H-1B legislation to watch - What it's really about

H-1B legislation to watch - What it's really about

Summary: Both L-1 and H-1B visa law changes could impact SIs, outsourcers and moreDick Durbin is one-half of the Durbin-Grassley senatorial duo that is proposing new legislation re: H-1B and L-1 visas. Lately, a number of publications have opined about the latest proposed legislation and its impact on outsourcers.

TOPICS: CXO, IT Employment

Both L-1 and H-1B visa law changes could impact SIs, outsourcers and more

Dick Durbin is one-half of the Durbin-Grassley senatorial duo that is proposing new legislation re: H-1B and L-1 visas. Lately, a number of publications have opined about the latest proposed legislation and its impact on outsourcers. Before I get to that, let's look at what is on Durbin's site concerning this legislation:

Some claim that the H-1B program helps to create American jobs, but it is currently being used by some companies to outsource American jobs to foreign countries. Under current law, an outsourcing company can use American workers to train H-1B guest-workers, fire the American workers and outsource the H-1B workers to a foreign country where they will do the same job for a much lower wage. In fact, Indian Commerce Minister Kamal Nath has referred to the H-1B as “the outsourcing visa.”

Employers can legally discriminate against qualified Americans by firing them without cause and recruiting only H-1B guest-workers to replace them. The U.S. Department of Labor (DOL) has said: “H-1B workers may be hired even when a qualified U.S. worker wants the job, and a U.S. worker can be displaced from the job in favor of a foreign worker.” Some companies that discriminate against American workers are so brazen that their job advertisements say “H-1B visa holders only.” And some companies in the United States have workforces that consist almost entirely of H-1B guest-workers.

To address these problems, the Durbin-Grassley bill would, among other things:

Require all employers who want to hire an H-1B guest-worker to first make a good-faith attempt to recruit a qualified American worker. Employers would be prohibited from using H-1B visa holders to displace qualified American workers.

Prohibit the blatantly discriminatory practice of “H-1B only” ads and prohibit employers from hiring additional H-1B and L-1 guest-workers if more than 50% of their employees are H-1B and L-1 visa holders.

Let's look at these comments first. As to the points Durbin makes, there are a number of truths within them. Yes, there are companies that have advertised "H-1B only" positions. There have been firms who have sacked U.S. workers to make room for an H-1B worker. And, yes, there are no protections for U.S. workers who are fired to allow an H-1B worker to have the position. Finally, there can be no dispute that firms are moving jobs offshore.

So, what else will this legislation do?

According to Durbin's web site, the legislation will address a number of enforcement issues:

To address potential fraud, the Durbin-Grassley bill would give the government more authority to conduct employer investigations and streamline the investigative process. For example, the bill would:

- Permit DOL to initiate investigations without a complaint and without the Labor Secretary’s personal authorization; - Authorize DOL to review H-1B applications for fraud; - Allow DOL to conduct random audits of any company that uses the H-1B program; - Require DOL to conduct annual audits of companies who employ large numbers of H-1B workers.

The enforcement issues are certain a concern. Durbin's site goes into more detail there on the shortcomings the Federal government has in this area. Fairness requires that law & regulations be uniformly enforced. Part of the dust-up today regarding H-1B visas is the public reaction to a few, well publicized instances of abuse. Those parties who pushed the extreme limits of the H-1B and L-1 visa programs have created PR, regulatory, legislative and other problems for systems integrators, software developers and outsourcers to name but a few.

As to the effect this proposed legislation could have on firms, Indian outsourcers are already preparing to lobby their cause before Washington D.C. legislators. Smart outsourcers are already contemplating the changes this legislation will have on their business model (for more on this, see this BusinessWeek piece). But note, the big rub seems to be around the 'firms with more than 50 employees who have more than 50% of their workers on H-1B visas'. That part of the legislation is really attracting attention.

I would have thought the requirement to use a U.S. worker first and the prohibition of sacking a U.S. worker in lieu of an H-1B worker would have triggered the bigger response. I'm sure these provisions will sell well to U.S. workers/voters particularly in a down economy.

We all need to remember that this is 'proposed' not 'actual' legislation. Similar proposals by Durbin and Grassley last year did not pass. However, the difference now is that the Federal government has a high profile visa fraud case to prosecute. That case will keep this issue in the public eye and that's something that will make the lobbyists of outsourcers work a lot harder.

