L-1 is the Loved One

With elections looming ahead on the American politscape combined with

outsourcing fears, and Congress already forced by the US tech industry to prune

H1-B visa levels to 65,000 from 195,000, it was the turn of the L-1 visa to byte

Indian IT services majors hard. Infotech majors Infosys, Wipro, Tata Consultancy

Services and Satyam came under fire at a Congressional hearing for acting as

"body shops".

And, US unions, workers and anti-immigration activists are rallying to accuse

them of abusing the US visa system to bring in low-cost workers at the expense

of Americans.

Wipro, TCS and Infy, were listed by a US labour organisation of abusing L-1

visa regulations. The Department for Professional Employees, an umbrella

organisation of 25 labour unions, alleged that the three Indian companies are

bringing in foreign workers on L-1 visas and then subcontracting them out to

other businesses.

All three companies vehemently denied any visa abuse violations regardless of

their "troubled history" under the H1-B visa program, saying they were

in total compliance with the visa laws.

An Infosys statement clarified, "We fully comply with visa statutes and

regulations in letter and spirit. Infosys continues to work with governments and

consulates of countries in which it operates to ensure that it fully understands

and correctly interprets the immigration regulations."

Wipro, TCS and Infosys are among the biggest users of the L-1 programme

supplying Indian IT talent to a Who’s Who of Fortune 500 corporations, allege

the unions. Infosys maintains that it adheres to L-1 visa regulations

stipulating that only employees with specialised knowledge or holding

managerial/executive positions can file an application.

"We are primarily an H-1 dependent company, with 65% to 70% of our

employees in the US holding H1-B visas. Most of our employees stay in the US for

the duration of the project, which is typically 1-2 years, and return to home

country," Infosys claimed.

With the present quota of 65,000 H1-B visas likely to be exhausted by April,

Indian companies that are targeting  experienced hands onsite will look at

the L-1 route more actively. Given that, in an election year, the last thing

that the Bush Administration is likely to do is lift the H1-B quota back from

65,000 to anywhere near the 195,000 level at which it stood in the past two

years, high L-1 use wouldn't continue. Ironically, it was the inablity of US

companies to hire that many people on H1-Bs over the past two years — thanks

to the tech downturn—that led to the curtailing of quota in the first

place. But now, just as companies are ready to hire, the rules (which they

pushed in through Congress) won’t allow them to bring more people over on

H1-Bs.

So, it’s L-1 to the rescue for their Indian nemeses. L-1 visa holders are

critical to boosting EBITDA margins and profit-after-tax of Indian software

companies.

A Merrill Lynch report in July last year claimed that 62% of Wipro’s total

visas are L-1 visas. The figure is 54% for Satyam and 55% for HCL Technologies,

according to the report.

However, for all its advantages, the L-1 has not been used as widely as the

H1-B, which is probably the reason it hasn’t attracted a cap yet. The number

of L-1 visas issued has see-sawed year-on-year since 2001. In 2003, 54,817 L-1

pros started work, compared to 100,969 H1-Bs.

Like H1-B, Indian pros were the biggest L-1 consumers, too, receiving a

quarter of visas issued in 2002. All the more reason not to leave them uncapped,

maintain American labour unions. Despite the so-called tough standards factored

into L-1 visa authorisation, it is suffice to say that the new golden goose on

the visa block should not go the H-1B way. Indian IT industry circles feel that

companies will have to use the right kind of visa rather than looking for

maximising US visas, which would be very myopic, given the election fever and

offshoring phobia gripping the US at this point of time.

TEAM DQ