U.S. slump poses threat to Indian programmers
By K.C. Krishnadas, EE Times
Mar 28, 2001 (2:35 PM)
URL: http://www.eetimes.com/story/OEG20010328S0053

BANGALORE, India — The slumping U.S. economy and the resulting decline in applications for U.S. high-tech visas this year pose an immediate threat to the job prospects of many Indian software engineers, an industry group said. Speaking here during a weeklong visit, Harris Miller, president of the Information Technology Association (ITAA; Arlington, Va.), said demand for H-1B visas this year will likely fall short of the 195,000 visa ceiling approved by Congress last year. About 45 percent of H-1B visas are held by Indian software engineers.

In fact, Miller predicted that demand for high-tech visas could drop to less than the 115,000 H-1B visa holders admitted to the United States in 2000. He cited declining recruitment by U.S. high-tech companies as they seek to cut costs. Many U.S. companies are laying off workers in response to a drop-off in demand this year for telecommunications and computer products.

Following intense lobbying by industry groups, Congress approved legislation in October that increased the number of H-1B visas to 195,000 annually for fiscal 2001-2003. In recent fiscal years, which end in September, the annual ceiling for visa applications had been reached before the end of the fiscal year.

But the U.S. Immigration and Naturalization Service reported recently that the number of H-1B visa applications has declined by nearly 30,000 since October compared with the same period last year. Much of the decline is attributed to reduced technology spending and the crash of many high-tech stocks.

The projected annual growth rate for H-1B visas of up to 30 percent has now been scaled back to between 3 percent and 5 percent for 2001, Miller said.

Another reason for declining demand for H-1B visas is that U.S. companies are increasingly looking to outsource work to low-cost manufacturers in countries like India, Miller said. He said Indian companies should take advantage of that opportunity by providing offshore development services.

Software deal

During his visit, Miller signed an agreement between the ITAA and India's National Association of Software and Service Companies (Nasscom). The deal seeks to bring opportunities to India despite the slowdown in U.S. business. Nasscom will hold a series of road shows in the United States designed to convince more U.S. companies to outsource software development projects to Indian companies.

The effects of the U.S. slump will be felt most keenly here by the "body shops" that send Indian software engineers abroad on visas, Miller said. Software professionals sent to the United States by such businesses are paid in India at local wages.

If the dip becomes a full-fledged recession, Miller said, it would be difficult to convince U.S. lawmakers to sustain the number of annual H-1B visas at 195,000. He predicted the H-1B visa ceiling could return 65,000 visas in 2004.

Still, Miller said the slowdown could have a positive effect by steadying the unbalanced supply-and-demand gap for information technology professionals in the United States. The ITAA represents about 26,000 companies in the U.S. high-technology sector.

A recent report by the Committee for Economic Development, a U.S. business group, called for reforming temporary visa programs. U.S. engineering groups that have been critical of H-1B backed the report.

"If we must bring in skilled foreign workers, we believe they should come to the U.S. as permanent residents rather than as 'guest workers' under H-1B and other temporary admissions programs," said Paul Kostek, former president of IEEE-USA.