With policymakers in Washington in the midst of a contentious debate over immigration reform, a rift is developing within the technology industry about how to handle high-skill workers from other countries who come to the U.S. for jobs.
On one side are companies like Microsoft (MSFT), Oracle (ORCL), and Intel (INTC). On the other are technology outsourcing firms, including Infosys Technologies (INFY) and Wipro (WIT) of India, and Cognizant Technology Solutions (CTSH), headquartered in New Jersey. The split may ultimately affect whether comprehensive immigration reform comes this year and, if so, what form it takes.
Senate Quizzes Indian Companies
The rift has emerged because of the starkly different ways the two groups of tech companies are using U.S. laws to bring foreign workers into the country. Microsoft, for example, often uses temporary work visas, known as H-1Bs, to hire high-level foreign programmers and engineers as they graduate from American universities, and then helps them gain American citizenship so they can stay in the States. In contrast, Wipro brings in many employees from its India operations to work at client facilities and then rotates them back to India so they are more effective at providing tech support and other services to clients.
The Indian companies have come under fire over the issue in recent weeks. Politicians, led by Senator Dick Durbin (D- Ill.), say the H-1B visas are being used to outsource American jobs to other countries. In a speech earlier this month, Durbin said he's concerned the program is "being abused by foreign companies to deprive qualified Americans of good jobs." On May 14, Durbin and Senator Chuck Grassley (R-Iowa) sent letters to nine Indian companies requesting detailed information on how the companies use the temporary work visas (see BusinessWeek.com 5/15/07, "Crackdown on Indian Outsourcing Firms").
Durbin and Grassley want data on a number of topics from the nine Indian outsourcers. They want to know how many U.S. citizens each employs, how much they pay their workers, and whether hiring H-1B workers has resulted in any layoffs.
Arguments over the issue are sure to intensify in the next few days, as companies are expected to submit their responses by May 29. Infosys, Wipro, and Cognizant all declined to comment for this article.
U.S. Tech Could Stall Process
In the meantime, Microsoft, Oracle, and others are scrambling to defend their own interests. They worry that a crackdown on outsourcing companies could also hurt them. The comprehensive immigration-reform proposal now being debated in the Senate includes several provisions championed by Durbin they consider too harsh. "If there are abusers, we should target those companies abusing the system," says Jack Krumholtz, managing director of federal government affairs at Microsoft. Says Robert Hoffman, vice-president for congressional and legislative affairs at Oracle: "We think that legitimate concerns should be addressed."
The tech industry's support is critical. The Senate is now debating a bipartisan proposal to overhaul the immigration rules for both high-skill and low-skill workers, including the estimated 12 million undocumented people presently in the country.
But the proposed legislation has drawn fire from all sides and its success is very much in question (see BusinessWeek.com 5/18/07, "A 'Troubled' Immigration Reform Proposal"). Conservatives have blasted what they call "amnesty" provisions for illegals, and pro-immigrant groups are hammering measures they deem "anti-family." The tech industry has expressed strong opposition to both the tighter rules for temporary workers and a complex point system for awarding green cards.
The tech industry has long argued that the major change it needs in the H-1B program is more visas. The number of visas available each year is capped at 65,000, with exceptions for certain types of jobs and workers. The allocation has been used up faster every year—this spring, the quota for all of 2007 was reached in less than 48 hours. Microsoft Chairman Bill Gates and other industry leaders argue the cap should be raised substantially so they can offer more jobs to talented workers. "We are essentially asking top talent to leave the U.S.," said Gates when he appeared before Congress in March (see BusinessWeek.com 3/8/07, "Gates to Senate: More Visas").
Who's Really Using the Program?
But until recently, it has been difficult to understand how companies use the H-1B program, what kind of workers they are recruiting, or even which companies are using it most. Very little information has been made public about the program, including which companies actually receive the visas. Now, however, information is seeping out. BusinessWeek obtained a list of the top 200 recipients of H-1B visas in fiscal 2006, and reviewed the Labor Dept.'s database of companies requesting approval for the visas. From this information, we pieced together some details on how the top 25 H-1B recipients are successfully using the program to bring in foreign workers (see BusinessWeek's slide show, "Immigration and the Visa Maze").
The contrasts are stark. The top recipients range from Microsoft and Cisco Systems (CSCO) to Infosys and Wipro to the New York City public schools (see BusinessWeek.com 5/25/07, "Going to Great Lengths for Math"). While much of the debate in Washington has been over foreign companies using the program, what stands out on the list is how active outsourcing firms have been in the program, including those in the U.S. Sixteen of the top 25 companies have substantial outsourcing operations, including Cognizant and Accenture (ACN). The two companies that received the most H-1Bs are Infosys and Wipro, with 4,908 and 4,002, respectively.
Microsoft received the most visas outside of the outsourcing companies, with 3,117. It's also one of the most efficient in securing the visas, receiving seven H-1Bs for every 10 labor-condition applications it submitted to the Labor Dept. By contrast, Wipro and Infosys received two out of every 10. One reason may be that Microsoft typically submits applications for jobs individually, while the Indian companies frequently put in applications for jobs in batches of 25 or 50. All but a handful of the Microsoft requests were for high-salaried work at its Redmond (Wash.) headquarters. One position was for an industry technical strategist at $120,000 annually, according to the agency's data.
"Job Creators" vs. "Job Takers"
Krumholtz says that Microsoft recruits many of its H-1B employees from U.S. schools, particularly graduates in engineering and sciences. The company also recruits workers with specialized skills, such as software engineers who can help localize its software for use in, say, Vietnam or Tibet. He adds that the company ends up sponsoring 90% of these workers for green cards, and that they make a significant contribution to the U.S. economy. "These are job creators, not job takers," Krumholtz says.
Oracle, Intel, Cisco, and Motorola (MOT) appear to be taking a similar approach, based on a review of government documents and interviews with some of the companies. Oracle is largely hiring software specialists for work at its Redwood City (Calif.) headquarters, and many are paid more than $100,000 a year. Oracle's Hoffman says that 90% of its H-1B workers are green card applicants. Intel often uses the visas to recruit engineers with advanced degrees from U.S. schools. "Our philosophy is that these people are the golden eggs; they're the innovators and future job creators," says Jenny Verdery, Intel's director of workforce policy.
The outsourcing companies have a different approach. They frequently will bring in workers from their overseas operations to help service a client in the U.S., and then the worker will return home. While Wipro declined to comment for this story, Laxman Badiga, the company's chief information officer, said in February that the company brings to the U.S. roughly 1,000 new temporary workers each year and rotates the same number back to India. He said the on-site training allows Wipro to serve clients better.
Satyam Computer Services (SAY), which received 2,880 H-1B visas in fiscal 2006, also regularly brings workers from India to the U.S. on those visas. Mukund Menon, vice-president for human resources, says that about two-thirds of the company's 4,570 employees are on H-1Bs now. He says new job openings are posted globally and Americans are recruited aggressively, but often Satyam is able to deliver services to clients faster by bringing in workers from India. "Speed is very important," he says.
What remains to be seen is whether Congress can craft an immigration reform proposal that will address both the politicians' concerns and those of Silicon Valley heavyweights. The companies say they support efforts to step up oversight and enforcement for the visa program. But they also fear that requirements to prove they try to recruit Americans first may be too onerous. Durbin and Grassley, however, say the visa program needs tighter restrictions. "It may be possible, but that's a hard needle to thread," says Hoffman.