Welcome to Part 3 of my series of posts on the current Recession. While not strictly essential, you may want to look at Part 1 and Part 2 before you read any further.

In all the major newspapers in the country, one important item in the news is the big hoopla about Senators Grassley and Sanders who introduced an amendment in the US Stimulus bill that – simply put – seeks to ban all stimulus payment recipients from employing any workers with H1B visas. Why all the ire against the H1B visa in particular? Why the singling out of Indian companies especially? Before we pass judgment on the Senators decisions,  let’s consider the reality – as they see it.

Here are some details about the H1B visa that the common man does not know (important points highlighted). Firstly, the H1B visa is meant for American companies  to fill temporary shortages in their workforce. The workers hired, if found suitable and willing, would then embrace the American way of life and elect to settle down in the US for good. To facilitate this, the American employer would sponsor a Permanent Residency for the worker (aka the “Green Card“) and thus, the US would gain another skilled worker, thus enriching it’s brain power, the worker would gain citizenship of the United States and the employer would gain a happy employee – a win-win situation for all.

Now, let’s see how the H1B is practically used. A New York bank needs a technology expert to work on a new technology. The average American technologist is available, but his price is astronomical. He/she works by the hour, refuses to work on weekends and charges a hefty overtime fee as well. Meanwhile, there exists a company named Winfy Inc, which is actually the US arm of Winfy Ltd., an Indian company that offers the services of a technology person from among their employees who can fulfill this need, but is currently in India. The bank agrees, and Winfy Inc applies for an H1B visa for their technologist. Eventually, the visa is granted and the technologist travels to the US. The technologist is good at technology, but lacking in refinement and good communication skills. He, however, learns these as he goes along.

At this point, one of two things happen.

With time, the technologist nears the end of his project and decides to return to India. However, the bank is now convinced that the technologist is a good candidate and the bank hires him directly with an H1B visa. It is important to note that the salary paid to the technologist is reasonable and fair. However, it is lesser than what an American technologist (from the preceding paragraph) wanted. In time, the bank applies for the Green Card of the Indian technologist and he joins the American mainstream.

In the other scenario, as the technologist nears the end of his project, he and Winfy Inc make their move. They offer to the Bank a business case wherein they detail plans of setting up an ODC (an Offshore Development Center) in India to do the exact work that the technologist was doing. As part of this plan, the US division in the Bank would be transitioned offshore and all it’s US positions eliminated. The Bank accepts this offer and as a result, American jobs are lost and transitioned offshore.

I should admit that the above two scenarios are purely hypothetical and oversimplified. Sometimes, there are other alternative situations and different results may emerge, but in most cases, the outcome is one of the two stated above. What Senators Grassley and Sanders are trying to do is to ensure that the first scenario continues while the second is stopped. They are also trying to ensure that with all the funds being received by the US Banks, they do not replace American workers with foreign ones. As a precursor, they sent letters to the largest H1B recipient companies trying to gauge how these companies were using their visas.

Here are some more practical suggestions that could be considered:

1. H1B recipients need to detail the work done by their visa workers – This will make the US firms accountable to ensure that workers who get the visa are working on what they were supposed to.
2. The US company must decide to either provide a Green Card to the worker or cancel the H1B after three years – This period of time is sufficient for the employer to judge if the worker is really worth providing permanent residency, after all.
3. Conduct audits into the business of companies that hold a large number of H1B and L1 visas on their US payrolls – The purpose of the visa is to allow temporary positions to be filled. How can companies have more than 40% employees holding a visa justify their usage?
4. Pass laws to prevent visa sweatshops – Remember that when a worked works for Winfy Inc, that company absorbs a large percentage of the revenue generated – and this goes on infinitely. Once the technologist works for the Bank for more than say 6 months, make it mandatory for the Bank to put him on their rolls as an employee – and transfer his H1B visa to their firm. Rule #2 above, applies after 3 years.
5. Reform the L1 visa as well – The visa sweatshops also use the L1 visa when the H1B quota is full. The purpose of an L1 visa is intra-company transfer. Companies using large numbers of L1 visas need to provide justification.

The purpose of the above ideas is not to put a dent in the pockets of Winfy Inc., rather, the idea is to ensure that the H1 and L1 visa streams are not misused.

Do you have any positive suggestions? List them here.

EDIT:  If you read this far, I’m sure you will love the other parts of this Recession series.  Don’t miss Part 4 – How the hell can a Big Bank go Bust?

Note: IANAL (I am not a lawyer) and neither am I an authority on immigration or American law. The above post and suggestions are purely based on personal experience. Any similarity in names or situations are purely coincidental.