The reduction this month in H-1B visas might not have a significant short-term effect on companies that use the visas to bring foreign IT workers to the U.S., and long term the trend toward offshore outsourcing could mean demand for the visas is lower than in the past, say those who track the industry.
"The cut in H-1B visas will not affect offshore service companies, as there are already a large number of H-1B visas issued, and these are valid for three years, and are renewable for another three years," said John McCarthy, group director for research at Forrester Research in Cambridge, Massachusetts. U.S. customers of offshore service providers are not worried about the cuts either, he said. "Clients usually leave it to the service provider to sort out these issues."
A congressional cap on the number of foreign workers allowed to come into the U.S. on H-1B visas reverted on Oct. 1, the start of the federal fiscal year, to pre-dot-com boom levels of 65,000 visas. Congress did not extend an earlier limit of 195,000 visas. The new cap affects new applicants and not existing H-1B holders working in the U.S. The H-1B visa is an employer-sponsored, non-immigrant visa for a foreign worker coming temporarily to the U.S. to perform services in a specialty occupation.
India's software exporters, among the largest users of H-1B visas, do not expect the cut to affect their businesses. As of March 2003, the Indian software exports industry already had about 120,000 H-1B visas and 15,000 L-1 visas in hand, according to the National Association of Software and Service Companies (NASSCOM) in Delhi.
As a result of the slowdown in the U.S. economy, as well as an increase in work getting done offshore in India, the need for H-1B visas by Indian software companies is falling, said Kiran Karnik, president of NASSCOM. In the year to Sept. 30, the number of Indian IT professionals traveling to the U.S. on H-1B visas was estimated at 30,000, down from 33,000 a year ago, and 77,000 in the previous year, according to NASSCOM.
Indian software companies use H-1B visas to send staff to the U.S. for on-site software development and maintenance work for their clients.
"The lowering of the cap on the H-1B visas will have little immediate impact, as the visas already issued are valid for three years and are extendable by three more," Karnik said. "The issue of limited availability of H-1B visas would not be of much concern in three to four years from now as more software development would move offshore. But in the medium term, we might feel the shortage of visas as the present cap of 65,000 is far too low. This is, in our view, not good for the U.S. economy, customers and companies in the U.S., and for Indian companies."
The issue could be what happens in the long term. "A depression in the need for IT workers has likewise depressed the need for H-1B visa holders in the short term, so the impact in the short-term, that is until next spring or summer, will be minimal," said Bob Cohen, senior vice president at the Information Technology Association of America (ITAA), an industry trade association based in Arlington, Virgina. "Over the longer term, the question becomes whether Congress will be able to act quickly to raise the cap in response to economic growth and new demand, when it comes, or whether the current cap becomes a drag on the ability of IT companies and their customers to grow and prosper."