How dependent are Indian offshore firms on H-1B and L-1 visas? In a word, very. These companies' business models are based on their ability to move Indian and other foreign nationals in and out of the United States. Here's a more direct answer: The "majority of [Indian] companies that operate here have significantly more [than] 50 percent of their workers on H-1B/L1 visas," Som Mittol, the president of the National Association of Software and Services Companies (Nasscom), an Indian trade group, SAID in a recent interview.
The 50 percent figure cited by Mittol is important because Indian firms may have to hire more American workers if legislation introduced by U.S. Sens. Chuck Grassley (R-Iowa), and Dick Durbin (D-Ill.) is approved. Among the bill's requirements is one that requires Indian firms to balance their workforces around a 50-50 rule that would limit visa use of the visas to no more than half of a firm's U.S. workforce.
Will the Grassley/Durbin bill force Indian firms hire U.S. workers? Yes. But Indians will do other things, as well. In its annual report released in April, TCS said that to "counter possible protectionist tendencies," it is "refining the business model to reduce the amount of work at customer locations and move work to other remote locations and hiring of more local nationals in key markets...." In short, it will do a little of both: push more work offshore and hire more American workers. (See page 61 of TCS' annual report PDF.)
Infosys Technologies Ltd. CEO S. Gopalakrishnan told investors this month that the Grassley/Durbin 50-50 rule would mean bringing back to India some of its visa workers "and replace them with people hired locally in the market," according to a transcript of his conference call on Seeking Alpha. Another strategy suggested this month by Fremont, Calif.-based offshore firm iGate Corp., is hiring Mexican nationals who can travel freely into the United States under North American Free Trade Agreement (NAFTA) rules by using a TN visa. The majority of iGate's labor force is in India.
But even if the Indian firms hire more U.S. workers, it's not going to stop the shift in jobs away from the United States. Offshore firms will continue to move work to low-cost regions as will Western IT service providers.
Is this offshoring shift by U.S. firms a sign of declining IT opportunities in the United States? The changing onsite/offshore ratio at IT services firms doesn't speak to the broader trends; it's just a subset of it. IT jobs overall hit a new high in November, according to one measure of IT employment, before declining when the economy nose-dived. IT employment has declined about 5 percent over the last year, according to the TechServe Alliance, formerly the National Association of Computer Consultant Businesses.