BACKLASH!
BACKLASH!
Date: Thursday, March 13, 2003 10:17 AM
H-1B and JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
It's encouraging that these Indian newspapers are getting worried.
http://www.dqindia.com/content/top_stories/103022601.asp
As the campaign against H1Bs and offshoring takes off in the US, are
Indian companies doing enough to deal with the backlash?
Sarita Rani
Wednesday, February 26, 2003
November 22, 2002: Michael Emmons, an IT worker on contract at Siemens
Information and Communication Networks, Lake Mary Fla, quit his job. He
was due to be replaced next month by a TCS employee on an L1 visa.
Irked at being replaced, and having to train his replacement to top
that, Emmons set up a site called www.hannatroup.com. Under a section
called "Our Indian Replacements from Tata Consulting India", the site
lists names of TCS employees, their telephone numbers, e-mail IDs and,
in some cases, names of their children. "Americans trained these
foreigners and then the Americans got laid off," it says. The agenda of
hannatroup.com to get people to sign a petition to stop H1B workers
coming to the US.
January 2003: American consulates in Delhi and Mumbai are rumored to
have stopped processing all H1B and L1 visas.
While the rumors are never confirmed, what definitely happened instead
was increased scrutiny of all visa applications and a whole lot of
221Gs given out to Indian software companies with blanket L1s. (221G is
a clause that allows the consulate to ask for more information. Its
in some ways worse than a rejection because there is now way of
figuring out when, if ever, a 221G will ever get a reply from the
embassy).
February 2003: The US Department of Labor begins an administrative law
hearing on a case filed by Guy Santiglia, a former systems
administrator at Sun Microsystems. His charge Sun Micro laid him off
and thousands of other employees even as it retained H1B workers and
was applying for the ability to hire thousands more. The company says
Santiglias charges have no merit and that the Equal Employment
Opportunity Commission and Department of Justice had already dismissed
his claims. However there are other H1B cases in the offing including
Pete Bennett, an out-of-work Web programmer who filed a claim with the
Department of Justice saying he had been refused a job with another
company on the basis of national origin. Bennett co-runs the site
www.nomoreh1b.com.
The road from San Jose to San Francisco is in many ways a trip across
the heart of Silicon Valley. The exits on Interstate 280 tell the story
of the late 20th centurys greatest revolutions Saratoga, Redwood
Shores, Mountain View, Palo Alto, Stanford University The homes of
some of ITs greatest minds and greatest companies.
Some Telling Numbers...
H1B visas issued in 2001 163,600
H1B visa extensions in 2001 (not counted under cap) 342,000
H1B visas issued in 2002 79,100
H1B applications pending from 2002 18,000
H1B extensions issued in 2002 (not counted under cap) 215,000
H1B cap in 2002 195,000
H1B cap proposed in September 2003 65,000
Number of computer scientists unemployed in the US 94,000 (5.1%)*
Indias share 1.5% (approx)
Number of employees of Top 4 Indian IT services 12,000 (approx)
companies in the US
(*Source: George F McClure of IEEEs Workforce Policy Committee,
quoting US Bureau of Labor Statistics)
And yet, the valley is today going through a churn. The revolution is
turning on its head. As the downturn cuts into jobs there is a certain
panic in the air. And its looking for a scapegoat. Increasingly,
Indian companies and immigrant H1B workers in the US are beginning to
be the target of that angst. Apart from the intense lobbying on
the H1B cap issue ( see Dataquest issue of January 15, 2003 ) there are
signs all over the net: www.zazona.com, www.fairus.org ,
www.h1bprotest.com , www.hireamericancitizens.org ,
www.stopimmigration.org , www.numbersusa.com
Gartner: Employers Must Move Cautiously
Other upheavals are happening in the workplace. A recent Gartner study
warned of a work-life balance backlash in the making. That is employees
getting tired of longer and longer hours at the office, and through
2004, likely to wrest some control on their lives back. Here we look at
a December 2002 study by Gartner V-P (workplace studies) Diana Morello,
on workforce management issues related to offhsore outsourcing in the
US and Europe...
n CIOs will consider offshore outsourcing for three main reasons: cost
savings, access to specific skills and a general sentiment that
internal staff cannot be trained quickly or effectively in new skills
n Without a significant upturn in IT investment in Europe and North
America, the movement of work overseas will lead to job cuts and
layoffs in IT, starting first with IT vendors and IT service providers
and moving steadily into IS organizations within user companies
n Some business executives will promote the efficiencies and economies
of scale gained through IT offshore outsourcing while downplaying the
implications on employment, jobs and employee trust. Missteps will
occur. North American and European companies that fail to acknowledge
the impact on IT-related employment, especially in a down market, will
be ripe for employee activism, community backlash and disruptive
shareholder actions.
n Discontinuity in IT jobs, skills and support roles will create
upheavals in compensation, rewards and incentives in the US, Canada and
Europe. Some enterprises will proceed clumsily, threatening
outsourcing, unless their staff makes compensation concessions.
