Companies may have found a way around H-1B visa limits

2007's No. 5 most underreported tech story

The Story: Silicon Valley businesses have long argued that changes in the immigration laws are needed to ensure a continuing supply of highly skilled workers. The current limit of 65,000 under the standard H1-B visas is not enough, they say. (The quota was filled in less than a month in 2007.)

[ Slideshow: 2007's top underreported tech stories ]

But that number obscures an important fact: The real total of visas issued to highly skilled workers is closer to 400,000 annually, according to the federal Citizenship and Immigration Services (CIS) agency. And that, say some critics, may mean that the law is being abused.

There are two reasons the number is so large.

First, the H1-B visa cap has a built-in exemption that allows an additional 20,000 workers who have graduated from U.S. universities with an advanced degree (master’s or higher) to enter every year.

Second — and the biggest reason — is the use of L-1 visas, which are granted to executives and workers with specialized skills employed by multinational companies. Because there is no cap on L-1 visas issued each year, the numbers have soared. In the last three years, an average of 315,000 L-1 visas have been issued each year.

Unlike the H-1B visas, the L-1 visas are not intended to be a springboard to possible permanent residency and a coveted green card. In essence, the L-1s are intended to allow multinational companies to rotate staff across national borders, so they can transfer foreign managers and specialists within the company to U.S. offices for a limited period of time.

But the vast number of workers admitted with L-1 visas has critics suspecting that companies — Indian outsourcing firms in particular —are using them as a back door to bring in lower-paid workers to do jobs that could be performed by Americans, rather than for the intended purposes of staff rotation.

"It's clear that foreign outsourcing firms are abusing the system, and we can't let that continue," Sen. Richard Durbin (D-Ill.) said earlier this year as Congress debated immigration reform. Here’s what upset him: According to immigration records, 14 of 20 companies whose employees were granted the most L-1 visas were offshore outsourcing firms, including Tata Consultancy, Satyam Computer Services, Wipro, and Infosys Technologies.

Tata Consultancy obtained 4,887 L-1s in fiscal 2006 — the most of any company — and 3,601 in fiscal 2007, second only to Cognizant (4,869), a U.S.-based outsourcer with a major presence in India. "I find it hard to believe that any one company has that many individuals … legitimately being transferred within a single year," Durbin said in Congress. (Tata declined to comment to InfoWorld, but a spokesman told BusinessWeek, "We're complying with the law and with the regulations. We want to work with Congress to address any issues they may have.")

Infosys, Wipro, Satyam, Tata, and Cognizant also appear on the CIS’s top 10 list of companies obtaining H-1B visas for employees in fiscal 2007, along with Microsoft, Cisco, IBM, Motorola, and Intel. Those facts further raise critics’ suspicions.

Bob Meltzer, who heads the VisaNow firm that helps applicants obtain visas, says there’s a growing belief that the L-1s are being abused today, though he can’t tell if that belief is justified. He does note that the L-1s had been abused in the early 1990s in the manner that critics suspect is happening today.

The Bottom Line: Immigration is a tough issue. And it’s even tougher when we don’t have all the facts, as is the case on employers’ claims of labor shortages requiring more foreign hires and employees’ claims of being replaced by foreign workers by companies looking to save a buck. When you’ve figured out the right balance, let the pols know what you think.

Complete list of 2007's underreported stories:

1.  Java is becoming the new Cobol

2.  Sun Microsystems is back in the game

3.  Hackers take aim at Mac OS X

4.  There are some threats you can worry less about

5.  Companies may have found a way around H-1B visa limits

6.  Open source’s new commercial strategy

7.  End-to-end Ethernet finally arrives

8.  Blade servers arrive for the masses

9.  BI is dead; long live BI

10. Balance of power shifts to software buyers