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L-1 visa alarm for Indian IT

Negative sentiment against Indian workers on temporary work visas has grown over the years but it has spiked under President Barack Obama who often speaks in protectionist terms when talking of saving American jobs.

His mantra has been “reward insourcing, punish outsourcing.” Picking up the baton, the Democrats in the U.S. Congress have zeroed in on Indian workers on H-1B and L-1 visas for skilled professionals.

Many charged hearings have been held by them over the years, on how large Indian IT companies are abusing the system by displacing American workers with low-paid Indian substitutes.

At a Senate Judiciary Committee hearing last Tuesday, the tone was decidedly hostile. Committee Chairman, Charles Grassley, a Republican, came out against the H1-B programme, saying it  displaces American workers. Senator Jeff Sessions, chairman of the immigration subcommittee, compared today’s technology moguls to the steel and oil giants of the last  century. “They all want more profits and lower pay for workers. That’s just what they do,” he said.

Although the Senate voted for a big increase in the number of H1-B visas in 2013, some senators have begun questioning the move as reports of abuse  of the visa system gain ground. The AFL-CIO, the largest labor union, has kept up a steady campaign against the H1-B programme and wants additional conditions in the law that foreign workers are not replacing American employees.

On the other side is the technology industry, which is pushing to raise the cap on H1-B from 65,000 to 195,000 and eliminate the cap on those who get advanced degrees from the U.S. in science, technology, engineering and math or STEM fields. The bill has bipartisan support as of now but that could change.

The message that the “foreigners are coming” has percolated throughout the system, especially after the devastating lawsuit against Infosys for visa fraud by Jack Palmer, which resulted in a $34 million settlement  in 2013. The result is systematic visa denial for Indian workers.

According to a new report by the National Foundation for American Policy (NFAP), a non-profit advocacy group, 56% of Indian L-1 applicants were denied a visa between 2012 and 2014. The L-1  allows a foreign company to bring one of its own employees  with “specialized knowledge” to the U.S. for a maximum of  five years while under H-1B, companies can bring qualified  foreign workers from a general pool.

The report called the denial rate for Indians “remarkable” compared to the average denial rate of 13% for all other  countries for the same period. For example, only 4% of Canadians were denied the L-1, even though Canada filed the second highest number of petitions (10,692) compared to 25,296 applications filed by Indians. The Chinese suffered denial at 22%, the British at 16% and Germans at 15%.[1]

The NFAP analysis is based on information from the U.S. Citizenship and Immigration Services (USCIS), obtained in response to a request under the Freedom of Information Act.

Interestingly, the rejections increased even though the number of overall applications  dropped by 23% between 2012-14. Additionally, the rate of denial for all countries was 35% in 2014 compared to only 6% in 2006. The sharp increase to 22% came in 2008— the year Obama was first elected. It was also the big bad year of the recession and economic uncertainty all around.

But the law itself did not change, raising questions about what standards the USCIS used to determine acceptance and rejection. The USCIS was supposed to develop new guidelines in 2012 to better define the criteria for “specialized knowledge” for L-1 visas but it never did. Employers and their lawyers have reported arbitrary actions and “inconsistent decision-making.”

Blake Chisam, a former chief counsel for the Ethics Committee for  the House of Representative, says in the report that the  “costs and consequences to global businesses of having to  guess – and second guess – about how the agency (USCIS)  will act with respect to the specialists who drive their  businesses is significant.”

The denial is accompanied by an increase in “requests for evidence” from companies for additional information. Fulfilling the high number of requests causes interminable delays and raises costs, according to the report. A whopping 65% of Indian petitions had “requests for evidence” attached to them compared to 3% for Canadians and 35% for the British.  The end result is often that a company cannot complete a contract in time and the job goes to a competitor operating wholly outside the United States, beyond the reach of USCIS.

According to an estimate by the U.S. Chamber of Commerce, legal fees to comply with the many requests for evidence on both H1-B and L-1 visas have placed an annual burden of nearly $21 million on companies. Stuart Anderson, executive director of NFAP, says a major consequence of USCIS actions is jobs leaving the United States or companies becoming less  interested in investing there in the first place to avoid  “the difficulties of the U.S. immigration system.”

The implications of the current immigration debate and the new report are hold immense challenges for the Indian technology industry. NASSCOM, the main industry association for the Indian IT industry, has said in the past that it considers visa restrictions “discriminatory” and believes they undermine the contribution that the Indian companies are making to the U.S. economy by paying taxes and social security, creating jobs and transforming organisations to make them more competitive.

Seema Sirohi is a Washington-based analyst and a frequent contributor to Gateway House: Indian Council on Global Relations. Seema is also on Twitter, and her handle is @seemasirohi

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[1]. National Foundation for American Policy “L-1 Denial Rates Increase Again for High Skill Foreign Nationals.” March 1, 2015. <http://nfap.com/wp-content/uploads/2015/03/NFAP-Policy-Brief.L-1-Denial-Rates-Increase-Again.March-20151.pdf.>