L1s Slip Past H-1B Curbs

L1 visas enable U.S. businesses to sidestep regulations governing H-1Bs.

Dec. 20 was supposed to be Michael Emmons D-Day, the day he was to lose his contractor position.

It would have been, had Emmons not quit his post at Siemens AGs Siemens Information and Communication Networks division, in Lake Mary, Fla., on Nov. 22 rather than wait to be replaced by a worker from Tata Consultancy Services holding an L1 visa. Tata is a Mumbai, India, IT services company contracted by Siemens to do, among other things, Emmons job: connecting Web sites to SAP R3 applications.

The story line is familiar: Large U.S. company outsources work to offshore service provider that uses foreign nationals with temporary work visas to take what could have been domestic IT jobs. Whats not familiar to many IT professionals is the L1 visa. Although the L category visa has been around some 50 years, it hasnt received a fraction of the attention the H-1B visa has from legislators, the media and outraged domestic IT workers, many of whom believe companies have given their jobs to lower-paid foreign IT workers brought in on H-1B visas. While many of those resentful workers have attempted to mount political pressure to reduce the number of H-1B visas given each year, no such movement has been mounted against the L1 visa.

In some respects, however, the L1 visa is easier for employers to use than the H-1B. And theres some evidence that use of the L1 visa is rising. The latest figures released by the Immigration and Naturalization Service show that the number of L1 visas granted climbed from 112,124 in 1995 to 294,658 in 2000. But they still havent caught up to the H-1B numbers: In 1995, 117,574 H-1B visas were granted, compared with 355,605 in 2000.

To IT workers such as Emmons who say they feel theyre facing unfair competition from imported workers, statistics mean little. What matters is that theyve lost their jobs, theyve had to train their replacements and many of those replacements are here on L1 visas.

Although theres little evidence that it is about to overtake the H-1B in terms of numbers granted, the L1 visa has clear advantages for employers. Technically, the L1 is an intracompany transfer visa that allows U.S. companies to import employees from foreign subsidiaries, affiliates or parent companies. One big plus for the L1—at least in the eyes of employers—is that theres no limit on the number that can be issued each year. H-1Bs are currently limited to 195,000.

Another advantage is that the L1 can be used to import large numbers of workers at one time.

The L1s relative anonymity also works in its favor, experts say. "I have not seen L1 visa use increasing, but I can see why anyone would want an escape route out of the H-1B," said Carl Shusterman, an immigration attorney in Los Angeles. "[The H-1B] is the most overregulated part of immigration law over any visa that exists."

With the L1 visa relatively easy to get, its not surprising that more domestic IT workers such as Emmons are beginning to worry about competition from companies relying on L1s. What is surprising is that some H-1B holders are also becoming concerned about competition from L1s, according to Norm Petereit, CEO and president of Analysts Express Inc., of Houston, the staffing company through which Emmons was contracting. Analysts Express, like many IT service providers, has seen its business shrink in recent years and, with it, its size. The company, which in 2000 employed 62 contractors, now has 18, 12 of whom are on H-1B visas. According to Petereit, in Stoneham, Mass., even his H-1B consultants live in fear of their contracts ending in this miserable economy, since large consultancies such as Tata can so easily bring in employees from India on L1 visas. "If [Analysts Express consultants] contracts ended today ... their concern is theyd have difficulty getting a new contract at the prevailing wage," Petereit said.

Unless the L1 program is changed, its likely many employers will continue to make liberal use of it. Software company Wipro Technologies, a Bangalore, India, division of Wipro Ltd., is a good example of why. According to Laxman Badiga, chief executive of talent transformation and external relations at Wipro, the company can get L1 visa applications approved four to eight weeks faster than it takes to process an H-1B visa. (And, contrary to rumor, Wipro pays the same payroll taxes in the United States on all employees, no matter what visa is involved, Badiga said.)

And thats helped Wipro, and other Indian contract IT services companies, steadily grow despite the down economy. According to Badiga, Wipro recruited about 2,300 workers between April and September last year.

To Wipro, said Badiga, the L1 is just one more tool thats helping the company prosper. To Emmons, however, its a "nasty tool Congress created to get cheap labor for their corporations." And to a growing number of recession-scarred IT workers, the L1 visa is just one more thing to worry about.