The spooky orchestral background and thriller tagline — “Just when you thought it was safe to go back in the water…” — from the 1978 hit movie “Jaws 2” brings out our primal fears that something can attack us even though all appears to be safe and when we least expect it. That’s what is happening now with H-1B visa reform.
As we predicted in previous blogs, it appeared in July that the chances were slim for immigration and H-1B visa reform to be enacted in 2013. And House Speaker John Boehner’s November 13 statement, “Frankly, I’ll make clear, we have no intention of ever going to conference on the Senate bill,” seemed to put an end to the bill.
But there are threatening sharks beneath the surface of Boehner’s statement. Let’s look at these risks and the timing.
Odds are good for reform occurring in 2014
Boehner wasn’t saying he does not intend to negotiate with the Senate on immigration/visa reform; he was just saying that he plans to take a piecemeal approach to the bill’s language instead of a comprehensive language approach. And instead of using the formal conference process, he will use an informal negotiation process to see where the two parties can reach compromises. He stated, “I want us to deal with this issue. But I want to deal with it in a common-sense, step-by-step way.”
Although it will be done piecemeal, the legislation still will have to go through Senators Durbin and Grassley, who authored the onerous H-1B visa language that targets the Indian service providers.
Because of the high chances of success in a piecemeal approach, we believe there is a 20-45 percent chance that in 2014 Congress will pass into law the proposed legislation with the currently drafted onerous visa provisions.
Politics. Another reason we believe Congress will enact the legislation is that Immigration is one of those rare issues that has strong sentiment in both political parties to get something done, although for different reasons. It has genuine bipartisan support and thus strong alignment of interests, so we believe there is a material chance that legislation will come through next year.
Despite the fact that it’s in the interest of both parties to enact the legislation, the Republicans are key to the outcome. If the Republicans gain strength, we see the legislation going through but shaped more strongly with a Republican bias. If they lose strength, we see legislation still going through but along the current lines of the Senate bill with the onerous provisions for H-1B visa reform. Whether the Republicans gain or lose political ground in upcoming months, it will lead to Congress passing immigration reform.
Our perspective is that the only major threat to the chances for passing the law in 2014 is status-quo politics. If both parties are locked in a standoff, it will negatively impact the chances for passing the law.
Timing. If Republicans and Democrats manage to reach compromises, the House could pass one or more piecemeal bills on immigration reform in February or March 2014. This could lead to Congress voting on the bill after the spring primaries, depending on how immigration plays out in the elections.
Impact on Indian service providers
If Congress does not pass comprehensive immigration reform in 2014, Senators Durbin and Grassley could still push to pass stand-alone H-1B visa reform for high-skilled workers.
Given the political sentiment, pressure is likely to ratchet up for the Indian firms even without a stand-alone bill. They will face an environment of increased scrutiny and have to deal with U.S. Dept. of Labor audits of their visa practices at client firms, higher scrutiny of visa petitions and possible higher risk of rejections, as well as increased scrutiny and due diligence by U.S. firms considering moving work to Indian providers.
Furthermore, you can almost hear the music from Jaws 2 and the shark’s teeth when you think of the ripple effects that are likely from the Infosys investigation into alleged visa abuse. How many times will we hear Durbin and Grassley raise t
he specter of “abuse” of visas? In addition, the U.S. Attorney may launch more visa investigations. And the IRS may decide to pursue INFY for underpaid employment taxes resulting from the provider’s visa practices; this could, in turn, lead to “abuse” investigations of other firms.
With a 20-45 percent chance of Congress passing the immigration with onerous H-1B visa provisions, perhaps the tagline for this continuing saga in 2014 should be from the movie, “The Fly” — “Be afraid. Be very afraid.”