Tech and outsourcing majors are getting ready for a surprise visitor at their American offices?US Citizenship & Immigration Services (USCIS). The agency that administers the H-1B and L-1 visa programmes has started making surprise audits of the US workplaces of companies that sponsor H-1B and L-1 visa holders.
As it audits worksites to check for any violations, USCIS is also tightening clamps on visa issuance. Rejection rate of applications for H1B and L1 visas are learnt to have gone up this year. Clearly, the US has stepped up its anti-fraud enforcement efforts for temporary worker programmes. Indian as well as American tech and outsourcing companies seem to be in a wait and watch mode to check if more measures to tighten immigration procedures are on their way.
Industry insiders feel this tighter scrutiny of visa issuance is one of the prime reasons that H1B visa is unlikely to reach its mandated cap of 65,000 before the start of the fiscal year 2010. Four months after USCIS started accepting petitions for the much sought after visa, nearly 20,000 slots are lying vacant. For the first time in several years, the demand has slowed down. Applications would outnumber the quota within days and USCIS had to resort to a draw of lots almost every year. In 2007 and 2006, the H-1B cap in the general categories were reached on May 26 and July 26 respectively, while in 2005 it was reached on August 10.
While the H-1B and L-1 Visa Reform Act, introduced by Senators Chuck Grassley and Dick Durbin, remains in Congressional committee, non-immigrant visas are becoming a thorny issue again. Whether the Visa reform Act becomes a law or not, direction of the US politics makes it clear that not only will there be protectionist measures but auditing of visa procedures will get tougher.
While Indian and American tech and outsourcing firms prefer not to talk of non-immigrant visa woes caused by tightening scrutiny, many have been caught offguard and are still struggling to adjust to the tighter scrutiny and a longer visa issuance cycle. ?Indian firms have no choice but to adjust and adapt to the changing reality. Delay or rejection of visas could lead to a business loss or opportunity loss and sometimes add to costs on the bench,? says Pavan Duggal, Supreme Court advocate. Several US-based attorneys like Murthy law firm are organising conferences for their clients to help them prepare for the increasing frequency of visits by officers from the USCIS Fraud Detection and National Security Office.
These audits will be funded by millions of dollars USCIS has received over the last decade from the fraud fee in H1B programme, point out lawyers. ?This new programme involves hiring of a private contractor to send investigators out to conduct 2,50,000 sites visits to H-1B employers to verify if the H-1B employee is working at the employer and performing the work as outlined in the H1B petition,? says San Deigo-based immigation lawyer Jacob Sapochnick in his blog.
The apparent reason for the tighter scrutiny is the increasing abuses in the H1B programme. One in five H1B visas were found to be fraudulent or contained some form of technical violations, according to a study released to the members of the US Senate Judiciary Committee last year. While 13% involved fraud, 7% had technical errors. Given the significant vulnerability, USCIS is making procedural changes, which will be described in a forthcoming document, the report had warned.
But another very serious concern is that many of these H-1B holders are going to displace American workers or be placed in positions where unemployed American workers might otherwise have an opportunity. The H-1B visa programme has been a hot-button issue in recent years as groups like the Programmers Guild and WashTech, which represent US tech workers, allege it is being abused, resulting in mistreatment of foreign workers, wage depression, and the displacement of American workers. IT labour unions like Alliance@IBM and lobbying groups such as Bright Future Jobs have been quite vocal about how the non-immigrant visa programmes cause harm to the US IT workforce.
Most companies have worked on changing their business model to align with the changing realities. In fact, many like TCS have made public statements about not applying for any fresh H1B visas. Infosys, which typically holds the largest number of H1B visas among Indian companies, also claims to be reducing the number as a part of the company?s policy to reduce its overseas bench strength.
?Indian companies have got used to dealing with visa issues and have perfected their business model around them,? says Everest India CEO, Gaurav Gupta. As Indian companies cut down the number of visas they have applied for, they are bringing back their staff to India. ?We have seen this in past that when it becomes difficult to get H1, clients are actually willing to come to India and work with us in India,? says Kris Gopalakrishnan, CEO, Infosys, who has been detailing the company?s three-pronged strategy to handle these issues in calls with analysts.
As the industry gets ready to learn tricks to overcome the increasing number of roadblocks, local hiring in US and offshoring is likely to increase. Leading IT research firm Gartnerbelieves offshoring operations will grow.
Today only 15% of IT services use the offshore model, it says. In 2013, 25% of outsourced services will be offshored and by 2018, that number will jump to 40%, according to its predictions. Software industry body Nasscom, which has just lowered the growth forecast for this fiscal year to 4-5% is predicting revenue of $225 billion by 2020.
Meanwhile, H1B sponsors are already getting advice from various attorneys on how to handle the USCIS audits. The frequency of these visits is on a rise and the surprise element could intimidate the employees and the employer, say visa lawyers. USCIS assessors come with a checklist of questions designed to confirm the identity of the employer who applied for the visa and the visa beneficiary and to verify that both are in compliance with the terms and conditions of the visa. The compliance with investigation is voluntary, according to leading tech companies but their attorneys are advising visa sponsors to co-operate. Investigators could request to interview the petitioner, review documents that support the visa application, and enter the workplace to confirm visually that the visa recipient is employed according to the terms and conditions of the H-1B visa.
In anticipation of potential visits, several companies have started documenting information to prove that they determined the prevailing wage for the occupation in the area and that the H-1B salary exceeds the market wages and the actual wages it pays to other employees in similar roles. They are also documenting factors?experience, qualifications, education, job responsibilities?considered in determining the wage. Law firms are also training them on what to do if the officers want to speak with the employees, the authority of the officers and the potential consequences of any lapses.
As the US government steps up workplace investigations and raids allegedly noncompliant worksites, the investigations are not limited to locating undocumented workers. The government is also targeting and investigating employers who are believed to be in violation of the requirements of employment-based immigration sponsorship. Along with protecting American jobs, immigration enforcement has been tied to national security concerns especially after the Mumbai terrorist attacks. ?A big part of greater scrutiny in US visas might be because of security concerns,? confirms Ernst & Young India tax partner, Sonu Iyer. ?Higher scrutiny seems to be coming from a mix of fight against terror and some bit of protectionism,? adds Pavan Duggal.
At the same time, the Buy American and Hire American campaign might ease out a bit, if America generates more tech jobs like last month on a regular basis. Statistics from the Depatment of Labour show that IT-related employment gained in July after posting five straight months of losses. Net gain of 7,400 IT jobs could help calm the ire of the protectionist lobby, despite the fact that the US economy on the whole lost 2,47,000 jobs.
Industry is surely hoping that these new IT jobs could help reduce the negative sentiment and hence lobbying against Indian techies. Overall visa reform might not have much of a chance, at least in the short term, in a legislative agenda that includes healthcare, climate change and regulation of banks and financial markets. Nevertheless, outsourcing majors are getting ready for a series of immigration clamps.