Bangalore: Though there is no immediate threat of an adverse impact on business prospects in the US for Indian information technology firms, the industry on Monday reacted sharply to a Senate legislation that points to America's growing phobia about outsourcing, reports Mail Today.
A $ 600 million Border Security Bill, which proposes a 200 per cent jump in H- 1B and L1 visa fees, was passed last Friday by the US Senate. Infosys spokesperson Mohandas Pai said Senator Charles Schumer's statement that the Bangalore- based IT firm — India's second largest — was a “ chop shop” was “ distressing” and hoped that industry body Nasscom would take up the matter with the Centre.
If the Bill becomes a law, the cost of each H- 1B or L1 visa could more than double from the current average of $ 2,000 ( Rs 92,000). The new Bill proposes an additional fee of up to $ 2,500 ( Rs 1.15 lakh) per H- 1B or L1 visa as filing and fraud prevention and detection fees.The visa hike is applicable only to companies that employ more than 50 per cent of their USbased workers from abroad.
Nasscom president Som Mittal was quoted by the Wall Street Journal as saying the new legislation could cost Indian companies close to $250 million (Rs 115,000 crore) in human resource expenses in the long run.
In India, the legislation is being seen as a step towards gradual protectionism. A Nasscom spokesperson said on Monday that it will have a significant impact on the Indian IT sector. “While we understand the need for the US to protect its southwest borders, it seems that the funding proposed by this Bill would be from the Indian IT sector,” he said. Nasscom declined to comment on the ‘chop shop' remark.
“The visa fee hikes will further erode cost arbitrage and cause a change in the operational model of Indian offshore providers,” said Jeya Kumar, CEO of Patni, a leading software and IT services firm.
“They (the Americans) have this pop culture image of the sheriff coming and shooting down the ‘bad guy',” said Infosys director of human resources Mohandas Pai on Monday. “We are a big company; they cannot ignore us, so we are not worried. Infosys is a good corporate citizen, pays its taxes and is law abiding. Our strategy is to create jobs in every jurisdiction that we work in. The visa fees are discriminatory and do not help create an open competitive market.”
The Indian community in the US, too, has voiced concern about the legislation. The Washington- headquartered US-India Political Action Committee (USINPAC) said on Monday “that the fee increase is a regressive move that would permanently move these jobs out of the US to off shore destinations and negatively impact the US economy”.
USINPAC chairperson Sanjay Puri said: “While the security of the US borders and the protection of American jobs are of prime importance, it should not be done to score points during a heated political climate. The proposed move by the US Congress could permanently export jobs outside the United States and deprive the US of the next Google or Intel. We urge Congress to consider the potential damage the Bill would cause and reconsider the provision.” Puri said some of the highly skilled and educated immigrants who came to the US under the H- 1B programme end up staying in the US and creating businesses, jobs and innovative products. “ This measure has the potential to stop that.” But in the new American political order where even the President openly preaches anti- outsourcing policies, protectionism could be the reality new Indian software firms would have to face.
President Barack Obama recently called India and China competitors for American jobs. “ There are other countries that are fighting for those jobs, in China and India,” Obama said during a speech at a function organised last week by the federation of American labour unions. “ As the world became smaller, outsourcing is an easier way to increase profits, and a lot of those jobs are shifted to lowwage nations,” he said. “ But I am here to tell you, we are not giving up and we are not giving in.” The US is still battling the aftereffects of the crippling recession in 2009 which left millions of Americans jobless and was responsible for more than 250 banks shutting down, 150 in this year alone. Unemployment in the US was 9.5 per cent as of July 2010, according to the US Bureau of Labor Statistics.
Prof S. Sadagopan, director of the Indian Institute of Information Technology at Bangalore, said, “ The job situation in US is not that good. People and their leaders will therefore take a shallow view.” He added: “ Many have not looked at the larger picture — India has created jobs in the US and the UK. For instance, TCS, India's largest software firm, was rated one of the largest job creators in Ohio. Prime Minster David Cameron of the United Kingdom acknowledged the role of Indian companies in creating jobs in Britain during his visit to Bangalore in July.” Infosys said it employs 1,300 US citizens and permanent residents and is in the process of hiring a thousand more.