SF Gate: Visa's use provokes opposition by techies/L-1 regarded as threat to workers

From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Sun May 25 2003 - 14:35:15 EDT

This article was sent to you by someone who found it on SF Gate.
The original article can be found on SFGate.com here:

Sunday, May 25, 2003 (SF Chronicle)
Visa's use provokes opposition by techies/L-1 regarded as threat to workers
Carrie Kirby, Chronicle Staff Writer

    An obscure work visa known as the L-1 has become the center of a bitter
controversy in the technology industry.
    Much like the H-1B before it -- an equally obscure visa that rose to
prominence when American workers complained they were being displaced by
its recipients -- the L-1 is catching the ire of tech workers and the eye
of government regulators who disagree on whether the visa is being used
    In the middle of the spat are Indian firms that undertake tech projects
for U.S. companies, including many in the Bay Area, on a contract basis.
    The L-1 visa was originally intended for multinational companies that need
to transfer key employees to U.S. divisions. But in recent years,
outsourcing firms such as Wipro Technologies, Infosys Technologies and
Tata Consultancy Services have stepped up their use of the L-1 visa to
bring programmers and other professionals from India to work at the
offices of U.S. clients.
    In the Bay Area, the firms' clients include Hewlett-Packard, Cisco
Systems, Visa International, ChevronTexaco and Sun Microsystems.
    Some U.S. tech workers, frustrated by growing unemployment, say the L-1,
like the H-1B before it, creates unfair competition and eliminates jobs of
American workers. In fact, the workers like the L-1 even less than the
H-1B because L-1 lacks the abuse-prevention clauses and annual limit that
H-1B has.
    A bill introduced by a Florida congressman last week seeks to ban the
visa's use in outsourcing.
    But the outsourcing companies, multimillion-dollar concerns with thousands
of employees in the United States and abroad, say their use of the visa is
legal and appropriate.
    The companies make no secret of their visa use. Wipro and Infosys, both
listed on U.S. stock exchanges, disclose the number of L-1 and H-1B visas
they get in financial filings.
    U.S. worker groups, including the AFL-CIO's Department for Professional
Employees and the Seattle technology union WashTech, say outsourcers are
using L-1 to get around what they call the minimal worker protections
attached to H- 1B visas.
    "We think it's the secret stealth visa," said Marcus Courtney, president
of WashTech.
    L-1s "seem to be sprouting up all over the Bay Area, and they're totally
off the radar screen," said Peter Bennett, a former computer programmer
who works as a mortgage broker in Danville. Because he runs a Web site
protesting the H-1B visa program (www.nomoreh1b.com), Bennett gets 50 to
500 e-mails a day from tech professionals who are out of work or fear
losing their jobs. An increasing number of them complain that L-1 workers
have shown up in their offices.
    Restrictions that apply to H-1B, but not L-1, include an annual limit on
the number of visas issued and a requirement that the visa applicant have
a bachelor's degree or higher. H-1B visa applicants have to pay a $1,000
fee toward training American workers; L-1 applicants don't.
    Visa law also requires workers with H-1Bs to be paid the prevailing wage
in the region where they work, although the Department of Labor does not
routinely check up on this.
    The L-1 visa carries no salary requirements, theoretically allowing a
foreign worker to continue drawing the salary he was paid at home while
working side-by-side with or replacing Americans earning two or three
times as much.
    Outsourcing firms say they pay their L-1 workers wages comparable to what
American workers earn. But Tata acknowledges that when it took over a
project at Siemens Information and Communication Networks in Lake Mary,
Fla., it paid some programmers only $36,000 a year -- below the average
local range of $37, 794 to $69,638 for a basic programmer (determined by
Department of Labor surveys) and far below the $98,000 that one U.S.
programmer there said she was paid.
    Tata spokesman Tom Conway said taxes, Social Security and other
withholding bring the salaries up to the average range.
    After Tata took over the project, Siemens let a dozen employees go, said
spokeswoman Paula Davis.
    Some of those employees were outraged that they could be replaced by
foreigners. It especially stung that they were asked to train Tata's
workers before they left, a procedure that Tata calls knowledge transfer.
    "This is what they call outsourcing. I call it insourcing. Import foreign
workers, mandate your American workers to train them, then lay off your
Americans," said Michael Emmons, who left Siemens last fall just before
his job there was to end. Emmons had worked as a contract computer
programmer for the company for six years, first in San Jose, then in
    Davis said Emmons and other workers were not directly replaced by foreign
workers. "We actually outsourced a function. It wasn't replacing this
employee with that employee," she said.
    What happened in Florida follows the general pattern of how Indian
outsourcing firms use L-1 visas: The Indian firms take over a project,
such as software maintenance, at low rates for an American client and send
