H-1B Visa Proposal: 'Unintended Consequences' All Around

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It didn't take long for observers -- including us and the folks who read our blogs -- to begin buzzing about the H-1B visa reform legislation proposed earlier this week by Sens. Chuck Grassley (R-Iowa) and Dick Durbin (D-Ill.).


Several of the folks commenting on our earlier post seemed to welcome the prospect that the proposal, if passed, should reduce the number of Indian companies like Wipro and Infosys that set up so-called "body shops" filled with workers hired through the H-1B visa program, train those workers in the U.S., and then send them back to India to put those skills to work there.


As detailed in a BusinessWeek article provided by one of our readers, Infosys and Wipro alone accounted for 42,000 H-1B applications in fiscal 2006. Just three U.S. firms -- Cognizant Technology Solutions, Accenture and Deloitte & Touche, all of which employ large numbers of folks in India -- placed in the list of top 10 H-1B applicants for that year.


But not everyone supports the legislation. ZDNet blogger Larry Dignan raises the objection that the bill, if passed, will simply encourage U.S. companies to send more work offshore. "Foreigners will still be hired, but not on U.S. soil," he says.


Will some companies just move the bulk of their hiring activity to India? Sure. The CEO of Cypress Semiconductor, quoted in this Reuters story, says he hires in India rather than the U.S. so he won't have to worry about "the vagaries of government decrees." Other folks, including a Microsoft executive and an attorney with a firm that represents about 50 Indian companies doing business in the U.S., support this view.


It's worth remembering, however, that not all companies have the time, money or energy to establish operations in India. You can't find every skill in India. Those that get outsourcing firms to do everything for them sometimes end up regretting it. And if you start hiring all of your engineers in India, it may make sense to start hiring executives there, too.


Dignan mentions the "unintended consequences" of the H-1B reform bill. There are also bound to be some of those for companies that make cynical decisions based mostly on their desire to slash costs and escape government regulation.