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Proposed H1B clause only an irritant: Experts

Monday, 5 October 2009 - 2:21am IST | Place: Mumbai | Agency: DNA
The latest demand by US Senator Charles Grassley for proof of project involvement in case of an H1B applicant may turn out to be ‘just another irritant’ for IT firms, say experts.

The latest demand by US Senator Charles Grassley for proof of project involvement in case of an H1B applicant may turn out to be ‘just another irritant’ for IT firms, say experts.  H1B is a non-immigrant visa, which allows an employer in the US to temporarily employ foreign workers. Subsidiaries of Indian IT service firms in the US employ workers with H1B visa for work at customer locations there.

As per current regulations, the US can issue up to 85,000 H1B petitions with 20,000 set aside for advance degree graduates of universities in the States. In his letter to the US Citizenship and Immigration Services (USCIS) on Tuesday, Grassley sought immigration authorities to strictly seek proof that an H1B applicant is on a job with a firm in the US.
Analysts feel the clause may not have much of an impact on IT firms.

Apurva Shah, a Mumbai-based IT sector analyst at broking firm Prabhudas Lilladher, said, “This is not going to impact companies significantly. This can at best be termed as another irritant, as a small portion of the onsite workforce remains in transition between projects.” On an average about 5% of the onsite workforce of Indian IT service firms remains on bench.

“I have not heard about such a clause yet. But even otherwise, we hardly have about 5% of our people on bench onsite. That too cannot be called as bench strictly, as most of them are on leave or have finished one project and being inducted into another. And all of them are actually on salary. So there is hardly any impact of such a clause,” said an Infosys executive who did not wish to be named. Analysts feel the IT industry has ways to work around the clause.

“Companies such as TCS, Infosys and others are setting up delivery and development centres in Mexico and Canada which are close to US. This helps firms save on costs as well as serve US customers from those locations, since people from Mexico and Canada do not need H1B under the North American Free Trade Agreement (Nafta),” an analyst said.

Observers also say that even for the portion of onsite employees in the US who are without a project, IT firms can always term them as ‘under training for higher skills’.
A top executive of a BPO firm said the impact of such a clause will be mostly on mom-and-pop recruitment firms in the US that recruit people on bench and supply to IT firms as and when required. These firms charge the IT firms on a hourly contract basis, popularly known as 1099 model in US.  A study by USCIS a year ago said one in five H1B cases had evidence of fraud or law violations.

Grassley, along with another senator, Richard Durbin, introduced a legislation that aims to tighten the H1B visa norms and impose a number of restrictions, especially on Indian firms and their ability to use large numbers of visa holders without hiring a proportional number of US workers.




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