INTEGRATED ACADEMY OF MANAGEMENT AND TECHNOLOGY

GHAZIABAD

Group Project on Global Economy

“US H-1B VISA FEES HIKE

AFFECTING INDIAN IT INDUSTRY”

Submitted To

Prof. S.S. Sharma.

Submitted By

Uttam Kumar Patra (PG09-112)

Ujjal Kumar Jana (PG09-111)

Pallav Kumar (PG09-71)

Subhajit Paul (PG09-106)

 Appendix I

ACKNOWLEDGEMENT
This project is entirely nourished by the careful supervision of Prof. S.S
Sharma, assistant professor, INMANTEC, has also performed a great role of
assistance with all his vast knowledge and experience to give a clear structure to
this project. He has monitored every day’s progress of the project while also
enlightening the uncovered areas of my knowledge.

Last but not the least we would like to acknowledge the chemists who are
the primary sources of collected information and data. Without their help &
generous contribution in giving me the right information I would not have been
able to do this project work perfectly. We like to thank them for their kind
cooperation in this regard.

Uttam Kumar Patra (PG09-112)

Ujjal Kumar Jana (PG09-111)

Pallav Kumar (PG09-70)

Subhajit Paul (PG09-106)

 Appendix II

Content
CHAPTER NO. Title PAGE
NO
Introduction 1-7

H-1B visa 1
Duration of stay 1
H-1B and legal immigration 1
Employer attestations to protect U.S. workers 2
H-1B holders earn more than Americans 4
Usage of H-1B by outsourcing firms 4
Top ten H-1B rankings 4
Indians grab maximum number of H-1B visas 5
L-1 visa 6
Types of L-1 visas 7
Top 20 L-1 visa users 7
Description of the 9-14
problem

Quotas and changes in quotas 9

Recent changes to U.S.A. law 10
Recent changes to U.S.A. policy 12
Emergency border security supplemental 13
appropriations act,
Research 15-18
methodology
RESEARCH DESIGN 15
Research period
Data collection
Research limitations 15
Analysis 15

Impact on H-1B visa fee high on indian it industry 16

Impact of H-1B visa fee hike on U.S.A. economy 17
Conclusion 19

REFERENCE 20
 Appendix III

Executive Summary
H-1 B visa, Indian techies’ passport to the American dream, has lost a great part of
its sheen in the past year or so after a barrage of sobering news against a darkening political
backdrop. Recent data shows that Indian professionals grabbed one-third of the H-1B visas
in 2009 and L1 visa. Foreign IT professionals on H-1B visas earn more than their American
counterparts. With 1,964 H-1B visas in 2009, Indian IT major Wipro has topped the list of
firms that got the coveted US visas for highly skilled professionals.

In a setback to the Indian information technology (IT) industry, the US Senate has passed
new legislation Emergency Border Security Supplemental Appropriations Act, 2010 to
increase the fees that companies have to pay to get H-1B and L visas for skilled workers.
Indian software firms use these visas to ship engineers to the US for onsite work. The
money raised from higher visa fees is to fund an extra $600 million (Rs2,760 crore) spending
to strengthen security along the US border with Mexico. The proposed increase in visa
application fee by at least $2,000 for next five years would raise nearly $550 million out of
$650 million that have been allocated for increasing the security of the US-Mexico border.

US Chamber of Commerce said in its latest report, In FY 2009, Indian tech companies used
4,809 new H-1B visas, which equals to 0.003 per cent of the US civilian labour force, less
than 1/100th of 1 per cent. The new H-1Bs used by Indian companies represented only
about six per cent of total initial beneficiaries (new employment), according to US Citizenship
and Immigration Services.

According to Nasscom, the Indian IT industry was likely to be hit India’s $50 billion
outsourcing industry by $200-250 million annually in additional fees though it gets about only
12% of the total H-1B visas issued. India earned nearly two-thirds of its software and back
office exports of $49.7 billion in fiscal 2010 from the US. This year, the industry expects to
grow 15-18% on increased business flow from customers. At present, it costs about $3,320
for H-1B and L visas. The Bill recommends increasing visa fees in both categories by
another $2,000. The increase in visa fees would add around $1,000 per year to the cost of
an employee, or 12 hours of chargeable onsite wages for these technology workers.
From around $2,000 being paid for each H-1B permit, Indian tech firms will have to pay
$4,500 for new visas and $4,000 for visa renewals. For the tech firms coming out of last
year’s economic crisis, this could mean higher costs. The visa fee hikes will further erode
cost arbitrage and cause a change in the operational model of Indian offshore providers. It
also raises fees on L visas (given to multi- national transferees) for foreign companies. Their
fees will raise from $320 to $2,570.
 Project on Global Economy

Introduction:
H-1B visa

The H-1B is a non-immigrant visa in the United States under the Immigration and Nationality
Act, section 101(a)(15)(H). It allows U.S. employers to temporarily employ foreign workers in
specialty occupations. If a foreign worker in H-1B status quits or is dismissed from the
sponsoring employer, the worker can apply for a change of status to another non-immigrant
status, find another employer (subject to application for adjustment of status and/or change
of visa), or must leave the US.

The regulations define a ―specialty occupation‖ as requiring theoretical and practical

application of a body of highly specialized knowledge in a field of human endeavor
including, but not limited to, architecture, engineering, mathematics, physical sciences,
social sciences, biotechnology, medicine and health, education, law, accounting, business
specialties, theology, and the arts, and requiring the attainment of a bachelor‘s degree or its
equivalent as a minimum (with the exception of fashion models, who must be "of
distinguished merit and ability".) Likewise, the foreign worker must possess at least a
bachelor‘s degree or its equivalent and state licensure, if required to practice in that field. H-
1B work-authorization is strictly limited to employment by the sponsoring employer.

Duration of stay

The duration of stay is three years, extendable to six. An exception to maximum length of
stay applies in certain circumstances:

1. one-year extensions if a labor certification application has been filed and is pending
for at least 365 days; and

2. three-year extensions if an I-140 Immigrant Petition has been approved.

