Posted by Stephanie Moore on April 10, 2012
Ever since offshore outsourcing became popular, employment visas — specifically the L1 and H1 visa — have been a source of debate. Indian vendors have needed them to make their offshore model work. US technical employees have feared them because they threaten to take away their livelihood.
Well, here we are in 2012 and the debate is hotter than ever. The offshore vendors, attempting to accommodate tech-savvy clients’ agility and context requirements, require even more staff onsite in the US. Simultaneously, the US government, struggling to combat unemployment, shore up the dwindling middle class, and get through the 2012 election cycle, is cracking down on visa enforcement. For Forrester clients, this situation has become problematic as their vendors fail to land resources for mission-critical projects and the clients themselves are then compelled to use local contractors to fulfill their onsite needs (one reason staff augmentation vendors are seeing a big uptick in growth).
The most recent visa flare-up is related to the L1 visa and a letter that the US Chamber of Commerce and a group of Indian and US companies wrote to the White House on March 22, 2012. For the sake of context, the L1 visa, if abused, is particularly dangerous for American workers because it allows offshore vendors to bring non-US staff to the US and pay them home-country wages. So, for example, a developer from India on an L1 visa in Manhattan can legally be paid $7,000 per year, even if an American developer or an H1B visa developer (who must be paid prevailing US-wage) would be paid closer to $70,000 per year. The problem is that the L1 visa was meant for intra-company transfers (e.g., Acme Company France to Acme Company US), and yet outsourcing companies have found ways to use them for client projects and thus avoid paying prevailing wage for some IT roles — effectively wiping out the competition for US staff or for legitimate H1B staff.
In the US Chamber of Commerce letter, signatories including outsourcers TCS, Wipro, Accenture, and Cognizant implored President Obama to make it easier for them to get L1 visas. The letter suggested that the recent delays and rejections in L1 visa processing (as the government attempts to better enforce visa rules) is making it more difficult (and presumably more expensive) to conduct business in the US due to the lack of qualified local workers. If this is true and no US citizens are currently available for high-tech work, should the government allow the vendors to bring in staff at any wage rate under any conditions? Is that fair to anyone including: 1) the L1 worker making $7,000 per year on Wall Street while his or her peers are making 10 times that much, or 2) the out-of-work US programmer looking for a job? Wouldn’t a better and more productive approach be to do some training — just as the vendors in India do all the time? Infosys, for example, spends about $184 million every year on state-of-the-art training for its staff in India. How many US- or India-based companies, who claim they are desperate for US-based engineering skills, can say they invest similar amounts in training US resources?
Here’s my take: The US clearly needs more native technologists, rather than more visas, to effectively participate in the global economy. Offshore outsourcing should be just that — outsourcing done using workers in foreign countries, not foreign workers doing work on US soil. While every offshore development team requires an onsite component, that onsite component could be provided by American citizens — who naturally have more contextual business understanding, thus satisfying one of clients’ most pressing needs today.
Forrester clients should act now to help solve this problem. Encourage your vendors to hire local for local positions and invest in training those locals. This will solve your context and requirements problems, your visa problems, and the improvement in productivity will make up for any price increase related to local labor.
In future posts, I will be exploring this issue in greater detail. I want to know what readers think of this issue. Are you struggling with visa issues?
Search Forrester's Blogs
Free On-Demand and Live Events
Latest events from Forrester analysts, online and in person »
Your Customers Are Powerful
Become customer obsessed to gain competitive advantage »