H1B Visas; Follow the Japanese U-Turn, Partially

After years of importing tens of thousands of foreign workers of Japanese descent from Latin American countries like Brazil and Peru for blue-collar jobs, Japan is now doing an U-turn on its immigration policy.

An U-turn that America must seriously consider (but only partially) vis-a-vis its H1B Visas.

Facing growing unemployment of its own citizens because of slumping production, Japan is now paying these guest workers who came there on special Nikkei Visas $3,000 for air fare and $2,000 for each dependent if they agree to go back home and not seek employment in Japan again.

With growing unemployment in the U.S. (going beyond 10% in some parts), America must study the Japanese model with some modifications.

Here are some suggestions on how we can reform the H1B program:

* Offer to pay the airfares of H1B employees and families who promise to return to their native countries and not apply for job visas for 10 years. U.S. airlines are in bad shape anyway so this H1B cargo should provide a fillip to their business.

* Impose a 10% H1B tax on the wages of H1B employees to fund the state labor departments and help pay unemployment insurance to American workers.

* Impose a $10,000 fee on the employer for each H1B Visa issued over and above the immigration fees to fund the investigation into  the massive H1B fraud.

* Impose a $25,000 fee on the employer wishing to sponsor an H1B Visa holder for a Green Card to retrain American workers.

* Seriously consider requiring H1B applicants to serve in the U.S. Army in Afghanistan and Iraq to reduce the bonuses the U.S. Defense Department has been forking out for the last few years to spur recruitment.

Bottomline, we need to make it as difficult as possible for employers to bring in H1B employees that work against the economic interests of American workers and their families.

Studies have already shown that H1B Visas depress wages for American workers and cause job losses.

When the U.S. economy rebounds, we can consider revising the regulations if there are serious labor shortages in some sectors. Until then, let these H1Bs stay where they are – in their countries.

Related Stories:
H1B Pulls Down Wages 6%; Send the Coolies Home
God Exists; Coolie Visa (H1B) Applications Down
IT Employment Down Again in U.S.; Send the H1B Coolies Home, Now
U.S. Senators Take a Shot at Infosys, Wipro, TCS et al

7 Responses to "H1B Visas; Follow the Japanese U-Turn, Partially"

  1. satya   April 24, 2009 at 2:07 pm

    Looks like some more tougher rules are going to get implemented on H1B.


    SearchIndia.com Responds:

    Yes, saw that earlier today.

    Remains to be seen if it’ll pass in Congress.

  2. aditya_k   April 24, 2009 at 10:09 pm

    ‘Som Mittal, president of Nasscom, called the move a protectionist measure and said free trade “can’t be only about goods, it must also include services”.

    He dismissed the charge that H-1B holders are taking away American jobs, arguing that the average stay under the visa was less than two years. “Besides, when Indian companies set up operations in the US, we create many jobs for Americans,” he said.’
    so what do you have to say about this? (its an excerpt from the above article)

    SearchIndia.com Responds:

    Som Mittal is a blabbering idiot who’s paid handsomely to talk rubbish. After our dear friend Dewang Mehta’s death, Nasscom’s top ranks are filled with blithering idiots.

    Som Mittal is talking baloney if he says that when Indian companies set up operations in the U.S., they create many jobs for Americans.

    The reality is that Indian IT firms employ very few Americans. You forget the bedrock or basis of outsourcing is low wages.

    Let’s analyze Som Mittal’s remarks by juxtaposing it against Indian Software giant TCS’ headcount by geography.

    * TCS had 143,761 employees as of March 31, 2009.
    * 91.7% of TCS employees are Indian
    * Of the 8.3% who are foreign, only 8.5% are American. Ironically, Mexican (9.6%), Chilean (15%), Chinese (9.6%), Brazilians (10.8%) and Ecuadorian (13.2%) employees outnumber American.
    * Most likely even Som Mittal can’t locate Chile or Ecuador on the map and yet TCS has more Chilean and Ecuadorian employees than American. What’s going on here? Not hard to figure out, right.

    By our calculations, TCS employs a piffling 1,014 Americans, less than 1% of its total headcount.

