Murthy and Five Former Ambassadors on Senate IT-Contracting Language

Murthy and Five Former Ambassadors: Senate IT-Contracting Language Must Go!

Years of legislative inertia have held back even the simplest of immigration reforms in Congress, so we were greatly cheered in June 2013 when the U.S. Senate passed a comprehensive immigration bill – not least because it would substantially increase the H1B cap to 115,000 per year, and allow further increases, to as many as 180,000 H1Bs annually. It also would boost the master’s cap to 25,000, reserving this pool of visas for the exclusive use of STEM workers. All of which suggested that the Senate understood how mission-critical these H1B workers are to America’s high-tech sector – a major driver of growth and jobs.

At least, that would be the message, if not for several troubling provisions in the Senate bill – provisions that reflect a radically different view of the H1B program. Specifically: language that targets certain IT consulting firms – those deemed “H1B-dependent” – which would prohibit them from placing their H1B employees offsite. As a practical matter, the provision would all but shut down the U.S. operations of these companies, because it sets an extremely low threshold for defining when a company is H1B-dependent: if at least 15 percent of the company’s workforce are H1B workers, the outplacement prohibition is triggered. [See Murthy at U.S.-India Business Summit, MurthyBlog, 16.Jul.2013.]

Under the bill, companies considered H1B-dependent would face further challenges to their economic viability and competitiveness: increased fees – up to $10,000 per worker – higher wage requirements, and by fiscal year (FY) 2017, an outright ban on hiring more than 50 percent of a company’s workforce as H1Bs and L-1s. However, a company would avoid being treated as H1B-dependent if they sponsored the vast majority of their H1B and L-1 employees for green cards. In that case, such companies could continue placing workers offsite, if they paid an additional fee.

What’s strangest about the Senate bill is its inconsistency: alongside forward-thinking policy choices – like increased H1B caps – we find draconian restrictions, higher fees, and heavy-handed regulations that are bound to curb, rather than encourage, H1B usage. Not only that, given the damage these provisions would inflict on U.S. companies and the IT contractors that serve them – many of whom work for India-based consulting firms – the Senate immigration bill would harm trade relations between the U.S. and India.

Murthy Law Firm founder and president, Sheela Murthy, has been actively involved in high-level efforts to warn the Senate about the problems inherent in their approach to H1B visas and offsite contracting. Ms. Murthy raised concerns about these provisions at the Annual Leadership Summit of the U.S.-India Business Council (USIBC) in July, and her concerns were echoed in a recent letter from five former U.S. Ambassadors to India to leaders in both houses of Congress, urging them to remove the discriminatory provisions “that would limit market entry of IT professionals who work for so-called visa-dependent IT companies.” The five former U.S. Ambassadors are: Thomas R. Pickering, Frank G. Wisner, Richard Celeste, David C. Mulford, and Robert Blackwill. [See Former Ambassadors Urge Congress to Keep Strong Trade Relations with India, Coalition for Jobs & Growth, 11.Sep.2013.]

Among the objections outlined in the Ambassadors’ letter:

  • The IT contracting provisions will not serve U.S. economic interests, and will complicate relations with India – a vital U.S. partner in trade and national security, and a longtime friend and ally.
  • Bilateral trade between the U.S. and India now tops $100 billion a year, and bilateral investments exceed $50 billion; India’s thriving middle class provides an enormous market for U.S. goods and services.
  • The United States and India “have partnered to form a ‘knowledge economy’ – not outsourcing, rather a partnership between U.S. and Indian high-skilled personnel to drive innovation and provide U.S. companies with an advantage over global competitors.”
  • “This activity has been supported by the creation of thousands of American jobs and partnerships with U.S. educational institutions who produce domestic IT graduates. The drivers for making more IT professionals available to meet American needs and drive growth have been U.S. and global Indian companies who bring temporary IT personnel to U.S. businesses when domestic supply of trained professionals is not sufficient.”
  • The Senate bill’s IT-contracting provisions would block free-market competition, and could provoke protectionist measures on both sides, further damaging U.S.-India trade links in the process.
  • We cannot expect trade relations to be a one-way street: U.S. laws and regulations should treat friendly nations in a way that encourages and strengthens our bilateral trading relationship; the Senate’s IT-contracting provisions are wholly at odds with that purpose.

At this writing, the House of Representatives is embroiled in ongoing fiscal battles that most likely will keep immigration reform off the legislative calendar for the next several weeks. Nonetheless, the Murthy Law Firm and its partners at the USIBC are continuing to sound the alarm about the IT-contracting provisions in the Senate bill, to prevent a similar mistake from occurring in the House, if and when they finally return to the immigration debate.

The Murthy Law Firm spoke out against these provisions in a recent series of meetings on Capitol Hill, communicating our concerns with key professional staff from the Senate Foreign Relations Committee. We will continue to press Congress to remove the offending language, and will keep our readers informed as these developments unfold.

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Disclaimer: The information provided here is of a general nature and may not apply to any specific or particular circumstance. It is not to be construed as legal advice nor presumed indefinitely up to date.