Despite a limit on length of stay, no requirement exists that the individual remain for any
period in the job the visa was originally issued for. This is known as H1B portability or
transfer, provided the new employer sponsors another H1B visa, which may or may not be
subjected to the quota. Under current law, H1B visa has no stipulated grace period in the
event the employer-employee relationship ceases to exist.

H-1B and legal immigration

Even though the H-1B visa is a non-immigrant visa, it is one of the few visa categories
recognized as dual intent, meaning an H-1B holder can have legal immigration intent (apply
for and obtain the green card) while still a holder of the visa. In the past the employment-
based green card process used to take only a few years, less than the duration of the H-1B
visa itself. However, in recent times the legal employment-based immigration process has
backlogged and retrogressed to the extent that it now takes many years for skilled
professional applicants from certain countries to obtain their green cards. Since the duration
of the H-1B visa hasn't changed, this has meant a lot more H-1B visa holders have to renew

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their visas in one-year or three-year increments to continue to be in legal status while their
green card application is in process.

Employer attestations to protect U.S. workers

The U.S. Department of Labor (DOL) is responsible for ensuring that foreign workers do not
displace or adversely affect wages or working conditions of U.S. workers.

While an employer is not required to advertise the position before hiring an H-1B non-
immigrant pursuant to the H-1B visa approval, the employer is required to notify the
employee representative about the LCA (Labor Condition Application) or if there is no such
representation then the employer is required to publish that LCA (Labor Condition
Application) at the workplace and the employer's office.

Employers must attest that wages offered are at least equal to the actual wage paid by the
employer to other workers with similar experience and qualifications for the job in question,
or alternatively, pay the prevailing wage for the occupation in the area of intended
employment, whichever is greater. By signing the LCA (Labor Condition Application), the
employer attests that: prevailing wage rate for area of employment will be paid; working
conditions of position will not adversely affect conditions of similarly employed American
workers; place of employment not experiencing labor dispute involving a strike or lockout.

The law requires H-1B workers to be paid the higher of the prevailing wage for the same
occupation and geographic location, or the same as the employer pays to similarly situated
employees. Other factors, such as age and skill were not permitted to be taken into account
for the prevailing wage. Congress changed the program in 2004 to require the Department of
Labor to provide four skill-based prevailing wage levels for employers to use. This is the only
prevailing wage mechanism the law permits that incorporates factors other than occupation
and location.

The approval processes for these applications are based on employer attestations and
documentary evidence submitted. The employer is advised of their liability if they are
replacing a US worker.

H-1 B visa, Indian techies‘ passport to the American dream, has lost a great part of its sheen
in the past year or so after a barrage of sobering news against a darkening political
backdrop. The United States Citizenship and Immigration Services (USCIS), the nodal
agency that apportions H-1B visas, has received only 18,000 applications until May for the
US financial year beginning October, indicating a repeat of last year when the flow of
petitions towards the quota of 65,000 was laboured. Contrast this to three years ago when
the quota was exhausted within a day. The USCIS was then flooded with 1.5 lakh
applications and had to resort to a lottery system for allotments.

Factors as diverse as the Employ American Workers Act (EAWA), a key legislation that
stresses on jobs for US citizens, to dropping wage rates, to limping recovery and high
unemployment rates in America are to blame for the free fall in H-1B petitions. For the first
time, H-1B visa holders are being driven back to India, their plans for a longer sojourn in the
world‘s largest economy coming to an abrupt end.

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Indian companies, IT firms in particular, corner a lion‘s share of this classification reserved
for foreign workers with skills needed in the US economy, allotted on a first-come-first-
served basis. Though it is the same story every year, there has been a drastic fall in
numbers.

In 2009, Indian IT companies like Infosys Technologies, Wipro Technologies and Tata
Consultancy Services (TCS), or offshoots of US firms like Cognizant and IBM, collected only
4,762 approved visas between them against 20,530 in 2006. And, there were only four
Indian companies among the top H-1B applicants last year compared to eight in 2006.
The country‘s largest software exporter TCS, which received 3,046 H-1B visas in 2006, was
conspicuous by its absence from the table in 2009. Early indications are that the Indian
interest is tepid this year too because the enthusiasm of IT companies to extend the stay of
employees has waned significantly. That has left Indian software workers worried.

Though H-1B visa holders comprise only 0.6% of the total US workforce, hiring foreigners
has become a prickly issue in a nation where one in 10 people are out of jobs. The situation
is the same in Silicon Valley, California, where the unemployment rate is higher at 12.6%
than the 9.9% national average, according to the Bureau of Labor Statistics. For federal
authorities, EAWA has turned handy to stanch job cuts. The 2009 act, one of US President
Barack Obama‘s big-box poll planks, stipulates that firms must not hire H-1B visa holders
unless they had offered positions ‗to equally-or better-qualified US workers‘. EAWA bars
companies opting for an H-1 B employee from giving pink slips to US citizens in the same
job for at least 180 days. The result is that banks, whose technology departments powered
outsourcing, are parceling jobs to relatively cheaper locations within the US like Texas and
Arizona rather than hiring H-1 B workers. EAWA has since brought about a radical change in
the H-1 B plans and hiring patterns of Indian companies.

The EAWA restrictions on H-1B has driven rival Infosys to L-1, a non-immigrant visa that
allows companies operating both in the US and abroad to transfer certain classes of
employees for up to seven years. Infosys has 1,800 people in this category. The company
will petition for H-1B in 2010, but the dwindling interest is palpable. Wipro, meanwhile, plans
to have nearly 40% locals on its overseas rolls. Experts also hold responsible the greater
scrutiny on H-1B petitions for Indian IT companies turning their back on these visas.
Both American and Indian firms are wary of applying for an H-1B as the government is going
over applications with a fine-tooth comb. If companies have not hired US citizens over one
year or offered the same job to them, a visa application has a high chance of getting
rejected, and rejections spoil a company‘s brand name. IT watchers presage up to 20,000
workers returning to India in a year. Many H-1B visa holders are said to be posting resumes
on Indian recruitment websites. An upshot of visa non-renewal is workers having to dispose
of assets prematurely. The lure of H-1 B visas is also fading because of a sharp drop in
wages. A job in India suddenly appears more attractive, given that it offers up to a 14%
annual growth against a 3% rise at US tech firms. Many H-1 B holders now see living in the
US as a stopgap arrangement till they are able to pay off expensive student loans or the visa
expiry period of three years.

