Will US Visa Restrictions Actually Increase Offshore Outsourcing?

Online, February 16, 2011 (Newswire.com) - The recent news regarding US government putting a restriction on H-1B visas has drawn much criticism as to the impact it will have. David Rutchik, a proponent of offshore outsourcing, argues his point in a recent article in forbes
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U.S. Government Initiates Visa Restrictions

Whether truly attempting to quell U.S. unemployment concerns or championing an issue expected to be popular with the U.S. electorate, U.S. lawmakers have introduced several initiatives that translate to more hurdles for offshore outsourcing providers to compete effectively in the U.S. One such effort introduced dramatic visa fee increases as part of a bill to increase U.S.-Mexico border security. A portion of the Border Security bill (signed into law in 2009) substantially increased the H-1B and L-1 visa application fees for firms utilizing the visas for more than half of their U.S.-based staff. The provision ostensibly was included to raise $640 million a year to support U.S.-Mexico border security reinforcement efforts, but it was largely perceived by the Indian IT community as a means to discriminate against outsourcing firms.

Under the new law, individual fees for H-1B visas soared more than seven-fold, increasing to $2,320 from $320 per visa application, with the anticipated cost to Indian offshore outsourcing providers expected to exceed $250 million annually, according to CNN's Indian unit, IBN Live. Indian providers decried the new legislation, with Wipro Technologies founder Azim Premji stressing that the recent American decision to clamp down on H-1B visas for skilled workers would reduce foreign investment in the U.S. and make it more difficult for U.S. exporters - hurting American workers' job prospects.

These views are countered by the Center for Immigration Studies, which states that there is no cause and effect relationship between H1-B visas and U.S. job creation, saying that, on the current trajectory, the U.S. will approve enough H1-B visas for computer workers to fill nearly 80 percent of the computer jobs it creates each year. But even with similar statements and increased political rhetoric (e.g., Sen. Chuck Schumer's reference to Indian IT outsourcers as "chop shops"), President Obama himself seems to be recognizing the value provided by the offshore outsourcing industry. Upon returning from a trip to India in November, he stated that the relationship "is not just a one-way street of American jobs and companies moving to India. It is a dynamic, two-way relationship that is creating jobs, growth, and higher living standards."

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Whether this plays out is yet to be seen, although I would tend to agree with David on this one. It is similar to a recent argument on whether the cloud will replace outsourcing. To see more interesting viewpoints on offshore outsourcing services, visit me at http://insideoutsourcing.org.