Analysts: Potential New H-1B Visa Clauses a Nuisance, No Game Changer

By Donald Sears  |  Posted 2009-10-05 Print this article Print

Republican Iowa Sen. Chuck Grassley is pushing for reform in the H-1B visa program and recently urged the U.S. Citizenship and Immigration Services (USCIS) to ask for evidence that workers coming over to the United States actually have employment.

Grassley recently wrote to the director of the USCIS: "Simply put, adjudicators should be asking companies up front for evidence that H-1B visa holders actually have a job awaiting them in the U.S., i.e., that workers are not coming in only to be 'benched' by employers."

Some business analysts in India do not see the current efforts to prove employment evidence as anything more than an "irritant," writes Amit Tripathi of DNA India.

Apurva Shah, a Mumbai-based IT sector analyst at broking firm Prabhudas Lilladher, said, "This is not going to impact companies significantly. This can at best be termed as another irritant, as a small portion of the onsite workforce remains in transition between projects." On an average about 5% of the onsite workforce of Indian IT service firms remains on bench.

"I have not heard about such a clause yet. But even otherwise, we hardly have about 5% of our people on bench onsite. That too cannot be called as bench strictly, as most of them are on leave or have finished one project and being inducted into another. And all of them are actually on salary. So there is hardly any impact of such a clause," said an Infosys executive who did not wish to be named. Analysts feel the IT industry has ways to work around the clause.

"Companies such as TCS, Infosys and others are setting up delivery and development centres in Mexico and Canada which are close to US. This helps firms save on costs as well as serve US customers from those locations, since people from Mexico and Canada do not need H-1B under the North American Free Trade Agreement (Nafta)," an analyst said.

Whether or not the USCIS will follow Grassley's lead on evidence gathering remains to be seen.

In 2007, an audit of a small percentage of H-1B visa companies found that there have been cases of fraud that included forged documentation, phantom businesses and phony job offers, and more. The Justice Department has been enforcing laws on the books after the audit, and has brought suit against a number of companies, including Vision Systems Group, Cognizant Technology, Patni Computer Systems and Computech.

In an effort to show that the USCIS takes fraud seriously, the organization began earlier this year making surprise audit visits to companies it suspects is operating under false pretenses.

At issue is whether the fraud is as widespread as Grassley and others believe. The H-1B visa program has had up to 65,000 participants with companies of all sizes, many of them household American firms including Microsoft, but also many of the largest Indian outsourcing companies like WiPro, Infosys and others.

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