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H-1B holders earn more than Americans

H-1B visa has often received flak for fall in American salaries. In fact, anti-H-1B visa activists
have often complained that say the programme depresses American IT workers' salaries
and robs them of jobs. However, a recent research from the University of Maryland claims
that foreign IT professionals on H-1B visas earn more than their American counterparts.
The research which examined the IT salaries using data from online salary surveys
conducted from 2000 to 2005, found that foreign IT professionals earned 8.9% more than
American citizens.

According to a report in ComputerWorld, Hank Lucas, professor of information systems at

the University of Maryland's Robert H Smith School of Business, and assistant professor
Sunil Mithas found that those on temporary visas, such as the H-1B and L-1, were paid 6.8
per cent more than those with US citizenship, and green card holders took home 12.9 per
cent more than their American-born counterparts. After adjusting for educational
qualifications, work experience, and other individual characteristics, Lucas and Mithas found
that IT professionals without US citizenship earned 8.9 per cent more than American
citizens, says the news report.

Usage of H-1B by outsourcing firms

In 2006, these firms collectively were issued 19,512 of the 65,000 H-1B visas granted, with 4
outsourcing firms among the top 5 receivers of H-1B visas. Among the top of the list were
some of the most well-known outsourcing firms: Infosys, Satyam Computer Services, Tata
Consultancy Services, and Wipro Technologies. Critics have argued that granting H-1B
visas to these outsourcing firms is not the real intent of the H-1B Visa program. One reason
given is: Critics claim that the Indian firms skirt regulations and use the visas to train workers
in the U.S. to facilitate moving jobs offshore.

Top ten H-1B rankings

A 2009 Business Week article cited a ComputerWorld article indicating that Wipro was the
top user of the program with 1,964 Visas. With 1,964 H-1B visas in 2009, Indian IT major
Wipro has topped the list of firms that got the coveted US visas for highly skilled
professionals.

Microsoft with 1,318 visas came next, with Intel (723) in third place, while Google with 211 in
25th place brought up the rear. IBM India (695), Infosys (440), Polaris Software Lab India
(254) and Satyam (219) were the other major Indian visa getters.

At least 200 US and Asia-based technology, financial and consulting companies applied for
H-1B visas in 2009. The major technology companies that did not rank in the Top 25, but did
rank in the Top 50 include Yahoo, Amazon, Apple, Texas Instruments, Nvidia and IBM,
according to e-week.com.

Some of the leading research universities in the United States also rank in the Top 50 --
University of Maryland, University of Michigan, Johns Hopkins, University of Illinois,

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University of Pennsylvania, Yale, Stanford, Harvard, University of Pittsburgh, Columbia and

Baylor College of Medicine.

Here is a countdown of the top 25 companies with the specific number of H-1B visas they
were granted by the US Citizenship and Immigration Services (USCIS) in 2009:

1. Wipro: 1,964
2. Microsoft: 1,318
3. Intel: 723
4. IBM India: 695
5. Patni Americas: 609
6. Larsen & Toubro Infotech: 602
7. Ernst & Young: 481
8. Infosys: 440
9. UST Global: 344
10. Deloitte: 328
11. Qualcomm: 320
12. Cisco Systems: 308
13. Accenture: 287
14. KPMG: 287
15. Oracle: 272
16. Polaris Software Lab India: 254
17. Rite Aid: 240
18. Goldman Sachs: 236
19. Deloitte & Touche: 235
20. Cognizant: 233
21. Mphasis: 229
22. Satyam: 219
23. Bloomberg: 217
24. Motorola: 213
25. Google: 211.

Indians grab maximum number of H-1B visas

Indian professionals grabbed one-third of the H-1B visas in 2009, even as there was a slump
for the most coveted US work visas in the past two years. US businesses use the H-1B
programme to employ foreign workers in specialty occupations that require theoretical or
technical expertise in fields, such as scientists, engineers, or computer programmers.

Accounting for one-tenth of non-immigrant residents in the US, 364,757 Indians were only
second to the Mexicans who made up 11.7 percent at 403,793, but 123,002 H1B visa
holders from India gave them the largest 36.3 percent share among professionals. Resident
non-immigrant admissions from India actually declined from 425,826 (11.5 percent) as the
total decreased 6.8 percent from 3.7 million in 2008 to 3.4 million in 2009, according to the
annual flow report issued by the Department of Homeland Security. However, in actual
terms, the number of Indians issued H-1B visas in 2009 dropped by more than one fifth
since 2007. Coinciding with the general economic recession in the US, there has been a

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sharp drop in the number of Indian professionals receiving the most coveted H-1B work
visas between the years 2007 and 2009, latest official figures have revealed.

Despite the drop of over 34,000 H-1B visas in two years, India continues to be the leading
country to get the maximum number of this category of work visas for professionals and is a
way ahead of other nations of the world, an analysis of the latest figures released by the
Department of Homeland Security reveal.

H1B admissions from India too declined from 154,726 (37.8 percent) as the total decreased
17 percent from 409,619 in 2008 to 339,243 in 2009, but student admissions rose 3.8
percent from 2008 to 2009, reflecting an increase in academic student entries (F1). The
leading countries of citizenship for resident non-immigrant admissions to the US in 2009
were Mexico (12 percent), India (11 percent), Japan (6.6 percent), Canada (6.4 percent),
China (5.8 percent), Britain (5.6 percent), and South Korea (5.6 percent).

