H-1B legislation alarms India's government

April 28, 2009 3:11 PM EDT

A top Indian official, as well the country's major IT industry group, reacted harshly to H-1B legislation introduced last week by U.S. Sens. Chuck Grassley (R-Iowa) and Dick Durbin (D-Ill.), calling it protectionism and for good reason. It may raise the cost of their product: IT services.

The legislation includes a provision that "prohibits companies with having more than 50% of their workforce using H-1B and L-1 visas," according to statement this weekend from India's largest IT industry group, the National Association of Software and Services Companies (NASSCOM). "This provision unfairly stacks the deck against foreign companies operating in the U.S. because U.S. companies are highly likely to have a high percentage of America employees."

The 50% visa restriction in the Grassley/Durbin bill will impede the ability of Indian firms to bring largely young and mobile workers into the U.S. The restrictions will force them to increase the size of their permanent U.S. workforces, which will likely increase costs and hurt their ability to compete against U.S.-based IT services vendors.  

Imposing this visa restriction may be no different, from the Indian perspective, than the U.S. imposing a tariff on imported steel to protect domestic makers.

The Grassley/Durbin bill has the attention of India's government. The country's commerce and industry minister, Kamal Nath, in a statement last weekend, said the legislation is "not in line with the U.S. president's stand against protectionism ..."

U.S. IT firms, which have already established big offshore operations, aren't impacted by the Grassley/Durbin bill, and that's why NASSCOM says it "unfairly stacks the deck" against India companies. The Indian government and trade group are being frank.

Offshore outsourcing isn't going away and there is nothing in the Grassley/Durbin bill that changes this global trend. But the bill may succeed in putting a focus on this question: Is the U.S. expediting the shift of jobs offshore through its visa policies?

If NASSCOM is asked testify on the use of the visa, it will likely bring the argument it outlined in its statement about the Grassley/Durbin bill:

 "Contrary to some perceptions, H-1 B visas are actually used to provide technically qualified talent that is in short supply, to open new markets, and to accelerate innovation and increase competitiveness for US companies. H1-B visas are not used to displace American workers."

A number of people commented on a recent story in Computerworld on that bill. I don't know who wrote the account below, it was anonymous, but it struck me as authentic. It offers the other side of this. The headline: I was displaced.

"Three years ago a person from India 'joined our team' of E-mail support people. I was tagged to teach him, as I was one of the more senior and experienced people in our group. The language difficulty was severe, but I followed through.

Surprise, surprise, a few months later I was told that I was being let go, after nearly 31 years with the company, and being replaced by the fellow in India. We provided remote support for several clients, and he was just a little more remote than I was. He also was paid less than a quarter of what I earned.

I am working now, but was unemployed for over 18 months looking for any sort of computer related work. I'm also making a fraction of what I was making before, and have no benefits.

THAT is what offshoring and H-1B is doing to our technical resources."