We'll need to watch this legislation. It could change the playing field for services both in the U.S. and abroad.

Topics: CXO, IT Employment


Brian is currently CEO of TechVentive, a strategy consultancy serving technology providers and other firms. He is also a research analyst with Vital Analysis.

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  • RE: H-1B legislation to watch - What it's really about

    There are thousands of highly skilled Americans that are unemployed that are willing to take these jobs. It's about time that we help Americans which helped bail out Wall Street. The American middle class has been devastated by these temporary Guest worker visas that were not meant for immigration purposes. It's about time we help our own American Citizens and local residents instead of bringing in cheap foreign labor. There is no skills shortage just companies that don't want to pay prevailing wages.
  • RE: H-1B legislation to watch - What it's really about

    Equally disturbing is the unwillingness of Indian IT outsourcing companies to give U.S. citizens a chance to compete for jobs on U.S. soil. This massive open discrimination, practiced by WIPRO, TATA, and Satyam where fully 90% of their U.S. based workforce are Indian citizens. These same companies are now complaining that their current growth, is affected by U.S. immigration policies, http://www.hindu.com/thehindu/holnus/006200905241114.htm.How can this be possible at a time when IBM, Microsoft, Oracle... and many others are laying off skilled hi-tech workers? How can their growth within the United States be affected when there are hundreds of thousands of unemployed hi-tech workers? It could only be the case, if these companies never intend to hire U.S. workers for U.S. jobs. It's about time that these Indian companies gave up their old-world discrimination, and started to hire fairly, without bigotry, in the U.S. labor marker. No indeed these companies are using the H-1b and L-1 visa to remove millions of U.S. jobs, at all levels, to India.
  • RE: H-1B legislation to watch - What it's really about

    Me, as a the owner of my Business should have the sole
    right to make my own business decisions. Wether i hire a H-1B over
    a Citizen or vice-versa should be my prerogative, why
    should the Govt make a decision as to how i run my
    business? would Durbin bail me out when my Business
    runs aground? I am running a for profit business venture,
    with my money invested in it, and cut throat competition, i
    am not running a charity or a non profit org. I should have
    the freedom to make decisions for my business that i deem appropriate,
    not the Govt not Mr Durbin.
    • And what type of business do you own? Grammar textbook sales?

      Quite obviously, literacy is not a requirement in your business.
      Somehow, I think your business is posting inane drivel on boards
      where the subject of H-1B visas comes up. If you are going to do so,
      it would increase your credibility if you at least checked your grammar
      and spelling once in a while. By the way, anyone who runs any sort of
      business realizes that their business is subject to government
      regulations, and at many levels. You seem to think that you should be
      subject to no regulation at all, and can do whatever you please. Since
      this is not the way the real world works, I question your connection to
      it. Did your off-shoring daddy pay you a nice shiny new quarter to
      submit your post? You should have held out for more. So much for
      your business acumen. I think your ADHD meds prescription needs a
      refill, too.
    • I respectfully disagree

      Sure, for the most part you should be left alone to run your own business. However, America isn't purely a capitalist system. Since the great depression, the government has put measures in place to try to avoid situations which cause mass unemployment, homelessness and hunger in our country. Even with the latest downturn, we are a fairly affluent society and we should be able to afford to make life in our society less harsh. In addition to rules that govern the markets, how banks operate and securities are bought and sold, the government has also created a framework on how employees can be terminated. For instance, it's illegal (an unethical) for a company to terminate it's employees right before they are eligible for their pension. In this case it will be illegal to displace a US worker for an H-1B worker.

      While this might seem meddlesome, it's not. Before H-1B's were around, you had to be a citizen of the United States to work here. The purpose of the H-1B was to bring in special workers who had skills that were either not available are very scarce. The new law is going to simply require companies to use H-1B for that original purpose.
    • If you can't pay a decent wage

      Then you shouldn't be in business, period. You as an American have a DUTY to your countrymen first, and to foreigners second. If you choose to hire an Indian for no other reason than they are willing to work for less than an equivalently-skilled American, then you are a traitor and don't deserve to be a business owner, because you clearly are looking for work on the cheap.
      • Not a Wage issue

        Why should i be forced to hire a 30 year Iraqi Vet with war credentials,
        over a bright young 4.0 GPA international student with a MS in CS,
        whom i can legally hire through the H-1B, for a Tech Startup?