    Now comes the best part – 52.4% of TCS revenues in Q4 (i.e quarter ending March 31, 2009) came from North America.

    Source: See Tata Consultancy Services, Fourth Quarter Results, Jan 1-March 31, 2009, P.21

    We doubt that other Indian IT companies are significantly different from TCS when it comes to employing Americans.

    Whatever Ganja Som Mittal is smoking, we’d like some of that too. 😉

  3. kreacher   April 25, 2009 at 6:40 am

    The TCS figures are not as straightforward as you make them to be. Let us look at the numbers again.

    8.2% revenue from Indian clients
    91.8% from rest of the world
    52.4% from N. America

    91.7% workforce from India
    8.3% from rest of the world

    48.2% revenue from delivery onsite.
    If tax jurisdiction is used to determine onsite / offshore revenue, then the 48.2% “onsite revenue” would include the 8.2% revenue from Indian clients as well, resulting in 40% revenue from overseas onsite delivery, globally.

    79.7% excluding trainees
    69.4% including trainees

    Now, the North American clients provide about 52.4% of total revenue, but just around 22.8% of the total revenue is from onsite delivery (40%*52.4/91.8 = 22.8%). The rest of the revenue from North American clients is generated offshore (52.4% – 22.8% = 29.6%).

    The utilization statistic of 69.4% indicates that out of the 143,761 employees 99,770 folks are working on a project at any point of time (this is only an approximation – utilization metrics are much more hairy). With a leveraged cost model and 40% revenue from global onsite delivery, it would potentially mean between 4.5-6 times as many folks working offshore than onsite (assuming that onsite billing rates are 3-4 times offshore billing rates). This would translate to 14000 – 18000 people deployed overseas, and around 8000-10000 people in North America (including citizens, residents and workers). Out of this figure there are 1014 Americans, which is 10%-12.5% of the total figure. I agree that even this is a very small figure out of the total US headcount, but this is permanent headcount – unlike the H1Bs.

    Also, once you consider that the largest IT services company in India has over so many years managed to put 7000-9000 non-US folks in North America, this figure does seem very small. All the Indian IT firms put together wouldn’t account for more than 70,000 people by this analogy. Note that the lags in Green Card processing are significant enough to not move people en masse from H1s to permanent residents.

    I am not defending the Indian IT firms – they employ a lot of chicanery to get undeserving folks H1Bs. And that really sucks, not just for the US but for more deserving folks in India as well.

    But from a purely statistical perspective Som Mittal does have a point – the H1B numbers are very small compared to the overall job pool. However, the statistics conceal two major things.

    The first is the billing rate difference. H1B is just the front of outsourcing. By moving jobs offshore you are essentially killing employment opportunities for a lot of people. A company thinks that instead of hiring one person in the US (citizen / permanent resident / qualified H1B holder), it can hire 3-4 people in an offshore contracting firm. Note that you would even have to pay an H1B holder a lot more money than a person offshore. This is way too tempting a proposition to pass up.

    The second is a floating pool of H1Bs. Companies get a large number of H1Bs, but only a fraction of the folks is onsite at any point of time depending on the skill required. So in a 2-year project I can have one contractor for the first year doing one set of activities and another contractor for the second year doing another set of activities. This would save me the hassle of having to hire one person and fire him once his job is done, then hire another person. Europe deals with this problem by fostering a contract-based business model. It is much more expensive to keep an employee, but everybody wins when you deal with independent contractors. Unfortunately the US structure doesn’t allow much leverage for local independent contractors in terms of healthcare, retirement planning etc, so the fallback option is to get contractors from abroad, a.k.a. H1B holders.

    So even if you have strong embargoes on H1Bs, unless you address the general issue of sending labour overseas and unless you have incentives for local contractors the US will not solve anything of significance. Wait and watch based on this year’s H1Bs – there are still more than 40000 slots open, I believe, but sadly jobs in the US will still be lost in droves.

    SearchIndia.com Responds:

    Read your points.

    1. Even if one goes by your arguments, the number of jobs created by Indian companies in the U.S. is tiny and insignificant.