Enterprises that move cautiously and respectfully will keep performance
high and defuse employee anger.
Ashok Mukherjee, Chief Manager, HR at TCS whose employees names
figure on some of these sites, is concerned but not perturbed as yet.
"Its still an undercurrent," he says, "our employees have faced no
harassment on the ground level so far." The company has however taken
up the issue with Siemens where its employees are posted. Siemens is in
turn talking to various government agencies and industry associations.
Ashok believes the undercurrent will never burst out- Americans are too
polite for that. "But if it ever does, we have a real problem on our
hands," he says.
Other India IT Services providers too are finding themselves in similar
situations. Bank of America cut nearly 3700 of its 25,000 tech jobs
last year some of which came to Infosys. Boeing outsourced some of its
work to Russia and Wipro in India. Ditto with Storage Tek 300 sacked
in Minneapolis as jobs moved to India.
These deals generated a lot of hate mail and a whole lot of activity in
chat rooms that some Indian companies now actively monitor. A reason,
says the Marketing head of a large software services provider, "why
large deals, specially BPO deals, are increasingly shrouded in
secrecy."
"Until now, the adverse impact of free trade has been confined largely
to blue-collar workers. But if more politically powerful middle-class
Americans take a hit as white-collar jobs move offshore, opposition to
free trade could broaden"
February 3, 2003, BusinessWeek cover story, titled The New Global
Job Shift
Its also why on March 19th Wipro is calling its prospective clients
to meet with an existing one Lehman Brothers. The company hopes the
Lehman Brothers CIO will talk about how he dealt with employee
issues when he outsourced jobs to India.
But is this enough? Are Indian IT services companies paying sufficient
attention to the issue?
Is your job next?
At the Nasscom strategy summit this February, the issue was certainly
on everyones mind. Almost every single speaker mentioned US job loss
and protection (vis a vis the New Jersey Bill) issues at least in
passing.
For instance Zensar CEO Ganesh Natarajan spoke of when he went to meet
the CEO of a BPO firm in Florida the previous week. "He was carrying a
magazine whose cover said, Is Your Job Next?" British Minister for
Small Business, Nigel Griffith took a dig at the US when he said, "the
British governments attitude to outsourcing is very strong. The
environment couldnt be more favorable and is in total contrast to
growing protectionism in the US."
Professor Sabyasachi Mitra of GeorgiTech Dupree college of management
spoke of "lot of resistance in the US to people coming there who
dont walk, talk and look like them. But Protectionism is not the
kind of thing the US does. Besides, business has a lot of lobbying
power."
Besides, there are indications that Nasscom itself is beginning to take
the issue seriously. Phiroz Vandrevala, past Chairman and executive
vice president Nasscom told members that the bodys executive
committee had decided on a public relations campaign and hired Hill &
Knowlton for the job. "The four pillars of that campaign are the media,
analysts, B2B messaging and Public Affairs." Vandrevalas key concern
vis a vis Public Affairs: the Totalization agreement (that will protect
Indian immigrants from dual taxation) and the ongoing debate on the H1B
cap.
"As the rest of the country recovers, Silicon Valley will not. It has
sold its soul to the opiate of cheap labor, and its an addiction
that can only be broken by going cold turkey. Tech workers are facing
what garment industry workers faced in the 80s, with one difference
the tech worker is the first highly-skilled worker that the American
government has turned its back on"
Tim Stefanini, CEO of Velocitos Corp, in the San Francisco Examiner, 4
Feb 2003
Paul Taaffe, CEO of Hill & Knowlton however had a slightly different
take. "Job losses is a political debate. Its what brings and throws
governments out of power. Besides, these people are completely
emotionally not ready to deal with losing white collar jobs to
countries like India." Taaffes prescription: you have to both defend
and attack. "The emotions the Forrester study generated (predicting 3
million jobs in the US will go over the next 5 years) you cannot
fight them with facts." In fact, says Taaffe, an Australian working in
the US, "you cannot win the argument over the next 12 to 24 months."
