It’s going to happen. I’ve been blogging since last May that the current U.S. immigration status is unsustainable and change will happen. And when it does, here’s what’s at risk: the heavy use of offshore talent in the landed model, as practiced by the big Indian service provider firms. Although at times on this issue I’ve felt like John the Baptist — the lone man crying in the wilderness — I continue to see signs that both political parties are preparing to take action on immigration reform.
The House is now talking about immigration reform again, just like I blogged they would. In addition, The New York Times reported recently that two congresswomen are reaching across the aisle to work on immigration overhaul. (Rebecca Tallent is a key player guiding John Boehner and House Republicans; Esther Olavarria is working with the White House to find a compromise.) And President Obama in his State of the Union address cited independent economists’ assessment that immigration reform would reduce deficits by almost $1 trillion — a top agenda item for Republicans.
Although the prevailing belief in the services industry through 2013 was that immigration and visa reform would not get through Congress, I say again that the pressures are too great and there is a material and growing chance that immigration/visa reform will happen. The political parties are aligning, and I also observe that the lack of strong support for the aggressive use of H-1B and L-1 visas in the landed model continues.
And when it happens, we believe the existing comfortable status quo of using H-1B and L-1 visas in the landed model will come under threat. I’ve mentioned in previous blogs America’s rise in protectionism. Although this mindset and immigration reform won’t stop the outsourcing model, it will change the economics for the providers that aggressively use H-1B and L-1 visas in their landed model. It will level the playing field and bring their economics more in line with their domestic competitors. That’s the issue.