    Also remember, many of them are likely desi H1Bs turned Green Card holders turned Citizens. Many of them could be secretarial types.

    2. If you look deep into these Indian IT companies, the results are sometimes funny. Here’s an example from our personal knowledge – Even the inhouse lawyers employed by TCS in the U.S. are desis on H1B Visa. That is the acme of nonsense. We go from the fiction that there are no qualified programmers in the U.S. to the fiction that there are no qualified lawyers in the U.S.

    Dissected to its essence, H1B Visas is nothing short of a brutal gang rape on American workers and their families.

    3. Surprised that you haven’t addressed the issue of TCS having more Chilean, Brazilian and Ecuadorian employees than American employees. That’s more of a smoking gun than all the other numbers either you or we have thrown into this pot.

    All in all, Som Mittal does not have a leg to stand on when he claims that Indian companies have created a lot of jobs here (U.S.).

    4. Agree that H1B is the front-end and that the bigger issue is the work farmed out to India.

    5. But if you are a student of politics or history, you will understand that all major ‘reform’ or ‘revolution’ starts off by focusing on one easily identifiable ‘villain.’ That’s the nature of the political process and that’s how you bring in change.

    For Americans, H1B is the visible, easily identifiable component of this outsourcing nonsense. And Senators Grassley and Durbin are rightly focusing on this end of the outsourcing debate.

    6. And for all this talk of Indian talk of globalization now, let’s not forget until 15-20 years back you couldn’t even a bring in a 2-in-1 tape recorder into India without paying a customs duty to protect domestic industry.

    America cannot sustain this level of job losses caused by H1B/outsourcing and the standard of living remain what it is.

    Bottomline – To worship on the altar of free trade when it’s convenient to do so and disdain it when inconvenient to do so is what nations do in the interests of their workers.

  4. allwin   April 25, 2009 at 9:56 am

    you are such ill mannered & always want bad things to happen for your fellow H1B indians.
    You don’t either see the suffering of sri lanksn tamils, all you remember is rajiv killing by LTTE. You are so cruel that for one rajiv life you want tousands of tamils to die.
    For above two crimes, GOD will definitely give you a life time gift which you will enjoy thrughout your life. Mera Baghwan!

    SearchIndia.com Responds:

    1. You write above: you are such ill mannered

    You are a pig and will be treated accordingly.

    If other readers know the filth you have repeatedly written about us and our family members here (that we deleted), they’d spit on you and hold you in the same contempt that we do.

    2. You write: You don’t either see the suffering of sri lanksn tamils, all you remember is rajiv killing by LTTE

    Let’s first address the suffering of millions of Americans and hundreds of millions of Indians, the two constituencies dear to us.

    Also, let’s not forget that until recently the LTTE has been the primary if not the sole representative of the Sri Lankan Tamils.

    Finally, Rajiv Gandhi’s murder by the LTTE terrorists on Indian soil. Only a few underlings have been arrested for the crime so far. The brains behind Rajiv’s murder (LTTE terrorist leader Prabhakaran et al) are still at large (hopefully, not for long).

    3. You write: always want bad things to happen for your fellow H1B indians.

    Not true. In an ideal world, nothing bad would happen to anyone but alas we don’t live in such a utopia.

    That said, the interests of our fellow Americans come first and then the interests of our fellow Indians.

    We believe H1B and outsourcing to India are detrimental to the interests of our country (America).

  5. aditya_k   April 25, 2009 at 10:01 am

    off-topic…have you seen Fahrenheit 9/11 (a documentary)? Just saw it…a must watch…..

    SearchIndia.com Responds:

    Yes. We are big fans of Michael Moore (director of Fahrenheit 9/11).

    We enjoyed it a lot…just as we enjoyed his subsequent documentary Sicko.

    Did you know that Michael Moore is now working on a documentary addressing the shenanigans on Wall Street.

  6. allwin   April 25, 2009 at 4:50 pm

    the bottomline is that koi bi [trash talk] who is not citizen by birth (You too) sabko [trash talk] pe laat marke nikalo…

  7. IAmAnIdiot   April 26, 2009 at 8:30 pm

    [Trash Talk]

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