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Outsourcing: A sea
change
By Siddharth Srivastava
NEW DELHI - US industry has
long been lobbying to remove immigration barriers
for skilled foreign workers. Even Bill Gates
recently made a strong case for this. But three US
entrepreneurs have done even better: they have hit
upon a novel plan to get 
around the problem - if
you cannot fly them in, ship them in. The concept
even has a fancy title: "hybrid sourcing".
A front-page report in The Times of India
on Wednesday said three American entrepreneurs
plan to house an international crew of software
developers on a ship just off the California
coast. This way, say promoters of the company -
called "Sea Code" - US jobs will stay close to
home, foreign workers will be saved immigration
hassles, and US firms will get competitive rates
for their projects. Sea Code will be registered in
the Bahamas, hence, not subject to US labor laws.
The trio has already identified a $10-million ship
called Carousel for this novel venture.
The promoters, San Diego techies David
Cook and Roger Green, backed by investor Barry
Shillito, a former assistant secretary of defense,
say they will hire around 600 programmers from all
over the world - including the US and India. "With
hybrid-sourcing, Sea Code brings the jobs already
offshored back to the US and ensures that 90 cents
of every dollar from our clients stays in the US
instead of flowing to foreign locations," the
company said in a statement. Cook, a
sailor-turned-techie, said he expects the venture
to sail smoothly: "We're not a slave ship." His
partner Green says it will be more like the
"International Space Ram Station".
Though
it remains to be seen whether the trio pulls it
off, the attempt surely is a reflection of the US
industry's growing desperation in the face of
government policies that limit the immigration of
skilled foreign workers. Microsoft chairman Bill
Gates recently slammed the US administration's
strict limits on temporary visas for technology
workers - the bulk of whom are Indians - saying
that if he had his way, the system would be
scrapped entirely. "The whole idea of the H1-B
visa thing is, don't let too many smart people
come into the country. The thing basically doesn't
make sense."
Gates was reacting to the
current annual cap of 65,000 with an additional
20,000 exempt visas (for foreign graduates from US
universities), taking the total to 85,000,
consequent to the outsourcing backlash. Before
2000, the H1-B program had a visa ceiling of
65,000 but was increased to 115,000 in 2000 and
subsequently to 195,000 for a period of three
years, during the tech boom. But after the
three-year period ended, the H1-B cap was brought
back to the original 65,000 per year because of
protests by American workers in an election year.
Last year, the quota was exhausted on the very
first day the new allocations opened - that's just
how desperate US industry is for Indian technical
talent.
H1-B is a specialty-occupation
visa status under which a large number of Indian
information technology (IT) firms send their
employees to the US for on-site project
development work, popularly known as
body-shopping. The US is the prime export
destination for the Indian software industry, with
more than 50% of the H1-B visas issued worldwide
by the US going to Indian professionals. India is
also currently the second-largest source, trailing
only Mexico, of legal immigrants to the US.
Echoing Gates's words, Microsoft India
chairman Ravi Venkatesan said: "there exists a
demographic challenge in the US with an aging
population, whereas India has [a large number of]
dynamic and highly educated youth. It is in the
natural interest of both economies to allow this
integration of resources and talent. In this day
of globalization, dropping artificial barriers
such as this is essential to allow [a] free flow
of trade and talent to benefit both countries,
while fostering economic development at the same
time."
US industry has been pushing for a
removal of the cap, which has also been opposed by
labor unions. Complete America - a coalition of
over 200 corporations, universities, research
institutions and trade associations - has
advocated an increase in the annual cap. The
allowance of an extra 20,000 visas for foreign
nationals graduating from US universities was a
result of its efforts.
As things stand,
however, the Bush administration does not seem to
be in any mood to comply with the demands of Gates
or other US companies. The H1-B visa program is
already under fire by unemployed US professionals
for "taking away" their jobs. The administration
believes that unemployment among US computer
engineers exceeds figures in other industries.
Indian information industry czars are
predictably happy at Gates' clarion call, which
they feel highlights the mismatch between the
availability of skills and demand for tech workers
in the US, despite the Bush administration's
claims. The Indian IT industry believes the cap
will affect Indian software firms, which have a
large number of clients in the US, though it will
also bring more offshore work to India from the
US.
Operationally, the H1-B restrictions
will curtail the flexibility to reinforce on-site
teams at various stages in the software
development lifecycle (system requirement studies,
testing and implementation phases, etc) if
adequate and proactive planning is not in place.
Since there is a perception that big companies
like Wipro, Infosys, HCL and Tata Consultancy
Services have already built robust H1-B "visa
banks", with a shelf life of six years, in
anticipation of a shortage, it is likely to be the
smaller IT firms that will really have to struggle
for new business as well as servicing current
clients. However, it is believed that if the cap
stays on any longer, it will definitely impact the
Indian IT industry as a whole.
In a
statement, India's software giant Infosys said:
"Bill Gates is an icon of American industry. His
voice creates a positive cluster of opinion and is
a clear signal to policymakers what US Inc wants.
Such voices will be more vocal now as you will see
the rhetoric fading out. After 9/11 and the
resulting security measures, immigration to US,
skilled people as well as students, has taken a
dip and now [the US] needs more skilled people."
There are other areas apart from the tech
sector that are feeling the pinch of the H1-B cap.
Reports in India highlight the acute shortage of
nurses and teachers, which can adversely affect
the US while at the same time opening up
opportunities for Indians. According to Stephen S
Nuell, president of Nurses for International
Exchange, the demand for nurses has escalated so
much that the US Congress is set to bring in
legislation to make visas to nurses more easily
available. Estimates put the demand for Indian
nurses in the US at 250,000. Meanwhile, the
teacher shortage in the US is estimated at
700,000. Will it be floating hospitals next? Or
schools...?
Siddharth Srivastava
is a New Delhi-based journalist.
(Copyright 2005 Asia Times Online Ltd. All
rights reserved. Please contact us for information
on sales, syndication and republishing.) |
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