Grassley-Durbin law could kill Indian IT's model

The battle over H-1B and L-1 reignited on Capitol Hill earlier this month, when two influential senators and long-term critics of the two visa programs introduced a new bill in the US Senate, calling to end their “abuses and protect American and foreign workers from exploitation”.

The ‘H-1B and L-1 Visa Reforms Act of 2015’, introduced by Senators Chuck Grassley — chairman of the Senate Judiciary Committee — and Dick Durbin — the chamber’s Democratic Whip — would ban companies from hiring H-1B employees if they already employ more than 50 people and more than half of their employees are foreign workers on H-1B and L-1 visas. The bill also requires “all employers who seek to hire H-1B visa holders to first make a good faith effort to recruit American workers”, according to Durbin.

The apparent target of the new bill is the Indian information technology services industry, the biggest beneficiaries of the H-1B and L-1 visa programs. Since 2000, more than a million Indians may have come to the US for work on these two visas. According to one estimate, more than 459,000 Indians came to this country on H-1B from 2003 to 2011, which is nearly 48 per cent of all the visas granted under this category. In comparison, China, the second largest recipient of H-1B, sent fewer than 90,000 during the same period.

Indian firms such as TCS, Infosys and Wipro are the largest recipients of H-1B and L-1 visas. Obviously, if the bill becomes law, they will be the ones that will be affected the most. Many have pointed out that it will essentially kill their current business model, as more than half of the total revenues of some of these  giants are generated from the US.
However, it is not sure, at this point, whether the Senate will pass the bill, which is not a new bill — it has been in circulation in one form or the other since 2007. A companion bill is yet to be introduced in the US House of Representatives. The last bill related to the H-1B and L-1 passed by the Senate — the 2013 immigration reform bill — was never taken up by the House of Representatives.

Bill’s passage not easy

It is not easy for a bill to be passed on a hot-button topic like this, especially since the visa programs also have fervent backers — mainly the US technology industry, led by the likes of Bill Gates and Mark Zuckerberg. Note that the position of Silicon Valley tech giants such as Google and Facebook on H-1B is not identical to that of TCS, Wipro, and Infosys. The former is interested in more freedom to hire foreign workers and in greater numbers.
If the current bill fails to muster enough support, it is unlikely that any of the elements from it will be incorporated into other laws. An executive action on the issue is also not very likely.

Nonetheless, the H-1B and L-1 issue, which is also part of the larger immigration reform, is sure to be at the front and centre of the presidential politics. If recent history is any indication, the rhetoric against H-1B and outsourcing tends to go up during the presidential election cycles.

There is also no question that opponents of the two visa programs have been building a groundswell of support for at least plugging the loopholes in the system. The US arm of the influential trade association, Institute of Electrical and Electronics Engineers (IEEE), was one of the first groups to come out in support of the bill.

Disney, Edison had an impact

What triggered renewed calls for cracking down on the visa programs are highly publicised reports of Disney and Southern California Edison replacing hundreds of their long-term workers with H-1B workers from India. There were also reports that the tech workers that were laid off were forced to train their replacements in order to secure “good attitude” severance pay. This resulted in the California State Assembly passing a resolution calling for investigating abuses of the H-1B visas in June.

Publicly, the Indian firms have not issued any statement on Grassley-Durbin bill. But privately, they have mounted lobbying efforts, in coordination with the Embassy of India, it is learned.

In fact, lately the Indian industry has been very proactive in engaging members of US Congress, touting their efforts to hire US employees and their overall contributions to the US economy. A report released by the CII and Grant Thornton in July revealed that India-based companies are responsible for creating 91,000 jobs and $15 billion in investments across the US.

Various news reports indicate that many Indian tech companies are bracing for a future immigration reform law and some of them have already started the transition process to make themselves ready in the event of some of these measures becoming law.

(The writer is an entrepreneur and philanthropist based in Washington, DC. His website is www.frankislam.com.)