in a team of visa holders to learn the company's procedures. As much of
the work as possible is then transferred to the company's headquarters in
India, where wages are much lower. But some visa holders continue working
at the client's office.
    Whether this is a legal use of the L-1 visa is a matter of interpretation.
An official at the Department of Homeland Security, now responsible for
immigration, said this kind of use is fraudulent because the L-1 is
designated to let workers move from one office to another within a company
-- not from a company to a client.
    "If an L-1 comes into the United States to work, they're coming to work
for their specific company that petitioned for them, not for another
company that they're being contracted out to. That would be a fraudulent
use of an L-1 visa, " said Christopher Bentley, spokesman for the Bureau
of Citizenship and Immigration Services, a division of the Department of
Homeland Security that replaced Immigration and Naturalization Services.
The bureau is assessing the L-1 and other visa programs for fraud, he
    The companies say they would never risk using the visas if officials had
not assured them it is legal. Wipro immigration attorney Terry Helbush
said she is puzzled by Homeland Security's statement. "The L-1 visas are
all approved by the consulate or by the INS. In our submissions, we're
very clear that . . . some of the employees are on site at the client."
    Tata also said it complies with visa law. Infosys declined to comment
because it is in a quiet period before a financial transaction.
    The way the outsourcers see it, they are complying with the law because
their employees are ultimately working for them, whether sitting in a
cubicle in Silicon Valley or sitting in one in Bangalore.
    Tata and Wipro both strive to differentiate themselves from what they call
body shoppers, firms that provide nothing more than inexpensive workers
for clients.
    Wipro Chief Operating Officer Lakshman Badiga said it is precisely because
the company has moved from just bringing in workers to running complex
global projects that it has increased its use of L-1 visas.
    The State Department says the outsourcers are within the law.
    "The fact that someone is on the site of (a client) does not make them
ineligible for an L-1 as long as . . . the company they actually work for
is truly functioning as their employer in terms of how they're paid and
who has the right to fire them," said Stuart Patt, spokesman for the State
Department's Consular Affairs Bureau.
    Not even immigration attorneys who specialize in procuring work visas can
    Memphis immigration lawyer Gregory Siskind said, "It's largely
inappropriate for companies to be using the L-1 to bring in workers that
are being contracted out to other companies. I would be very surprised if
it continues for very much longer without a crackdown."
    If using L-1s for outsourcing is legal now, it won't be under legislation
introduced last week by Rep. John Mica, R-Fla. Calling L-1 "a back door to
cheap labor," Mica said his bill would ban L-1 visa holders from being
transferred to client companies.
    It's not clear whether the legislation would actually ban Wipro, Tata and
others from using the visas just as they have been because the companies
say the workers are their employees even when they are doing work for
    L-1 visas have been used in relative obscurity since 1970. But during the
past two years, an increasing number of the visas are going to workers
from a single country: India. Thirty-three percent of the 32,416 L-1 visas
issued so far in 2003 went to Indians, up from 20 percent in 2001.
    At Wipro and Infosys, L-1 visa use rose considerably during the same time.
Wipro, for example, had 624 H-1B employees in 2000 but only 289 L-1
workers. Since then, its L-1 count has soared to 1,157, while the number
of H-1B employees has increased to 705.
    The limit on that other contentious tech visa, the H-1B, is scheduled to
go from 195,000 to 65,000 in the fall unless Congress intervenes. Worker
groups are gearing up to fight industry lobbyists to make sure the limit
is lowered.
    Some say the L-1 visa could make the H-1B limit irrelevant.
    "If the H-1B becomes more difficult to get, (companies) will just adapt
and go to L-1s," said Ron Hira, a volunteer on workforce policy issues at
the Institute of Electrical and Electronics Engineers-USA. Hira is also a
Columbia University researcher on science and technology policy.

    E-mail Carrie Kirby at ckirby@sfchronicle.com. Indian workers
    Year      L-1 visas to all nationalities      To Indians      Proportion of
    2001      59,384                                  11,908            20%
    2002      57,721                                  17,812            31
    2003      32,416                                  10,447            33
    First 6 months
    Source: State Department
    Top nationalities for visa holders FY 2002:
    India  17,812
    Britain 6,711
    Japan  6,122
    Germany 2,916
    Mexico 2,020
    France 1,995
    Total  57,721
    Source: State Department
    L-1 visa use by Indian outsourcers is increasing:
    Wipro         Infosys
    2000   289           218
    2001   510           292
    2002   1,004         445
    2003   1,157       1,760

Copyright 2003 SF Chronicle

This archive was generated by hypermail 2.1.5 : Mon May 26 2003 - 00:00:01 EDT