H-1B Visas and the Scapegoating of India

By October 30, 2013News & Press

Some critics are arguing that Indian-Americans overseeing IT services firms are being unfairly held accountable for the others who misuse the H-1B visa system. Those company owners are being scapegoated, they say, for the widespread abuse of the program in order to harness cheap labor.

In an article for Bloomberg, H-1B critic Norman Matloff blames U.S. Sen. Charles Schumer, among others for what he calls the demonization of an ethnic group. Sen. Schumer had referred to Indian businesses as “chop shops.” That does not mean, argues Matloff, that he believes the IT industry offshore is in the clear; they often hire cheap labor. But, he says, India does not “abuse” the foreign worker system more than any other country within the technology industry.

If Congress does boost the current H-1B visa cap, as so many hope, there is a concern that U.S. tech workers will be at a greater disadvantage, battling against a theoretically flooded employment market. Lawmakers who oppose a raised cap say they want to protect U.S. high tech workers by restraining visa use by offshore firms.

But others argue that a continued tight cap on the number of H-1B visas as proposed by Sen. Schumer and others is just a way to hobble offshore outsourcing firms.

Outsourcing firms offshore are not required to disclose who makes up their workforce and how many employees are working with a visa status. And if a company is forced to change the percentage of visa-based workers due to an immigration bill, will they then increase their domestic U.S. workers and fill the gap left by the low number of allowed visa holders?

Will visa restrictions or a restriction that bars the largest H-1B employers from sending their visa holders to work at third-party sites push offshore outsourcing businesses to hire more domestic-based employees? There may be business acquisitions which work to increase the U.S. domestic workforce based in offshore firms, or other workarounds which will make the restrictions moot.

Some companies such as IBM may even see gains from these restrictions. IBM continues to be one of the largest IT employers of Indian workers. If visa restrictions simply raise the costs for competitors offshore, U.S.-based companies may grab more of the market –or they may simply expand their own overseas workforces.

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