H1-B Visas: Why Is U.S. Upset With Indian Firms?

By siliconindia | Thursday, 05 September 2013, 12:43 Hrs

Bangalore: There has been a lot of confusion regarding the H-1B Visas in the past few weeks. The new Immigration Bill is expected to lay down restrictions on the attainment of H-1B visas like make it more expensive and difficult to obtain. This will compel Indian IT firms to modify their business model that will cost a fortune. Adding to their woes came the declaration from the U.S Senate of singling out Indian and Indian-American IT companies for punitive restrictions on H-1B visas, reports Business Standard.

The Democratic Senators Dick Durbin and Charles Schumer accused Indian firms of taking undue advantage of H-1B visas and referred to Indian employers as ‘chop-shops’. The Bill, however, has not used the word ‘Indian’ and defined the accused class as companies who rent out computer programmes to other countries.

India is not the only country to use H-1B visas for cheap labor; many U.S. companies hire foreign workers as their programmers too. Both types of companies underpay their foreign workers. The only difference is Indian hire employees with mostly Bachelor degree while other companies look for Master’s level. This underpayment is, however, not illegal. The definition on legally required wage in the programme has some loopholes and according to Schumer, any company can misuse it for their benefit.

The profit or savings of Indian companies from using cheap labor may go up to 20 percent when foreign workers are employed instead of young Americans. And the savings go up to 50 percent when H-1B visa holders replace older Americans.