From 2008 to 2009, decreases in resident admissions occurred among eight of the 10
leading countries of citizenship with the decrease from India (14 percent decrease)
attributable to workers in specialty occupations, the report said. The leading countries of
citizenship for H1B admissions in 2009 were India (36 percent), Canada (6.5 percent),
Britain (4.3 percent) and Mexico (4.2 percent).

In 2009, leading source countries for L1 for company transfers included India (16 percent),
Britain (13 percent) and Japan (9.9 percent). Forty percent of L1 admissions were accounted
for by nationals of these three countries. Nearly half of academic student admissions (F1)
were nationals of five countries: China (14 percent), South Korea (13 percent), India (9
percent), Mexico (8.2 percent), and Japan (5.6 percent).

The most frequent destinations of resident non-immigrant admissions in 2009 were

California (14 percent), New York (13 percent), Texas (8.5 percent) and Florida (6.5
percent). These four states represented the destinations of 42 percent of foreign nationals
admitted.

L-1 visa

An L-1 visa is a visa document used to enter the United States for the purpose of work in L-
1 status. It is a non-immigrant visa, and is valid for a short amount of time, generally three
years. L-1 visas are available to employees of an international company with offices in both
a home country and the United States, or which intend to open a new office in the United
States while maintaining their home country interests. The visa allows such foreign workers
to relocate to the corporation's US office after having worked abroad for the company for at
least one year prior to being granted L-1 status. The US office must be a parent company,
child company, or sister company to the foreign company.

Spouses of L-1 visa holders are allowed to work, without restriction, in the US, and the L-1
visa may legally be used as a stepping stone to a green card under the doctrine of dual
intent.

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Types of L-1 Visas

The L-1 visa has two subcategories: L-1A for executives and managers, and L-1B for
workers with specialized knowledge. L-1A status is valid for up to 7 years, L-1B for 5. After
the expiration of the 7 or 5 years respectively, the alien must leave the United States for an
aggregate of 365 days, and must work for a parent, subsidiary, affiliate or branch of the U.S.
company during that time before becoming eligible to reapply for an L-1 visa.

There are two types of L-1 procedures:

 Regular L-1 visas, which must be applied for and approved for each individual by
the U.S. Citizenship and Immigration Services (USCIS); and

 Blanket L-1 visas which are available to employers who hire large numbers of
Intracompany Transferees every year.

For a regular L-1 visa, the company must file a petition with the USCIS and each petition is
evaluated on its own merits.

In the case of a blanket L-1 visa petition, it has already been determined by USCIS that the
company qualifies for the issuance of Intracompany Transferee visa, so the individual visa
applicant need only file a copy of the approved blanket petition, along with documents
supporting their personal qualifications, with the U.S. consulate or embassy having
jurisdiction over their place of residence proving the applicant's qualification

Top 20 L-1 Visa Users

In 2006, 7 of the top 10 users of the L-1 visa were IT outsourcing firms that either have
headquarters in India or were primarily based in India due to the larger employment base
located in India.

Top 20 L-1 Visa Users

Rank Company Headquarters Primary L-1 Visa
Employment Received
Base
1 Tata Consultancy Services Mumbai, India India 4887
2 Cognizant Technology New Jersey India 3520
Solutions
3 IBM Armonk, New York USA 1237
4 Mahindra Satyam Hyderabad, India India 950
5 Wipro Bangalore, India India 839
6 Hindustan Computers Noida, India India 511
7 Deloitte & Touche LLP New York, New York USA 512
8 Patni Computer Systems Mumbai, India India 440
9 Intel Corporation Santa Clara, USA 392
California
10 Kanbay (currently Chicago, Pune, India 329
Capgemini) Hyderabad, and
Chennai

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11 Honeywell International Morristown, New USA 320

Jersey
12 Hewlett Packard Palo Alto, California USA 316
13 Infosys Bangalore, India India 294
14 Accenture Dublin, Ireland India 291
15 Keane (formerly Caritor) San Ramon, India 231
California
16 Schlumberger Technology Houston, Texas USA 214
Corp
17 Oracle Corporation Redwood Shores, USA 176
California
18 Syntel Troy, Michigan India 171
19 PricewaterhouseCoopers New York, New York USA 168
20 Microsoft Redmond, USA 168
Washington
(source: list published by the US Senators Richard Durbin and Chuck Grassley on June 26,
2007)

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Description of the problem

Quotas and changes in quotas

The number of new H-1Bs issued each year in the United States is subject to an annual
congressionally-mandated quota. Each H-1B quota applies to a particular Financial Year
which begins on October 1. Applications for the upcoming Financial Year are accepted
beginning on the preceding April 1 (or the first working day after that date). Those
beneficiaries not subject to the annual quota are those who currently hold H-1B status or
have held H-1B status at some point in the past six years and have not been outside the
United States for more than 365 consecutive days. This annual quota has had a significant
impact on the high tech industry. It has generally been set at 65,000 visas per year, with
some exceptions for workers at exempt organizations like universities and colleges (note:
contrary to popular belief, non-profit organizations are not automatically exempt, but may be
so if affiliated with a university or college). In 2000, Congress permanently exempted H-1B
visas going to Universities and Government Research Laboratories from the quota.

During the early years of this quota in the early 1990s, this quota was rarely actually
reached. By the mid-1990s, however, the quota tended to be filled each year on a first come,
first served basis, resulting in new H-1Bs often being denied or delayed because the annual
quota was already filled. In 1998 the quota was increased first to 115,000 and then, in 2000,
to 195,000 visas per year. During the years the quota was 195,000, it was never reached.

In FY 2004, the quota reverted to 90,000 when the temporary increase passed by Congress
in 1999 expired. Since then, the quota is again filling up rapidly every year, making H-1Bs
again increasingly hard to get. More recently, the basic quota was left at 65,000 but with an
additional 20,000 visas possible for foreign workers with U.S. advanced degrees. Of the
65,000 total, 6,800 are initially reserved for citizens of Chile and Singapore under free trade
agreements with those countries; however, if these reserved visas are not used under the
agreements, they go back to the general pool. Outside of the 65,000 quota, another 10,500
visas annually are available to Australian citizens under a similar but more flexible program,
the E-3 visa program.

