Update on the U.S. Employment Visa Landscape and its Implication for Global Services | Sherpas in Blue Shirts

Posted On September 27, 2011

Since our last posting and its companion white paper, a lot of our clients have been asking us what all the noise around potential U.S. government changes to the work visa policy really means. Honestly, we can’t say with any real level of certainty. We may be headed down a path by which use of U.S. employment visas by Indian and U.S. global services providers, as well as U.S.-based technology firms, is significantly curtailed. Or, this could turn out to be a flash in the pan driven by the headlines surrounding the Infosys litigation and investigation. What we do know is that there are potential risks, both short- and long-term. We also know several things could serve as possible early indicators of either improvement or further deterioration in this situation.

The Risks

In the short term, the risks include continued acceleration of audits and increased rejection rates for applications. This could lead to long-term suspensions for habitual offenders, potentially causing significant disruptions in the availability of skilled foreign workers even without any major legislative action. We have anecdotal evidence from numerous ITO suppliers that an increased level of scrutiny on, and rejection rates for, B-1 visas is hindering their ability to conduct internal meetings and training for foreign employees in the United States. Statements from the State Department in a response it provided to Senator Grassley (R-Iowa) corroborates this. It is highly likely that this same approach will be taken throughout the remainder of the election cycle regarding H-1B visas and L-1 visas. As we pointed out in our recent Executive Point of View on this topic, the State Department has the option of targeting visa applications for scrutiny based on many factors including city/locale, nationality, work type, and firm type, and they are not held to pending or future law changes to employ these options.

In the longer term, the risk comes primarily from legislative restrictions and civil litigation that are dependent on a number of factors:

  • The state of the U.S. and the global economy; economic improvement will help remove the spotlight from this topic
  • The outcomes of the Infosys litigation and investigation, and the discovery of similar situations with other suppliers
  • Perceived efforts by service providers to police themselves
  • The outcome of the pending election cycle

What to Look for Going Forward

We believe that anyone with a stake in this game should keep an eye on several things as this situation continues to play out, including:

  • Sudden cancellations of major ADM projects by clients
  • The tone of announcements for major new outsourcing projects
  • The status of existing civil, and potential criminal, litigation against Infosys
  • More lawsuits like the one recently filed in California by IT employees alleging that their employer replaced them with H-1B workers in violation of the state’s anti-discrimination laws
  • Further announcements or communications from the U.S. State Department around policy changes or changes to definitions as they are applied to the screening and approval of visa applications. This includes further reductions to the Business Executive Program (BEP) that would result in additional delays in the screening process

Observations

So what have we observed on the U.S. employment visa front since our posting on this topic several weeks ago? As it turns out, quite a bit:

  • Infosys has retained Stephen Jonas, a partner in WilmerHale’s litigation/controversy department and the chair of the firm’s investigations and criminal litigation practice group, to represent it in potential criminal matters related to the visa fraud whistle-blower case
  • Two more Infosys whistleblowers have surfaced, one of them a former human resources employee in Infosys’ office in Plano, Texas
  • An audit report released this month by the Office of the Inspector General for the Social Security Administration reported that approximately 21 percent of the year 2007 H-1B visa applications it recently reviewed involved either fraud or technical violations, and that an estimated 18 percent of the H-1B workers to whom the Social Security Administration assigned an SSN in 2007 may have used their SSNs for purposes other than to work for their approved employer
  • Although not directly tied to the issue of potential visa fraud, we noted that a recent CSC press release touted a $900+ million ITO contract with a new but unnamed client. This is rather unusual, and could lead to speculation that clients are becoming more sensitive to being tied to the potential outsourcing of U.S.-based jobs to foreign workers. This could be a harbinger of a potential future reluctance to engage in large transactions or other types of high-profile deals

Keeping current on this situation should enable you to stay ahead of the curve regarding increased risk. Rest assured that we will be watching it and continuing to let you know what we see on the horizon.

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