Indian IT firms hire few U.S. workers

Indian business group blames "skills shortage" for low hiring rate

The Confederation of Indian Industry (CII) surveyed Indian companies across a variety of industries and found that in the majority of industry sectors, about 80 per cent of their U.S. workforces were local hires. The exceptions were in the IT and business-process outsourcing (BPO) industries, where Indian firms relied mostly on visa-holding workers.

The IT and BPO industries "seem to exhibit less dependence on the U.S. workforce," the CII report said. "This may be explained by a skills shortage in the U.S., as well as the availability of a highly qualified Indian workforce that dominates the IT and BPO sector not only the U.S. but also globally."

The CII study illustrates the contributions that Indian businesses make to the U.S. economy. But a 10 per cent hiring rate of U.S. workers by Indian IT firms also puts a bright line around the need of Indian companies to have ready access to the H-1B and L-1 visas. It also exposes their potential vulnerability to congressional action.

Indian companies are particularly worried about longstanding legislative efforts by U.S. Sens. Dick Durbin (D-Ill.) and Chuck Grassley (R-Iowa), that would limit H-1B holders to 50 per cent of their U.S. workforce.

Among those at the forum was Meera Shankar, India's ambassador to the U.S., and lawmakers including U.S. Rep. Jean Schmidt (R-Ohio).

Schmidt praised Tata Consultancy Services, which employs about 450 people at its North American Delivery Center in Milford, Ohio. "We found a partner with Tata," she said.

Former Ohio Gov. Ted Strickland, who lost election in November, championed tax breaks for Tata to build its delivery center in Ohio. But last August, Strickland, a Democrat, facing a close race against Republican John Kasich, issued an executive order prohibiting state agencies from hiring any firm that sends work offshore . He said offshore firms posed "unacceptable" security risks. Strickland lost to Kasich and the executive order ended when he left office.

In an interview following her talk, Schmidt was asked how she reconciled the differences between those who want the offshore outsourcing business and those who are fearful of it. "We're global and so we have to look - is it going to be a plus for my community, for my state and for my country? And if that's the case, I think we need to move forward and try to make it work," Schmidt said.

U.S. Rep. Joe Crowley (D-N.Y.), co-chairman of the the congressional Caucus on India and Indian-Americans, was asked in an interview about his outlook on the effort by some lawmakers to increase the H-1B cap. He plans to support a cap increase but was doubtful it would happen as part of comprehensive immigration reform.

Nonetheless, Crowley said, "I think we can make some adjustments" to the visa, which he said was needed to help retain advanced degree graduates from U.S. universities.

Encouraging foreign graduates, particularly those who leave with advanced science, technology, engineering and math-related degrees, to remain in the U.S., has been cited by President Obama as a policy concern. But it is also a different issue from the one underlying last week's forum.

For India, free trade means free movement of services workers in an out of the U.S. Indian businesses are trying to convince lawmakers to see this relationship as mutually beneficial, with both gaining from the benefits of trade. The CII says 35 Indian firms in all industries have created some 60,000 jobs in the U.S.

But trade relations, at least as far as India's IT industry is concerned, is on an unsteady course. Congress recently increased fees for H-1B visas by $2,000, and Indian IT companies are facing increasing visa processing requirements, said Som Mittal, president of the National Association of Software and Services Companies (NASSCOM), India's leading IT industry group.

Indian firms are being hurt by "excessive denials" of visas and burdensome requests for evidence in support of visa petitions, issues that immigration lawyers in the U.S. have also complained about, Mittal said.

"At a time when we are opening up borders for trade, the free movement of people does become a big irritant," Mittal said. The problems with the visa are coming at the same time that U.S.-India trade is increasing, he said. "These issues are becoming very sore points in discussions."

Proponents of offshore outsourcing argue that the ability of U.S. companies to shift work to lower-wage countries allows those companies to reinvest the savings and create other jobs. Opponents of offshore outsourcing say it leads to job losses and a discouraging future for IT, particularly as more complex work moves offshore.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed. His e-mail address is pthibodeau@computerworld.com.

Read more about outsourcing in Computerworld's Outsourcing Topic Center.

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Patrick Thibodeau

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