For FY 2007, beginning on October 1, 2006, the entire quota of visas for the year was
exhausted within a span of less than 2 months on May 26, 2006, well before the beginning of
the financial year concerned. The additional 20,000 Advanced Degree H-1B visas were
exhausted on July 26. For FY 2008, the entire quota was exhausted before the end of the
first day on which applications were accepted, April 2. Under USCIS rules, the 123,480
petitions received on April 2 and April 3 that were subject to the cap were pooled, and then
65,000 of these were selected at random for further processing. The additional 20,000
Advanced Degree H-1B visas for FY 2008 was exhausted on April 30.

In its annual report on H-1B visas released in November 2006, USCIS stated that it
approved 131,000 H-1B visas in FY 2004 and 117,000 in FY 2005. The inflation in numbers
is because H-1B visas can be exempt from the caps if the employer is a University or
Research Lab.

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For FY 2009, USCIS announced on April 8, 2008 that the entire quota for visas for the year
has been reached, for both 20,000 Advanced and the 65,000 quota. USCIS would complete
initial data entry for all filing received during April 1 to April 7, 2008 before running the lottery.

For FY 2010, USCIS announced on December 21, 2009, that enough petitions were
received to reach the year quota. Trend analysis indicates that the FY 2011 cap may be
reached sometime between early October and November since the economy is picking up
and the recession is easing.

Applications for H-1B work visas, once most sought-after among Indian IT professionals,
have not even reached the 50 per cent mark of the Congressional-mandated quota of
65,000, US officials have said, amid India's concerns over the fee hike for the scheme.
According to the latest figures released by the US Citizenship and Immigration Services
(USCIS), just 29,700 people had applied for H-1B visas till August 13, 2010. In the separate
higher-education category, the USCIS had received only 12,300 petitions so far. Till two
years ago, the cap for both the categories of H-1B visas was reached within the first few
days and USCIS had to resort to computerised draw of lots to decide the successful
applicants. The low-key response this year comes amid India's concerns over the hike in H1-
B and L1 visa fee, which would adversely affect Indian IT companies.

Recent changes to U.S. law

The American Competitiveness in the Twenty-First Century Act of 2000 (AC21) and the U.S.
Department of Labor's PERM system for labor certification erased most of the earlier
claimed arguments for H-1B's as indentured servants during the green card process. With
PERM, labor certification processing times are now approx 9 months (as of Mar 2010).

Because of AC21, the H-1B employee is free to change jobs if they have an I-485
application pending for six months and an approved I-140, if the position they are moving to
is substantially comparable to their current position. In some cases, if those labor
certifications are withdrawn and replaced with PERM applications, processing times will
improve, but the person will also lose their favorable priority date. In those cases, employers'
incentive to attempt to lock in H-1B employees to a job by offering a green card is reduced,
because the employer bears the high legal costs and fees associated with labor certification
and I-140 processing, but the H-1B employee is still free to change jobs.

However, many people are ineligible to file I-485 at the current time due to the widespread
retrogression in priority dates. Thus, they may well still be stuck with their sponsoring
employer for many years. There are also many old labor certification cases pending under
pre-PERM rules.

On May 25, 2006 the U.S. Senate passed immigration bill 2611, which contained several
increases in the number of H-1B visas, including:

1. raising the base quota from 65,000 to 115,000,

2. Automatically increasing the base quota by 20% whenever it is reached with no

provision for lowering it,

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3. Adding 6,800 visas for trade agreements separate from the base quota,

4. Adding 20,000 visas for those with foreign graduate degrees,

5. Raising from 20,000 to unlimited the number of visas for those with U.S. graduate
degrees, and

6. Making visas to non-profit organizations exempt from the quota.

However, as the House refused to consider the measure, it died in conference and no H-1B
increase was approved in time for the elections.

The USCIS has announced that after completing a policy review that it was clarifying that to
avoid H-1B quota limits, individuals who spent one year outside of U.S. and did not exhaust
their entire six year term can choose to be re-admitted for ―remainder‖ of initial six-year
period without being subject to the H-1B cap.

The USCIS has also announced that after completing a policy review that it was clarifying
that ―any time spent in H-4 status will not count against the six-year maximum period of
admission applicable to H-1B aliens.

On May 24, 2007, the Senate considered amendments to the Comprehensive Immigration
Reform bill (S. 1348) including the Sanders Amendment to increase the H-1B Scholarship &
Training Fee from $1500 to $8500 (for H-1B employers with more than 25 full time
employees). The additional fee was to be used for training and scholarship programs and in
addition to other existing fees. Senator Sanders listed the Teamsters Union and the AFL-
CIO among supporters of his amendment. Without this amendment, Senator Sanders (I-VT)
said, "skilled middle class and upper middle class Americans" would be hurt, and their
wages would continue to be suppressed. Just prior to the vote, Senator Sanders announced
that he had made changes to his amendment, dropping the fee for H-1B visas from the
$8500 he proposed earlier, down to $5000. Following Senator Sanders‘ announcement,
Senators Kennedy and Specter expressed their support for the bill and the amendment
passed by a vote of 59–35. Compete America, a coalition of U.S. tech companies, reported
the passage of the Sanders amendment will "accelerate outsourcing and undermine U.S.
economic growth."

The Consolidated Natural Resources Act of 2008, which, among other issues, federalizes
immigration in the Commonwealth of the Northern Mariana Islands, stipulates that during a
transition period, numerical limitations will not apply to otherwise qualified workers in the H
visa category in the CNMI and Guam.

