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Senate's big immigration bill seeks to crackdown on offshore outsourcing

Patrick Thibodeau | April 17, 2013
The U.S. Senate's comprehensive immigration bill would make major changes to the H-1B visa that are certain to upset some and possibly please others.

There is room to raise wages. At least half of H-1B workers are hired as entry level workers and paid wages that may be below incumbent U.S. workers.

The bill also requires employers to "first advertise the jobs to American workers at this higher wage before hiring an H-1B worker."

Regarding large users of H-1B visas, the bill intends to "crack down on abusers of the H-1B system" by requiring H-1B dependent employers -- employers with 15% or more of their workforce on temporary visas -- to pay higher fees.

Industry groups were holding back on reaction until the details are revealed later today.

Ron Hira, a public policy professor at the Rochester Institute of Technology, said one puzzling thing is why the base cap is allowed to go as high as 180,000, yet the H-1B exemption for advance degree grads stays near the same.

Hira wondered why the tech industry wouldn't fight for a higher advanced degree exemption, given that these graduates are the ones they care most about.

Regarding offshore outsourcers, the bill includes restrictive provisions on H-1B use. If an employer has 50 or more employees and more than 30% but less than 50% are H-1B or L-1 employees, the employer must pay a $5,000 fee per additional worker. If it goes above 50%, the fee rises to $10,000.

Employers who are seeking to convert a temporary visa holder to a green card, may be able to exclude that employee from the limit.

What may be the most onerous provision for India's large IT services may be the restrictions on India's IT offshore firms. It includes the so-called 50-50 rule, limiting H-1B and L-1 visa holders to 50% of an IT services firm's U.S. workforce.

That provision takes effect in steps, starting at 75% in 2014, and 65% in 2015 and then 50% in 2016.

Regarding the increased restrictions on offshore outsourcing firms, Hira said it will likely change the hiring behavior of some of the large firms, and prompt them to acquire companies that have large numbers of American workers. That way these firms "can keep on exploiting the H-1B and L-1 programs while still meeting these thresholds," he said.

"The upshot is that it will force some changes in the outsourcers, but it won't eliminate the H-1B as the outsourcing visa, just blunt it some," said Hira. How much will depend on the wage requirements, which remain vague, he said.

Another provision in the bill would require the U.S. to establish a searchable website for posting H-1B positions. It requires employers to post detailed job openings on the Labor Dept. website for at least 30 calendar days before hiring an H-1B applicant to fill that position.


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