Impact of H-1B Provisions in Stimulus Package Still Unclear


Earlier this week I wrote a post wondering whether the federal government should attach any strings to bailout money given to U.S. companies in light of the fact that some banks are reportedly planning to increase the amount of IT work they send offshore, even as they cut large numbers of jobs here in the States.


I wondered: Do companies accepting bailouts have a responsibility to get work such as merger-related integration projects done as cost-effectively as possible, even if it's not by workers in the U.S.? While I don't know the "right" answer (I'm not sure there is one), I do think that companies receiving bailout or stimulus funds should have to be more forthcoming about their global activities. As I've noted before, it's surprisingly hard to get solid data on the amount of work companies perform offshore. Quite frankly, the lack of reliable information just makes offshoring opponents' arguments seem more convincing. What are companies trying to hide?


There's a similar dearth of data regarding the number of H-1B visas used by American companies. Like offshoring, H-1Bs are a highly charged issue, with visa opponents saying that U.S. companies use them to employ foreign workers at salaries lower than those earned by U.S. citizens with similar skills, and proponents insisting that H-1B visa holders are exactly the kinds of talented workers the U.S. needs to remain competitive.


The government has already applied some restrictions to companies accepting handouts regarding H-1B visas, reports the New York Times. A provision in the economic stimulus package limits the number of of H-1B visa holders such companies can hire. As explained in this Network World FAQ, the provision applies to companies receiving funds from the Troubled Assets Relief Program (TARP) with H-1B holders accounting for at least 15 percent of their workforces. The provision stipulates they prove they have diligently recruited American workers for positions and that they haven't replaced a U.S. citizen when hiring a foreign national.

The vague wording of the provision, coupled with the increasing scrutiny given to how they use their TARP funds, is making U.S. financial institutions leery of extending job offers to H-1B visa holders. Bank of America has rescinded a small number of offers to students that would have needed H-1B visas for employment. Several banks, including JP Morgan Chase and Citigroup, declined to comment for the story. According to the Times,150 H-1B visa applications were approved for Chase employees last year.


U.S. business schools worry that uncertainty over visas could hurt their enrollments. "It gives an advantage to international institutions over American institutions," says Glenn Hubbard, the dean of Columbia University's business school. A possible chilling effect can be seen in the number of student visa applications processed by the U.S. Embassy in India between Oct. 1, 2008 and January 2009. According to an Economic Times story, such applications are down by 14.3 percent.


Financial institutions employ far fewer H-1B workers than technology companies like Microsoft or Cisco Systems, both of which were among the top recipients of H-1B visas in fiscal 2008, according to a Washington Technology article. Sitting atop the recipient list were Indian service providers Infosys Technologies, with 4,559 visas; Wipro, with 2,678 visas; Satyam Computer Services, with 1,917; and Tata Consultancy Services, with 1,539. In comparison, Microsoft got 1,037 visas, up from 962 in fiscal 2007, and Cisco got 422 visas, up from 324.