July 11 marked the date of the 2013 United States – India Business Council (USIBC) summit which was hosted at the nation’s capital in the U.S. Chamber of Commerce. The summit’s participants included numerous high-ranking statesmen from both India and the U.S.; prestigious attendees from the U.S. side included five previous U.S. ambassadors to India, U.S. Senators Charles Schumer and Mark Warner and a fair number of members of Congress. Big industry was also strongly represented by representatives of industry giants such as Boeing, General Electric, Tata Group and dozens more.
An important centerfold of the summit included a panel discussion on the potential impacts of immigration reform on the U.S. – India Knowledge Economy. The panel’s keynote speaker, Sheela Murthy highlighted provisions which have been recently passed in the senate. She warned of language in the bill which if ratified would prohibit H1B-dependent employers from outplacing, outsourcing, leasing, or otherwise contracting for services or placement of an H1B worker. Under immigration reform, the term “H1-B Dependent” applies to companies whose workforce is made up of at least 15% H-1B workers.
Some experts believe this is a term aimed directly towards the IT contracting world. If passed, the current proposed legislation would create a major obstacle for IT contracting firms looking to do business in the U.S. These specific provisions could be seen as favoring non-H1B dependent companies. If put into effect, they would permit companies to become non-dependent if companies sponsored the “vast majority” of H-1B workers for their green card status. This action would be seen as essentially making H-1B workers U.S. workers under the title of “intending immigrants”. Most concerning, non-H1B dependent firms would be able to place workers offsite at other locations simply by paying an additional fee to USCIS.
New and more restrictive provisions would significantly effect both the U.S. and India economies. These reform provisions could carry serious implications for the U.S. high-tech economy. By restricting hiring of contractors, the next logical step for large IT firms would be to shift even more business off-shore, which would result in substantial loss of tax revenue. The livelihood of small to medium IT contracting firms would be jeopardized by the additional USCIS fees and the pressure of being forced to compete with larger non-H1b dependent firms even more.
This issue has not received much attention in the public eye due to its niche-specific nature; however if signed into law, the hiring provisions will be very impactful on the vital and growing IT contracting industry which requires twenty-four hour personnel support and highly-specialized workers to keep it running smoothly.