Latest Visa Reform Proposal: How Bad is the Bite on Services? | Sherpas in Blue Shirts

For those of us who follow immigration reform, particularly with a view to how it would affect the services industry, the latest proposed legislation coming from Senator Grassley out of the U.S. Senate is troubling. If his proposals become law – and one might imagine they would have some possibility, given he’s the chairman of the committee with oversight over immigration – they would be more restrictive to the offshore services model than the previous legislation that the bipartisan Gang of Eight proposed two years ago.

The bad news

Specifically, this legislation would, like the previous legislation, fundamentally challenge the visa requirements, both around H-1B visas as well as the L-1 visas. It would significantly restrict the number of H-1B visas or the ability to leverage the H-1Bs and L-1s that can be used in the landed-onshore model as well as raise the fees for those visas.

Most troubling around this new language is that it would include L-1s as well as H-1Bs, therefore significantly reducing the flexibility of service providers that heavily use offshoring. On its face, this proposed legislation would be a direct challenge to the offshore model that the services industry currently uses. The bark is pretty bad.

But there is some good news: The bark is worse than the bite.

Good news

At least for the next two years, this proposed legislation has almost no chance of becoming law. It is unclear whether it has sufficient support in the broader U.S. Senate and certainly is completely counter to the U.S. House’s point of view around visa reform. It lacks broad support in both the Democratic or Republican majorities.

So why is Senator Grassley bringing it up at this time?

I think Grassley (the existing chairman of the immigration reform committee) and Senator Durbin (the former chairman) put it forward to try to shape the immigration reform debate in the presidential election cycle and force candidates to take positions that may affect legislation after the election dust settles.

Bottom line

Recognizing that there is almost no chance of legislation becoming law before the next president is elected, let’s not dismiss the potential for adverse impacts completely. Legislation, after all, is only part of the equation. There is clearly a growing consensus in the bureaucracy that the H-1B and L-1 visa model needs closer scrutiny, especially for service providers that are aggressive users of the model.

I think we can expect to see the government continue to revisit and tighten down the interpretation of the existing laws. It will be nettlesome and will affect the services model at the margin. It’s likely to create a small but incremental impact on the model; however, I believe it won’t cause a decisive model change.

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