmigrationlaw.com