U.S. IMMIGRATION POLICY - When will we see an H-1B philosophy in India?

The U.S., a nation of immigrants, has modified immigration laws every decade or so to reflect the needs of American economy ever since 1891 when the first Immigration Act was passed. Traditionally immigration policies were meant to serve the needs of an insulated, domestic U.S. economy; however the 21^st century has created a new challenge. In order to compete globally, U.S. now needs to design policies that respond to both, global and domestic economy, rather than only domestic economy.

The centerpiece in this new era of immigration is the H-1B visa for specialty workers, started in 1990, which is heavily used by U.S. companies to import skilled IT staff. Many of these entities are actually U.S. arms of foreign companies who provide a range of IT services to their clients in the U.S. The letter by senators Durbin and Grassley is a simple exercise in determining if these companies are complying with U.S. law, and such letters are common practice when ever a lawmaker desires to gather more information.

The facts will be known soon once the nine companies submit the details they have been required to furnish, and we can probably expect that all of them have been complying with laws. However, the letter also serves to investigate to what degree Indian firms have taken advantage of the loopholes in a broken system. The core question relates to wages – are the H-1B employees being hired on a similar salary as their American counterparts? The current laws are framed such that companies can be in compliance, yet can pay a lower salary to the new hire, thus the question for these nine Indian companies is not whether they are wrong in law, but to what extent do they “under-pay” their hires? This behavior can be exhibited by any company, be it of Indian origin, or a hundred year old American company, so there is nothing “Indian” about this.

If, as is expected, the targeted Indian firms have been in compliance with law then there can be virtually no penalty since they have not broken any law; but yes if any one has been under-paying then they can expect immense pressures from the American public, their customers, and U.S. lawmakers who will ensure that wages are now at par with U.S. economy’s statistical averages. The data collected by the U.S. Department of Labor is inadequate and is not verified sufficiently – thus a scientific analysis so far has not been possible, though reports by some advocacy groups say that average H-1B salaries are about 20% lower than their American counterparts.

The complicated nature of U.S. immigration debate is further highlighted when critics argue that U.S. policy should attract long term talent, and blame the H-1B program of not helping America’s competitiveness by citing the fact that Infosys applied for 22,590 H-1B visas and requested 99 green cards in 2006, while Wipro applied for 19,450 H-1B visas but only 69 green cards in 2006.

While we await the findings of the letter, India will be well served to keep four things uppermost in mind. One, hopefully these firms have been in legal compliance, however if they have indulged in wage arbitrage then in future they will need to rectify their wages. Indian firms need to be globally competitive, and that includes playing by fair rules in any market they operate, be it in India or in the U.S. Two, this whole matter is currently under Congressional purview, and U.S. administration has little or no role, thus any arguments that are made should reach the U.S. lawmakers rather than the administration. Unless the industry complains to the Indian government and then the matter is taken up with the U.S. administration.

Thirdly, India needs to pay acute attention to WTO Mode 4 negotiations to ensure that Indian services companies operate with utmost ethics and are not discriminated against in any market. And, lastly, most urgent, this is a wake up call for India to learn from the example of the U.S. which goes to such lengths to attract talent; and think about its own policies for attracting worldwide talent and building a competitive Indian economy – an H-1B program in India?