Do Indian outsourcers misuse the h-1b visa programs?

Indian outsourcing firms are under scrutiny as federal legislators investigate the use--and alleged abuse--of the H-1B foreign worker visa.

Sens. Dick Durbin, D-Ill., and Chuck Grassley, R-Iowa, both members of the Senate Judiciary Subcommittee on Immigration, sent letters to the CEOs of nine Indian firms--including Infosys Technologies, Satyam Computer Services, Tata Consultancy Services, and Wipro Technologies--requesting details on their use of H-1B visas. Grassley and Durbin claim that the Indian firms are skirting federal regulations and using the visas to stock their U.S. operations with low-paid Indian nationals. They also maintain that the companies use the program to expose their workers to customer service operations in the United States, easing the process of moving that work offshore and displacing American workers.

In their letters to the companies, Durbin and Grassley asked for information on the average ages of their H-1B workers, their wages, and the companies' efforts to recruit Americans for those positions. The companies have yet to respond, a Durbin spokesman says.

Indian outsourcers are conspicuous in their use of H-1B visas. According to a government list, Indian firms represent five of the top 10 firms granted H-1B visas last year. In a recent interview with InformationWeek, Tata said it employs about 8,000 H-1B workers. In Securities and Exchange Commission filings, Infosys says it has at least 7,100 H-1B workers, and Wipro and Satyam note that H-1B workers make up most of their U.S. staffs.

Last month, Durbin and Grassley introduced a visa reform bill intended to crack down on abuses by foreign outsourcing firms. The bill, aimed at both the H-1B and L-1 visa programs--L-1 visas aren't capped and are designed for managers at multinational companies--breaks new ground by barring companies from using the visas simply to train short-term workers who are shipped back home to do outsourced work. It would require all employers with H-1B workers to pledge that they made "good faith" efforts to fill those jobs with American workers, something that's required now only of companies with 15% or more of their employees on H-1Bs. The bill also would require employers to advertise jobs on a Labor Department Website for 30 days, and post summaries of all H-1B applications.

The Indian outsourcers wouldn't comment, but the National Association of Software and Services Companies, a lobbying group, defended their use of H-1B visas as a business issue. "Work permits are primarily a tool for facilitating trade and allow global companies to bring key staff to the U.S. on temporary assignments, just as U.S. staff often travels across the world for temporary assignments," NASSCOM said in a statement.

Source: InformationWeek

 

 

Pakistan; Next Generation of Economic Leaders

Potential to overtake existing BRIC countries - Brazil and Russia

Mexico, Indonesia, Pakistan and Turkey are in a favorable position to become the new generation of emerging economies to have significant impact on the global economy, claims Grant Thornton International. Following on from the Grant Thornton International Business Report (IBR) in February 2007 into the impact of the BRIC economies (Brazil Russia, India and China) on the global market place, the international accounting organization has identified Mexico, Indonesia, Pakistan and Turkey as the front runners to inherit the BRIC mantel from the original four. These countries may match or even overtake some of the commonly identified BRIC economies (Brazil, Russia, India and China) which are expected to join the global economic powers.

Although these economies are unlikely to match India or China in strength, they certainly have the potential to rival Brazil and Russia in terms of economic strength.

Alex MacBeath, global leader of privately held business services for Grant Thornton International, said: "Indonesia and Pakistan, with their large populations, have the potential to grow their labor-intensive exports and could capitalize on the process of low-cost production that mainland China has so successfully exploited. Mexico, as the 14th largest economy in the world, is benefiting from its close trading ties with the other North American Free Trade Agreement (NAFTA) countries and is well-placed to play a more significant role in the Americas. Turkey is expanding robustly and is on the path to making the transition to a modern industrial economy and is set to increase its influence in Western Europe and the Middle East."

According to Hector Perez from Salles, Sáinz-Grant Thornton in Mexico: "The reason for such an outstanding performance from the Mexican economy during 2006 was the unprecedented macroeconomic stability, a steady Mexican peso and a low inflation rate of 4%.

Hendra Winata from the Grant Thornton firm in Indonesia commented: "The Indonesian economy continues to strengthen with the help of a vigorous policy reform agenda aimed at reviving investment and easing inflationary pressures. As a result the country's growth target of 6% looks very achievable.

Aykut Halit from Arkan & Ergin Grant Thornton in Turkey commented: "Turkish economic growth rates over the past five years have averaged 7.5% with foreign trade averaging 26% a year. Foreign direct investment has come in at record levels from Europe, North America and the Middle East as have many international banks. Turkey is also set to be boosted by becoming a full member of the European Union in the near future."

Source: International press

 

 

Financial Services, Manufacturing Drive Offshore IT Services Boom

Market to reach $14.7 billion by 2009, financial services account for quarter of spending

The US offshore IT services market is expected to nearly double in size to an estimated $14.7 billion by 2009, reports IDC. This represents a five-year compound annual growth rate (CAGR) of 14.4%. Discrete manufacturers will continue to generate the largest percentage of overall revenue for offshore services providers, accounting for 17% of spending by 2009. Retail, communications, banking, insurance, and other financial services companies are also expected to be prominent users of offshore IT services. In aggregate, the financial services industry is expected to account for 28.9% of the total spending by the end of the forecast period. A handful of industries will also present attractive, above average growth opportunities for offshore IT services. These will include healthcare, process manufacturing, professional services, and transportation.

The prediction is based on a survey of 1,000 end users in the U.S. According to IDC, cost savings remains the leading driver for adoption for all types of offshore services. However, nearly half those surveyed also leverage offshore capabilities to support new service and technology delivery models within their organizations. In general, discrete manufacturers and healthcare respondents viewed offshore services as an important cost-cutting mechanism, with the majority of discrete manufacturers also citing offshore services as an increasingly strategic component of IT delivery.

As for the financial services industry, Jason Spaulding, research analyst, Vertical Industry Research at IDC noted, "These firms are at the vanguard of offshore services work. Companies in these industries are dominated by core legacy applications environments, strict competitive pressure to reduce costs, and consolidation. As a result, firms look to inexpensively integrate and manage current applications while developing new custom applications."

More than 75% of respondents to the survey indicated that industry expertise plays an important role in providing offshore services. "Given this fact, understanding the key business drivers, inhibitors, and the degree to which industries will or will not procure offshore services is critical to capturing services opportunities," Spaulding advised. Furthermore, providers of all types should look to target industries while striving to enhance the depth of their current vertical market offerings and selectively targeting new industries for expansion."

Source: OSW Team, IDC