On Feb. 17, 2009, President Obama signed into law the American Recovery and
Reinvestment Act of 2009 (―stimulus bill‖), Public Law 111-5. Section 1661 of the ARRA
incorporates the Employ American Workers Act (―EAWA‖) by Senators Sanders (I-Vt.) and
Grassley (R-Iowa) to limit certain banks and other financial institutions from hiring H-1B
workers unless they had offered positions to equally- or better-qualified US workers, and to
prevent banks from hiring H-1B workers in occupations they had laid off US workers from.
These restrictions include:

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1. The employer must, prior to filing the H-1B petition, take good-faith steps to recruit
U.S. workers for the position for which the H-1B worker is sought, offering a wage at
least as high as what the law requires for the H-1B worker. The employer must also
attest that, in connection with this recruitment, it has offered the job to any U.S.
worker who applies who is equally or better qualified for the position.

2. The employer must not have laid off, and will not lay off, any U.S. worker in a job
essentially equivalent to the H-1B position in the area of intended employment of the
H-1B worker within the period beginning 90 days prior to the filing of the H-1B petition
and ending 90 days after its filing.

Recent Changes to U.S. Policy

USCIS (U.S. Citizenship & Immigration Services) recently issued a Memoranda dated 8 Jan
2010. The memoranda effectively states that there must be a clear "employee employer
relationship" between the petitioner (employer) and the beneficiary (potential Visa holder). It
simply outlines what the employer must do to be considered in compliance as well as putting
forth the documentation requirements to back up the employer's assertion that a valid
relationship exists.

Some argue that this has effectively "killed the bodyshop industry". While it is clear that the
number of Visa petitions granted has declined (or is slower than normal to reach the full
quota), it is not clear whether or not this is a result of simple political pressure to put the
program on "hold", or a long-term result from real economic realities. The Memoranda gives
three clear examples of what is and is NOT considered a valid "employee employer
relationship".

 an accountant working on and off-site to work

 a fashion model

 a computer software engineer working off-site

In the case of the software engineer the petitioner (employer) must simply agree to do (some
of) the following among others:

 supervise the beneficiary off-site & on-site

 maintain such supervision through calls, reports, or visits

 have a "right" to control the work on a day-to-day basis if such control is required.

 provide tools for the job

 hire, pay and have the ability to fire the beneficiary

 evaluate work products and perform progress/performance reviews

 claim them for tax purposes

 provide (some type of) employee benefits

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 use "proprietary information" to perform work

 produce an end product related to the business

 have an "ability to" control the manner and means in which the work product is
accomplished.

Emergency Border Security Supplemental Appropriations Act, 2010

In a setback to the Indian information technology (IT) industry, the US Senate has passed
new legislation to increase the fees that companies have to pay to get H-1B and L visas for
skilled workers. Indian software firms use these visas to ship engineers to the US for onsite
work.
The money raised from higher visa fees is to fund an extra $600 million (Rs2,760 crore)
spending to strengthen security along the US border with Mexico.

The bill, introduced Democratic Party senators Chuck Schumer and Claire McCaskill in the
US Senate on Aug 5th 2010 proposes to raise funds for the $600 million US-Mexico border
security by doubling the price for each H-1B work permit. ―A handful of foreign controlled
companies that operate in the US—such as Wipro, Tata, Infosys and Satyam—rely on H-1B
and L1 visas to import foreign workers to the US,‖ said McCaskill in a statement on her
website. ―The Senate Democrats‘ border security proposal would increase the visa fees paid
by these companies by roughly $2,000 per visa application.‖ "Instead of raising the deficit --
which we do not do in this bill -- or diverting vital stimulus funds, the Senate ultimately
agreed to pay for the border package by increasing visa fees on companies who hire foreign
workers in a manner contrary to the original intent of the H-1B visa programme," Schumer
said in the US Senate. The proposed increase in visa application fee by at least $2,000 for
next five years would raise nearly $550 million out of $650 million that have been allocated
for increasing the security of the US-Mexico border. These fee increases would apply only to
companies with more than 50 employees and for whom the majority of their workforce is
visa-holding foreign workers.

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.In 1990, the US Congress realised the world was changing rapidly and that technological
innovations, such as the Internet, were creating a high demand in the United States for hi-
tech workers to create new technologies and products. Consequently, Congress created the
H-1B visa programme to allow US employers to hire foreign tech workers in special
circumstances when they could not find an American citizen who was qualified, he said.
Many of the companies that use this programme today are using the programme in exactly
the way Congress intended; that is, these companies, such as Microsoft, IBM and Intel, are
hiring bright foreign students educated in our American universities to work in the United
States for 6 or 7 years to invent new product lines and technologies so that Microsoft, IBM
and Intel can sell more products to the American public and hire more American workers,"
he said. "Then at the expiration of the H-1B visa period, these companies apply for these
talented workers to earn green cards and stay with the company. "When the H-1B visa
programme is used in this manner, it is a good programme for everyone involved. It is good
for the company, it is good for the worker and it is good for the American people who benefit
from the products and jobs created by the innovation of the H-1B visa holder," Schumer
said.

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RESEARCH METHODOLOGY
Research methodology is a way to systematically solve the research problem. It may be
understood as a science of studying how research is done scientifically. In it we study the
various steps that are generally adopted by a researcher in studying his research problem
along with the logic behind them. It is necessary for the researcher to know not only the
research methods or techniques but also the methodology.

RESEARCH DESIGN
A research design is a framework or a blue print for conducting the market research project.
It details the procedures necessary for obtaining the information needed for obtaining the
information needed to structure or solve a marketing research problem.

Design maybe broadly classified into:

- Exploratory research

- Conclusive research

Research period
Research was conducted in the within a weak (7-12 Aug) 2010.
Data Collection

Mainly secondary data was used in our research

Secondary Data: Data, documents, records, or specimens that have been collected, are in
existence prior to the beginning of the study. It had information about our product and its
terms and also details about the other competitor companies of our product existing in the
same market. This information was extracted from facts and figures already there, from
magazines, internet, Newspaper & journals etc.

