US immigration bill with bureaucratic H-1B visas sails through Senate

New York: Sweeping legislation to overhaul America’s immigration system passed with strong support in the Senate on Thursday and was sent to the House, where it faces significant headwinds due to opposition from Republican lawmakers.

The measure passed 68 to 32, and now moves to the House where Republican leaders have pledged to chart their own path, which is sure to diverge sharply from the Senate's approach.

Fourteen of the Senate's 46 Republicans voted for the bill, joining all of the Senate's Democrats and two independents. Only six years earlier, a similar immigration measure had imploded in the Senate.

The bill offers a path to citizenship for millions of illegal immigrants in the US. At a cost of roughly $30 billion, the legislation would double the number of US Border Patrol agents along the US-Mexico border to 40,000 and require the construction of 700 miles of fencing.

The bill raises the yearly cap on H1-B visas to 180,000 which is good, but there are several killer provisions in the Senate bill that could hobble Indian outsourcing firms' businesses in the US. For some, the most attractive part of the bill is that it creates a new and separate green-card exemption for foreigners who get graduate degrees from US universities in the sciences, technology, math and engineering (STEM) fields.

 US immigration bill with bureaucratic H-1B visas sails through Senate

Members of the bipartisan "Gang of Eight" who crafted the immigration reform bill, Sen Chuck Schumer, center, flanked by Sen. John McCain left, and Sen. Lindsey Graham leave the floor after final passage in the Senate, at the Capitol in Washington. AP

The H1-B and L-1 Visa portion of the immigration bill, however, is designed in a way that makes it more difficult and costly for Indian IT firms to bring in workers on temporary visas, while easing restrictions on US firms using those resources by increasing the annual cap on work visas.

Companies such as Infosys, Wipro, Cognizant and Tata Consultancy Services have set up large US offices with American employees to be closer to clients, but there is always an offshore angle. They rely heavily on H-1B visas to allow Indian staff to fly to the US when they are needed for face-to-face consultations and to work on projects in the US as part of their “global service delivery” model.

The immigration bill is supported by US computer service providers and businesses, and opposed by Indian IT firms and the Indian government, who argue that it is protectionist. India raised concerns about the immigration bill with Secretary of State John Kerry when he was in New Delhi saying the issue of short-term work visas shouldn't be mixed up with immigration.

The proposed reforms could force Indian IT companies to hire thousands of new American employees or make acquisitions to ramp up American staff.

"Over the short term, the legislation would likely have a negative impact on Indian-heritage IT companies and give a competitive edge to US firms," said Sid Pai, Partner and President, ISG Asia Pacific. "Over the long term, however, the provisions could encourage Indian firms to expand their US presence. Specifically, to avoid the provisions of the bill, Indian companies may step up local hiring and focus on acquisitions of US-based companies."

Killer provisions for Indian companies

Firstly, a company with more than 15 percent of its workforce on H-1Bs will be restricted from placing H-1B workers at the offices of their clients, an approach used by nearly all Indian IT services groups.

Secondly, the proposed legislation suggests that from 2016 any company with more than half of its staff on such work permits will be forbidden from applying for more visas, effectively creating a cap on temporary immigrant staff.

Thirdly, seeking to prevent undercutting American salaries, the bill would require H-1B workers be paid more than under current law, and impose steep fees of $10,000 per visa on big companies with more than half of their staff on H-1B visas.

Lobbying push moves to the House

The US-India Business Council and Nasscom, which represents India’s technology sector, which clocks in $100 billion in annual revenue, are spearheading a lobbying push to get lawmakers in the House to kill complicated and restrictive provisions for H-1B and L-1 visas. They are explaining to lawmakers that the bill creates more H-1B visas, but then makes it harder to use with all the new government rules.

Senate Majority Leader Harry Reid said on Thursday that he was "confident" the House would pass the legislation, even though Republican House Speaker John Boehner said earlier in the day that his chamber will not simply take up whatever the Senate passes.

"We're going to do our own bill through regular order, and it will be legislation that reflects the will of our majority and the will of the American people," he said.

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Updated Date: Jun 28, 2013 07:29:29 IST