        I would hire a Citizen over an H-1B, only if i feel he brings on more to
        the table, not just because he's a Citizen, we're not living in a socio-
        capitilistic economy.

        How many of you whining in here buy the more expensive American
        made products over the foreign made ones? hell i am sure most of
        you folks are pretty darn happy driving your Japanese cars over GM
    • Government vs Business

      Government does not understand business. Because government does not understand business it ends up doing really stupid things that make problems worse.

      Business sometimes gets so focused on making a profit that it loses perspective and concentrates on short term objectives. Businesses in the current economy will do a lot to survive the short term problems but end up working against its own self interest for longer term planning.

      Part of the problem is that both business and government use pragmatic solutions that ignore community needs. H1-B visas were supposed to help business when local employees lack the knowledge or experience for certain tasks; but H1-Bs are abused by focusing not on the skill/knowledge but on cost.

      Ford became a big company when Ford chose to pay his workers enought so that they could afford the products they made. This is an example of longer term planning. If companies squeeze all the profit possible out of the business to the point where the employees barely earn enough to survive then the company loses local business and also hurt the company.

      People tend to look to government for relief but government makes matters worse because of a lack of business sense in the law makers leads to bad laws. With enough bad laws then businesses gets caught up spending more money to assure complience with laws and losing more of possible profit.

      • So are you saying....

        ...because Govt might pass a bad law, that nothing should be done about this?

        Bottom line is if there were no regulations in place, companies would do whatever they pleased and we'd still have things like the child labor like we had in the early part of the last century.
        Wintel BSOD
        • So What I am saying...

          is that government is also part of the problem. It not government might pass a bad law; it is more likely that government will pass a band aid fix that helps a few but fails most.

          You are correct in pointing out that companies would do what ever they want if it were not for regulations. Most companies are good about taking care of business and treating their customers well so that they get more business from those customers. Bad companies are the ones who have to be controlled by government regulations.

          Traditionally we look to the government for leadership and solutions; but the problem is that government rushes to help and fails to properly deliborate a good solution. I am talking about governments in general.

          The real solutions need to come from consumers, customers, business partners and established business practices. If the consumers and customers stop tolerating bad behavior by companies we would not need regulations except for the most egregious cases.
          • Well that's all fine and nice

            [i]The real solutions need to come from consumers, customers, business partners and established business practices. If the consumers and customers stop tolerating bad behavior by companies we would not need regulations except for the most egregious cases.[/i]

            But it's the Federal Government that grants H-1B's, not the corporations or the outsourcers. Ya know, the one's that are abusing this problem. It's within the scope of their responsibility.

            I do think the bill before Congress doesn't go far enough though so in that sense, I can see the present proposed legislation as being more of a band-aid fix (as you describe) than anything.
            Wintel BSOD
      • Something to think about

        I am all for the hiring of local talent and am in the same boat as many of you.

        But....we need the right amount of government regulations and taxing. Right now it is getting out-of-hand. The more they spend and tax the more expensive we employees become. We need tort reform as well. Now with universal health care the government is going to dictate what insurance employees must have. We are losing too many jobs abroad because instead of working with businesses our governemtn chooses to dictate to them. We are getting too expensive. Unlike the government they cannot simply tax more.

        Trickle-down economics works....and now when times are bad they trickle down as well.
        • Trickle Down Works?

          So, Madolf was just "trickle down" in extreme? I'm both old enough and grew up poor enough to remember when many states had "consumer" and "worker" laws that attempted to head off the most egregious examples of greed and white-collar crime. After too many years of buying Congressmen and Congresswomen, we now have an FDA that is ineffective, laws that help the rich get richer at everyone else's expense, and blind putzes like you still pushing "trickle down" Grow up!
    • I am with you

      Let's get rid of cheap politics and too much government meddling to protect only a few incompetents, who are projecting the recession as a problem due to H1B. The corporate is taking advantage of this false propaganda, and lowering salaries or cutting jobs. To protect salaries, I invite the powers that be to publish data depicting how much software/IT job is affected and in what way.
      quark s

    First, it's 85,000 per YEAR not 65,00 and their are many exemptions to this cap so we actually DON'T know the exact numbers!