RESEARCH LIMITATIONS

Though every effort was put in to make this report authentic in every respect,
there were few uncontrollable factors that might have had their influence on the
final report. The various limiting factors are -:
 The data could be gathered from secondary source thus any error in the information
would have also got replicated in this report.
 As the data was gathered from the secondary sources, the validity of the data could not
be tested.
 Time constraint was the major limitation faced by the researcher.
However, every effort is made to ensure that these do not in any way adversely affect the
results of the study and inject an element of objecting in the report.

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Analysis
IMPACT ON H-1B VISA FEE HIGH ON INDIAN IT INDUSTRY

“Indian IT firms funding border security in the US...is a strange phenomenon. It is little
draconian,”
Indian IT firms have been the biggest beneficiaries of these visa categories and the US sets
an annual cap on the number of visas used. In the current year, the US has set a cap of
65,000 visas under H-1B category. Figures for number of L category visas availed are not
available as they are for intra-company transfers and there is no cap on them. Both these
categories of visas have been controversial, with critics saying that they are being used even
where there is no labour shortage in the US and that they artificially depress wages for
American workers.

The Bill specifies that fees would be hiked primarily for those employers who have more than
50% of their employees on the H-1B or L category visa. Though the number of H-1B visas
issued to Indian firms has been decreasing, under the L category when the nature of work
changes or an employee extends stay or is transferred onto a different project, fees would
have to be automatically paid. At the one hand, US talks about promoting global trade and
here they bring in an indirect form of protectionism. As business becomes more competitive,
it is not (a) level playing field any more.
India‘s National Association of Software and Services Companies (Nasscom) said every
year the Indian IT industry contributes about $1billion for social security payments in the US
for even employees posted temporarily there. Since an individual needs to be in the US for
at least 10 years before one can enjoy benefits of social security, the money spent does not
benefit the employees or the Indian IT industry. Interestingly, many countries in Europe such
as Belgium and Germany offer social security benefits. India has at least 50% of the global
outsourcing business.

According to Nasscom, the Indian IT industry was likely to be hit India‘s $50 billion
outsourcing industry by $200-250 million annually in additional fees though it gets about only
12% of the total H-1B visas issued. India earned nearly two-thirds of its software and back
office exports of $49.7 billion in fiscal 2010 from the US. This year, the industry expects to
grow 15-18% on increased business flow from customers. At present, it costs about $3,320
for H-1B and L visas. The Bill recommends increasing visa fees in both categories by
another $2,000. The increase in visa fees would add around $1,000 per year to the cost of
an employee, or 12 hours of chargeable onsite wages for these technology workers.
From around $2,000 being paid for each H-1B permit, Indian tech firms will have to pay
$4,500 for new visas and $4,000 for visa renewals. For the tech firms coming out of last
year‘s economic crisis, this could mean higher costs. The visa fee hikes will further erode
cost arbitrage and cause a change in the operational model of Indian offshore providers. It
also raises fees on L visas (given to multi- national transferees) for foreign companies. Their
fees will raise from $320 to $2,570.

US Chamber of Commerce said in its latest report, In FY 2009, Indian tech companies used
4,809 new H-1B visas, which equals to 0.003 per cent of the US civilian labour force, less

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than 1/100th of 1 per cent. The new H-1Bs used by Indian companies represented only
about six per cent of total initial beneficiaries (new employment), according to US Citizenship
and Immigration Services, When information technology services companies - whether
Indian or non-Indian - perform work in the United States it is only because US companies
believe such work makes their businesses more profitable. If such service providers enable
US businesses to concentrate on core functions and run more effectively, then US
companies can hire more people in the long run.

India‘s top tech firms, such as Tata Consultancy Services (TCS), Infosys Technologies and
Wipro, send up to 10,000 professionals every year on H-IB work permit to deliver temporary
projects locally for customers inlcuding General Electric and Citigroup. On an average, 70-
80% of Indian tech firms‘ US workforce is temporary workers. American tech firms including
Microsoft and Intel, which also send professionals on H1B permit, will escape the levy as
foreign workers account for less than half of their US workforce. Infosys Technologies Ltd,
India‘s second largest software exporter, said the new law is discriminatory and impacts the
competitiveness of certain companies because lot of other US companies who have people
on L1 will not have to bear this extra cost. The firm said it is hiring locals for the past few
quarters in the US and plans to recruit 1,000 people. Tech Mahindra Ltd, said that impact on
the company would be minimal as nearly 85% of the work is done offshore.

Although, some tech firms don‘t mind paying an additional fee for the work permits in order
to grow their US business. ―It‘s a $30 billion market we are talking about—does it really
matter?,‖ asked a senior official at one of the top ten Indian tech firms. Visa fee hikes will
result in a minor cost escalation and in the larger scheme of things this is a non issue. It
would not rate this even among the top five issues of the industry. Higher visa costs could
actually help Indian firms demand better rates from customers. Higher attrition, currency
headwinds are all signaling a hike in the billing rates and this becomes one more arrow in
that quiver.
Some immigration experts feel the US may find it difficult to implement such a levy. It will be
difficult to implement such a big hike in the filing fees for petitions. A routine hike in H1B and
L1 fees is already scheduled for the fall of 2010. But a big non-routine hike like this one may
be difficult to implement. Higher costs of sending temporary workers to the US can
potentially trigger more offshoring of back office and software application development
projects to India. There are not many takers for the H1B visa as there used to be, and
offshore firms are relying lesser on on-site work. This won‘t be that much of a burden
especially because the H1B visa is given for five years and is extendable. Fallout from the
rising costs will be to move more work to India –the US government‘s aim in creating more
jobs in the US will not be fulfilled.

IMPACT OF H-1B VISA FEE HIKE ON USA ECONOMY

H-1B visas result in more patents for the US

The US Chamber of Commerce has come out strongly in favour of more H-1B visas, saying
that work visas benefit the US economy with more patents. The report cites research
undertaken at large US tech companies like Intel, IBM and Microsoft, indicating that liberal
H-1B regime until 2006 resulted in large number of patents at these firms. The US Chamber
cites a research by Harvard Business School fellow William Kerr and William F Lincoln

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(University of Michigan), which says that in 2006, the Indian and Chinese inventors‘ share of
US domestic patents filed by microchip giants Intel and Applied Materials exceeded 30%.
The period from 1999 to 2006-07 enjoyed liberal visa regimes, with visas issued in 1999-
2001 often topping 115,000 in number.

