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H1-B Hike: Much Talk, Little Action

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DQI Bureau
New Update

Finally the US has decided to in-crease the H1-B visa limit from 65,000 to

85,000. However, there is a catch: the Omnibus Spending Bill that sanctions this

hike has limited it for foreign nationals who have received masters or doctoral

degrees from American universities.

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No wonder that while the top honchos have welcomed the move, no one seems

excited as it barely makes an impact. The H1-B is currently capped at 65,000 a

year, down from the 195,000 in 2000 before the tech bubble burst. The number was

reduced in 2004. Indians make up the highest number of H1-B visas from the

number allowed. Employers' requests for H1-B visas for the 2005 fiscal is

already higher than the quota.

New H1-B applicants may have to pay more for getting the visas and the US

Labor Department will have the right to investigate any violations. According to

the Department of Labor, by 2010 there will be a skills shortage in the US for

computer-related jobs of nearly 1.7 mn people. If US companies hope to stay at

the forefront of the industry, it is imperative that they are allowed to access

the best global talent-be it from Germany, India or Ireland-to ensure they

have the right staff to meet demand and remain innovative and successful.

Indian software professionals already contribute significantly to the US

technology industry and the economy-they pay nearly a billion dollars to the

US social security system and more than $800 mn in taxes every year. They also

spend significantly on goods and services, close to $1.2 bn every year during

their stay in the US. Interestingly, McKinsey study showed that for every $1

worth of outsourcing job done by an Indian company, $1.12 to $1.14 worth of

value is created for the US economy.

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According to Nasscom's Sunil Mehta, "The H1-B and L-1 visa programs

were designed to help enhance US industry's global competitiveness and

leadership-and they do." The apex body of India software industry also

believes that the announcement will have major impact on most of the visa

related issues, prominent among them being the impact on HR deployment

flexibility of Indian service providers, especially since alternative routes

like L-1 visa is also expected to be monitored more flexibly.

Analysts say that push for greater offshore components would continue to

increase, though it may not necessarily mean an automatic decision to send more

work offshore. Most businesses are very clear that offshoring is positive for

their companies and also to the US economies as a whole and hence the increase

in H1-B visa limit won't make any major affect on Indian companies. Adds

Pointsoft CEO Brij Mohan Mandala, "At a time when the industry is getting

uncertain about the future potential in US markets, and ease of expanding

business, this announcement comes as a relief. Looking from the US perspective,

this is a cautious yet firm move towards outsourcing, and in the process

reassuring the faith in Indian IT professionals."

The flip side of the story is that the window of opportunity is open only to

those foreign nationals who have had their education in US universities, leaving

many a skilled brain high and dry for the time being. "But this is part of

the historic wave wherein demand drives policies," Mandala said. Another

statistic suggests that though there was restriction on 65,000 H1-B visas, IT

companies were managing well and there wasn't any major impact on bottomlines,

clearly indicating that demand for these visas is based on the economic needs of

the US and not for importing "low-cost foreign professionals".

Perhaps that's exactly why Nasscom had suggested a "professional

services visa" under the WTO regime, which would facilitate the movement of

professionals. The objective was to try and evolve visas that are appropriate

for the software industry, which would not require any artificial limits.

Rahul Gupta CyberMedia News

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