    Second, SOCIALIST programs like the H-1B american worker replacement program have one common result. By artificially lowering the price of a commodity you discourage production. (More H1-B's = lower pay = less americans entering field)

    Third, the vast majority of these cheap imported workers go to a handfull of large bodyshops like Wipro, Tata, and Infosys that undercut American workers and are used to FACILITATE off-shoring through knowledge transfer(American workers train foreign workers to allow off shoring).

    Fourth, H-1B program is a poster child for FRAUD, with recipients PAYING for jobs, falsifying credentials, or just plain lying to clients, and employers.

    Fifth the program in inherently sexist(almost %100 Indian male under 30) racist(Indian bodyshops do not hire Europeans Africans Americans etc) and ageist(what other field are you to old to hire at 35?)

    The constant barrage of falsehoods, outdated or incorrect statistic, biased studies, propaganda and lies from the corporate lobbyists and special interests who have agendas contrary to the good of the USA and its citizens is starting to show itself for what it is, TREASON.
  • RE: H-1B legislation to watch - What it's really about

    Obama's a socialist, so I don't see any problem with his signing this type of legislation. In this case, I think it's about time something was done about outsourcing American jobs. I am tired of conference calls with difficult to understand Indians.
  • RE: H-1B legislation to watch - What it's really about

    I'm hopeful that 8 years of activism will finally pay off. The offshoring lobby (NASCOM, ITAA, etc) are about to get served their just deserts.

    Many of the companies they represent weren't operating in the spirit of the law, and constantly seeking loopholes. Some of the worst abusers haven't violated a single law. Hopefully loopholes will be closed and the H-1b visa stops becoming the "offshoring visa".

    To the business person who believes he can hire whomever he wants, you can - as long as they are authorized to work in our country. It's up to our ELECTED representatives to decide who you can hire. It's called a democracy, silly. There are some fascist nations you may want to look into doing business there. You can probably do whatever you want as long as you pay off the right people.
  • Thank you Sens Durbin/Grassley --- Long Overdue...

    Wish I lived in one of your states to give you my vote...
    Plain Logic
  • S.887 = No More Human Trafficking

    Thanks to human traffickers like Infosys and WiPro, and their shills in the media, American I.T. vets have to compete on price alone with the likes of their young dowry dogs. What, a programmer is like a old pitcher, who is put out to pasture and replaced by a punk right out of the minors? Get a clue, shills and collaborators.

    As for "wage arbitrage", ten years ago I made $80-$100/hr. as contract programmer for Fortune 500 companies. But now that millions of H-1Bs and L-1s have flooded the market, the prevailing wages have been driven down.

    So instead of vets like me making $100/hr and more, our 20 yrs plus experience at some the countries largest companies means nothing. Even though we have kept our skills current (I am not exactly a COBOL programmer), none of that matters when there are 500 million twenty-somethings with phony resumes and no experience ready to always work for a buck less than the next guy.

    That is why we hate the scabs and the pimps like WiPro and Infosys that wh0re the scum out. In the gladiator pits of corporate I.T., we kick their a$$ on a daily basis, those of us that still have jobs, and yet we still have to compete on price alone. We bring to the arena a wealth of experience, solid communication skills, and the lessons of 20 years of software development.

    The jackals bring a pair of shower shoes, a greed for gold, a desperate need to command a large dowry, and all that a 3-week programming boot camp can teach you. Good thing for them that they have a Desi project manager to cover for them or another Indian lead that can hide their coding screw ups.

    If S.887 doesn't pass, there will be retribution.
    • Tone it down a bit

      I am sympathetic to nearly all of your claims, but you are not going to accomplish anything this way. I have met some excellent programmers with H-1B Visas from India and Belarus. I have worked with an excellent PhD student from China who was busy faxing after the Tienanmen Square Massacre. They are as diverse as we are.

      Consider the conditions of the H-1B Visa workers. They are essentially indentured servants to the company that brought them over. They are supposed to be paid prevailing wage, but that is often for someone more junior than the foreign worker. I think that the law needs to be changed so that the H-1B Visa recipient is free to change employers at any time.

      If we, as a country, need more workers in a field, then we should have the foreign nationals enter the market, not take a particular position. The current system is a racket that allows the WiPros of the world to profit from pitting H-1B workers against exiting US workers (both citizens and legal residents). This harms all of the workers, but benefits the employers and the body-shop houses.

      If you are going to talk about retribution, you had better be writing to your members of Congress first. Write now.