The 50/50 Rule for H-1B Visas Could Lead to More U.S. IT Jobs

By Donald Sears  |  Posted 2010-06-21

A recent article on how one Indian outsourcing company is watching pending visa legislation shines a light on the challenges faced when economies go sour, politicians become more protectionist and growing businesses expand their foothold in the United States, yet have a large foreign-worker presence here.

A rule known as the 50/50 rule in a piece of 2009 Senate legislation (as well as a clause in the House in the Comprehensive Immigration Reform ASAP Act of 2009) seeks to balance out the numbers of foreign workers and U.S. workers in companies that employ more than 50 U.S.-based employees. If a company is using H-1B or L-1 visa workers or both, the legislation would limit the number of those workers to no more than 50 percent of the company's U.S.-based workforce.

For a company like Patni Computer Systems, based in Mumbai, India, its ever-expanding North American presence is having a difficult time predicting what countries its workforce will be coming from in the future. Roughly 2,300 of its 14,000 employees are based in locations in Massachusetts, Texas, Indiana and California.

The company is growing, but the 50/50 rule could be a challenging one to its bottom line, as service provider businesses make money on labor margins. With a larger pool of American technology workers available due to the recession, this could be the right time to be working for an offshore-based company.

The president of Patni Americas, Naresh Lakhanpal, told the company plans to increase its American workforce.

Lakhanpal says Patni needs to ramp up its hiring of American-born U.S. citizens now so that the company can proactively get its ratio of employees who are American citizens vs. foreign nationals closer to 50/50, from 60/40 or 65/35.

"A 50/50 visa rule would be a challenging short-term issue for several offshore outsourcers, many of which staff their U.S. locations with 75 percent-plus H-1Bs and L-1s," says Phil Fersht, founder of outsourcing analyst firm Horses for Sources. He notes that such a restriction would decrease offshore outsourcers' margins or drive up their costs.

"It would definitely even the playing field between [offshore outsourcers and] those Western providers with a larger onshore U.S. citizen presence within their delivery centers," he adds.

The House clause and Senate bill have not been brought to a vote yet.

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