Unfair bill

The new US Immigration Bill, which seeks to constrain an established business model of the Indian information technology industry, is causing much concern in the software sector. If the bill becomes law, the present practice of sending engineers on temporary work permits to work on short term projects in the US might become difficult.

American companies which do the same kind of work will not have to face such restrictions and so will have a competitive advantage over Indian companies. These short term projects are important for Indian companies as they form a vital segment of the outsourcing work. The bill would bar IT companies with a stipulated percentage of their work force in the H1B or L1 status from hiring more holders of such visas after three years, and force them to pay higher visa fees till then. There are other restrictions also. All this will constrain their business and operations and make them  much more costly.

The concerns are valid and representatives of the Indian government have also shared them, as the $100 billion IT industry is an important part of the country’s economy.  The main thrust of the bill, which has general support from both Democratic and Republican sides, is to  reform  the US immigration system and provide citizenship to millions of illegal immigrants. The provisions about outsourcing are only a small part of it. It has been approved by a Senate panel but there is going to be a long debate before it is passed by Congress. The Indian software industry can do legitimate lobbying in the US to dilute the discriminatory provisions or get them removed. Though American technology companies have welcomed the provisions there is a view that ultimately they might also hurt American companies. The larger view that outsourcing, as it has developed over the last two decades, has done much good to the US economy is  valid. It is also contended that the proposed restrictions will be in violation of fair trade practices and could be challenged in world forums.

Whatever final shape the US bill takes, Indian technology companies should be ready to make the challenge posed by it into an opportunity as they have done in the past. They have evolved much in the past. They  should change their business models and upgrade themselves into better service providers. It is also necessary to look at better geographical diversification of their operations.

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