NASSCOM Statement on the H-1B Program

NASSCOM, the premier trade body of the IT software and services industry in India, today sent a letter on behalf of the nine Indian companies to Senators Durbin and Grassley, addressing the issues raised by them in their letter of May 14 2007 (addressed to nine Indian IT companies) about reported fraud and abuse of the H-1B visa program, and its impact on American workers. 

 

The NASSCOM response represents the viewpoint of these nine Indian companies and the industry. The letter assures the Senators of support and co-operation by NASSCOM and its member companies on the larger issue of visa fraud and also echoes the Senators’ belief that any fraudulent activity should be dealt with in the strictest possible manner. 

 

It highlights that H-1 B visas are beneficial to both, US and Indian companies, and also to the US economy. It also draws attention to the fact that many US industry leaders have repeatedly stressed the need to raise the H-1B visa cap, which was reduced from 195,000 to 65,000 two years ago[1]. On the linkage between layoffs and the H-1 B visa, the letter notes that these two do not seem to go hand in hand as exhibited through the 2006 survey by Money Magazine[2]. It also iterates that while the number of H-1B visas is currently very limited (currently capped at 65,000 a year), the H-1B visa is not limited to the IT sector nor to Indians alone. In fact of the H-1 B visas granted in the year 2006, nearly 14,000 (more than 20%) visas were granted to American educational institutions.

 

Among other significant areas of note, one at a broader level is addressing the mistaken belief that US-India trade is flowing primarily in one direction. As has been recognised widely, India is a major buyer of a whole host of US goods and services, including aircraft, wheat, branded garments and accessories, etc. An overwhelming majority of the computers and software used by India’s IT industry as also other sectors of the economy are those produced by US companies like H-P, Dell, Microsoft, Oracle, etc. The largest outsourcing contracts from the Indian private sector, as also from the Indian government, have gone to US companies. The rapidly growing Indian economy is importing ever-larger quantities of these goods and services. Meanwhile, Indian students now form the biggest group of foreign nationals studying in the US universities, spending an estimated $ 3 billion a year. These indicators of a growing trade relationship complement the excellent political and people-to-people relationship that exists between our two countries.

The above instances indicate, very clearly that India, and its industries are strong proponents of building this further, in a mutually beneficial way.

 

The NASSCOM letter also calls for attention to the fact that there is a considerable body of evidence pointing to the contributions made by H-1B visa holders to innovation and entrepreneurship in the US which has resulted in job creation on a scale that is anecdotally well-known and widely-recognised, even though it has not been properly quantified. These contributions have come from nationals of many countries, who have worked in the US under this visa programme; needless to say, the Indian IT industry and NASSCOM are particularly happy to note the contribution made by Indians.

 

H-1 B visa holders pay taxes, pay social security and make significant contributions to the local and national economy. Additionally, in the past two years, to combat potential fraud in H-1B and L-1 visas companies have paid more than $300 million in government-imposed fees to fund a State Department/DOL/DHS effort.

 

NASSCOM letter has particularly drawn attention to the specific clause in the Immigration Bill which has been introduced by the two Senators that “prohibits companies from hiring H-1B employees if they employ more than 50 people and more than 50% of their employees are H-1B visa holders”.

 

NASSCOM and the Indian IT industry clearly see this as a protectionist measure that will affect Indian IT companies, reduce the number of H1-B holders going to the US and reduce the competitiveness of the IT industry in the US. 

 

To conclude, the letter notes that knowledge-based services trade has been a unique feature of India-US trade and NASSCOM and the industry are hopeful that the US will not specifically penalize non-US firms and continue to promote free and fair trade, so that this sector can continue to flourish as part of a broader US-India engagement.

 

NASSCOM has offered to meet and discuss on the issue with the Senators at a convenient time.

 

Background

 

The H-1 B visa programme is designed to address the skills shortage in the US and it permits global companies to bring necessary expertise to the US to fulfill contracts between vendors and customers. This is similar to the need for US and other citizens to travel for business assignments to various countries across the world including India.

 

The rules of the H-1 B visa programme allow H-1 B visa holders to change jobs within the US and the market forces thus created ensure that wages cannot be artificially suppressed but are market determined. Evidence of the fact that these visas are not used to ‘import low-cost labour” (as some commentators opine) is available from data of the visa usage in the past.

 

When Congress raised the limit to 195,000 a year in FY2002 and 2003, in both years fewer than 80,000 visas were issued against the cap, leaving 230,000 H-1 B visas unused in those two years, indicating that visa numbers are being determined by market supply and demand conditions and not by any attempt at wage arbitrage. Moreover, H-1 B visa holders pay taxes, pay social security and make significant contributions to the local and national economy. Additionally, in the past two years, to combat potential fraud in H-1B visas companies have paid more than $300 million in government-imposed fees to fund a State Department/DOL/DHS effort.

 

 

 

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[1] Industry leaders have drawn attention, in public statements, to the current skill gap in the US and the need for H-1 B visas to fulfill the demand for skilled workers. Reports have also indicated that total employment in the technology sector in the US has actually been growing over the last few years. http://www.usatoday.com/tech/techinvestor/industry/2007-04-24-techjobs_N.htm

 

[2] As per a 2006 Money magazine survey – American professionals in “Computer and Mathematical” occupations are at virtual full employment, with a low annual unemployment rate of 2.4 percent in 2006, and U.S. salaries in computer and math occupations increased by 2.4% between May 2004 and May 2005.

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