For IBM and Microsoft the Indian and Chinese inventor‘s share of US domestic patents
increased to over 20% by 2006, nearly doubling since 1995. In Intel‘s case the share of
Indian and Chinese employees increased from around 20% in 1995 to nearly 40% a decade
later. It resulted in direct benefit to the US economy. The report said that refusing H-1B visas
will result in more layoffs in the US. ―Layoffs occur because a product or service has outlived
its place in the market. Hiring high skilled foreign nationals alongside US professionals can
help a company retain its competitive edge in the marketplace by more innovation,‖ said
Randel K Johnson, senior vice president labour, immigration & employee benefits at the US
Chamber of Commerce.

The report also lambasts critics who insist H-1B professionals are hired to save money.
Critics fail to note that H-1B applicants have to pay high fee, making these employees even
costlier for employers. The American Council on International Personnel, estimates that the
combined H-1B and green card sponsorship costs can exceed $35,000 for one individual.

The Chamber also adds that foreign nationals have added value to US education, as well. In
electrical engineering classes in 2006, almost 68% of the full-time graduate students
(master‘s and PhDs) on US campuses were foreign nationals. In all engineering courses, the
foreign nationals‘ share was 54%. Computer science and economics classes had the
maximum (about 60%) courses being composed of foreign nationals.
The study also cites reports of the National Venture Capital Association, which states that
over the past 15 years, immigrants have started 25% of US public companies that were
venture-backed.

The report encourages more H-1B visas citing innovation in Google, as a case in point.
Orkut Buyukkokten, was born in Konya, Turkey, and later received his PhD in computer
science from Stanford University. He joined Google as a software engineer in 2002 through
the H-1B visa program, and his innovation led to the creation of Orkut, one of the most
popular social networks which helped Google grow. Krishna Bharat who joined Google in
1999, through the H-1B program, created Google News. According to Google as a global
company, Google is fortunate to be able to have employees work for us in other countries if
they are not allowed to stay in the US.

The American Council on International Personnel estimates the government and legal fees
petitioning for an H-1B professional and renewing that petition after three years would be
$8,500-$15,000. Without the renewal or dependants, the cost would range from $4,100 to
$7,000. This includes legal costs, government mandated training, scholarship fees, an anti-
fraud fee, and application and visa fees. Thus, contrary to popular belief, hiring a H-1B visa
candidate over a US citizen, is a costly proposition, but it leads to creation of more talent and
innovation inside the US.

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Conclusion
Slamming the critics of H-1B, a US think-tank and corporate America have suggested
removal of Congressional cap on this popular work visa programme and allow markets to
determine number of skilled foreign workers eligible to work in the country.
.
The 81-page report titled "Regaining America's Competitive Advantage: Making our
Immigration System Work" has been jointly prepared by US Chamber of Commerce, which
is the top representative body of the American businesses, and American Council on
International Personnel (ACIP), an eminent think-tank. The best policy for the United States
is one that sides with freedom and innovation, not restriction. It is a policy where the H-1B
cap is either eliminated or set high enough that we can let the market decide on the number
of new skilled foreign nationals who work in America each year.

The best policy would ease the way for employers to sponsor high skilled individuals for
green cards by exempting from labour certification and current employment-based immigrant
quotas many who now languish in 6 to 20 year queues. Allowing top talent who graduate
from US universities to gain a green card directly will help US employers retain the world's
leading future innovators. The report has come out with some very interesting finding about
H-1B visa programme, according to which popular foreign work visa has been a key factor in
US' competitiveness and its economic growth.

Findings of this report show that leading US companies cite the role played by highly
educated foreign nationals in the success of the organisation. Noting that the critics argue
US has too much talent entry of high skilled foreign nationals should be blocked, the report
says real immigration-related problem is that many talented people have not been able to
stay in US after graduation because of low quotas for H-1B visas and employment-based
green cards. H-1B visas are a large source of scholarship money for US students, with H-1B
training and scholarship fees levied on each petition (and renewal) having funded more than
53,000 math and science college scholarships for US students through the National Science
Foundation. There is little evidence high skilled foreign nationals on H-1B visas are in
general paid less than their American counterparts. The report said critics who insist H-1B
professionals are hired to "save money" fail to note that in addition to legal requirement to
pay H-1B visa holders higher than prevailing or actual wage paid to US workers, employers
must pay significant legal and government fees.

The American Council on International Personnel estimates combined H-1B and green card
sponsorship costs (government/legal fees) can exceed USD 35,000 for one person.
According to the Chamber, it‘s the smaller companies which are liable to more violations
than large firms, which have come under fire for employing large number of people under H-
1B program. According to the US citizen and immigration services, companies with less than
$10 million in annual revenue had a 41% violation rate, compared to a 7% rate for
companies with greater than $10 million in revenue. Only 7% of companies with more than
$10 million in annual revenues (eight cases) audited were found to have suspected fraud or
technical violations, says the US chamber of commerce, thus putting forth a case for more
H-1B visas.

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Reference
 US moves to hike H-1B visa fees LiveMint Aug 6 2010.
 Wipro tops list of H-1B visa professionals in 2009 Economics Times 7 Jun
2010.
 'H-1B holders earn more than Americans' Economics Times 22 MAY, 2010
 Rush for H-1B visas slows as low wages, protectionism take sheen off US jobs
Economics Times 4 JUN, 2010
 Indians grab maximum number of H-1B visas Business standard July 8, 2010
 Let market decide on H1B numbers: US Chamber of Commerce Economics
Times 16 AUG, 2010,
 H-1B visas result in more patents for the US: Panel Economics Times 18 AUG,
2010
 http://en.wikipedia.org/wiki/H-1B_visa
 http://en.wikipedia.org/wiki/L-1_visa

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