The immigration reform deal announced in the U.S. Senate last week is a work in progress with an uncertain future in both houses of Congress. And its H-1B provisions aren't making either proponents or critics of the visa program happy.

If the bill resulting from the bipartisan agreement survives the legislative gantlet, it will effectively increase the annual H-1B cap to 135,000 visas beginning in the next federal fiscal year, which starts in October. That is based on a proposed increase in the cap for regular H-1B visas from 65,000 to 115,000, plus the continuation of 20,000 visas that go to applicants who have received advanced degrees from U.S. universities, according to some groups that have analyzed the proposed legislation.

The measure also would provide some relief for companies that applied for H-1B visas for the next fiscal year but lose a selection lottery held by the U.S. Citizenship and Immigration Services. The USCIS received about 150,000 applications for the 65,000 regular visas on April 2, the first and only day that it accepted applications.

A computer program will randomly generate a list of visa winners. But the Senate bill, if it reaches President Bush's desk as written, would apply to the 2008 fiscal year, enabling the USCIS to issue an additional 50,000 visas to applicants from this year's lottery pool.

In addition, the proposal in the Senate would allow the new cap of 115,000 regular visas to quickly rise if it was reached during the first half of a fiscal year. If that happened, the cap would increase another 15 percent for that fiscal year and then an additional 15 percent for the subsequent year, although it couldn't go any higher than 180,000 visas annually.

The legislation also incorporates some of the provisions included in an H-1B bill drafted earlier this year by Sens. Dick Durbin (D-Ill.) and Chuck Grassley (R-Iowa). For instance, no more than 50 percent of the U.S.-based employees at a company using H-1B workers can be visa holders.

The proposed rule would apply that restriction to companies with 50 or more employees.

That limit could have a substantial impact on India-based offshore services firms, many of which are heavy users of H-1B visas, said Charles Kuck, an immigration attorney and president-elect of the American Immigration Lawyers Association.

If the offshore vendors have more than 50 percent of their employees in the U.S. working under visas, the Senate legislation's proposed limit would "disable them from using the [visa] program for some period of time," said Kuck. Companies that also use H-1B visas but employ large numbers of U.S workers, such as Microsoft, wouldn't be affected.

But proposed changes in how green cards are awarded to foreign workers "is a much bigger problem" for IT vendors, said Kuck. The Senate bill would create a point system for issuing green cards based on the skills and education of the person seeking permanent residency. The current system is more market-driven because it allows employers to request green cards, more closely matching individual employees with needed skills.