Question then is: will the issue go away after 12 to 24 months? And are
Indian companies geared to deal with it in the meantime?
March of history
History tells us that the issue will die its own death. Though the
ability of Indian companies to deal with it in the meantime may still
be an open question.
Says Ashok, "there have been waves of immigration to the US and of jobs
moving out in the past. Whenever the economy is at a low, xenophobia
begins to set in. But that changes as the economy begins to look up
again."
"For years, US engineers grumbled that foreign engineers on work visas
were getting their jobs. Now, for the first time, US workers are filing
formal complaints with the government and in court, charging that
foreign guest workers are replacing them during the downturn And labor
lawyers researching the cases are finding something that stuns them
H-1B rules give citizens almost no protection from being replaced by a
foreign worker"
25 Sept 2002, Mercury News, story titled US Workers Taking H-1B
Issues to Court
Like Ashok, just about everyone talks of how American manufacturing and
textile sector jobs moved overseas. And how the US re-skilled and
re-adjusted itself. Says Laxman Badiga, Chief Executive for Talent
Transformation at Wipro Technologies, "weve seen the US worker
switching and doing something else in the past. In IT Services that
will not be a problem. These people will switch to something else."
That, in fact, is the crux of the Indian argument.
However, lessons from history arent always dependable bellwethers
for future policies. This time, the situation just might be different.
Says former Infosys marketing chief Phaneesh Murthy, "when
manufacturing started getting globalized the US economy shifted to
services driven by an over valued dollar and low productivity. There
was a compelling cost to value equation then and today 82% of American
workers are in the services sector." Now, he says, "we have the same
drivers for services jobs moving out. Few people realize that the US
labor market is fundamentally disadvantaged because they are working in
a developed marked cost structure and selling in a global/growing
market cost environment."
The Crib List
There are many stories about what immigrant workers on H1B and L1 visas
do or dont. Some of these stories are true, some totally out of
sync, and some merely exaggerated versions of the truth. We take a look
at some of the big crib stories about H1B workers. In any case, any
public relations campaign will have to address the following issues:
n They work at substantially lower pay and are upsetting the entire pay
structure of the American workforce.
n They are like indentured servants and willing to work long hours for
fear of being booted out. As a result employer expectations of all
workers specially in the IT sector are rising beyond reason.
n They are given an Associate Masters degree by their companies so
they can qualify for their visas and come into the US to work. No
American company does that for its employees.
n They dont pay taxes. Their children go to school that run on taxes
paid by American citizens.
What this means is that there are drivers other than just off-shoring
to India that is driving jobs out of the US. Besides, when
manufacturing moved out, people shifted to a services economy. Now, as
Phaneesh says, "they dont have that luxury. Where do they move from
here?"
Historys nice, but
Thats a difficult question to answer. In many ways the services
economy is already seen as the highest end of the value chain.
While some IT services professionals and companies are likely to move
up to R&D and new technologies, a very large chunk will not make that
shift. As Laxman Badiga says, " In the BPO sector the kind of person
being displaced is a low skill person.
He will find it difficult to get a new job."
In fact, technology forecaster and Director of the Institute of the
Future, Paul Saffo (see interview) believes there is by now "structural
unemployment in silicon valley." He believes that there is already a
recovery underway but its a strange "jobless recovery." When the
economy recovers, he says, "silicon valley will not recover with it."
Phaneesh Murthy says those who are betting on things getting better
once the economy takes off "are betting that the global market will
expand. But that is not really a done deal."
At the moment the Indian argument rests around two things : (a) that
the US is not really a protectionist country and that it will not do
anything to stop jobs moving out and (b) that history vouches for the
fact that things will eventually find their own equilibrium.
While both of these assumptions might be true, it might perhaps be
facile to rest on them. While companies and countries might see the
virtue of producing more efficiently, individuals who lose their jobs
might not. Hundreds of thousands of jobs moving out is at the end of
the day both an economic and emotional issue. Either way, as Wipro
Technologies CEO Vivek Paul said at the Q3 results recently, "Well
hear more and more of this as time goes on."
Sarita Rani with inputs from TV Mahalingam in Bangalore
Continued from Page 1
Visa Basics
Every now and then, the H1B visa has been in the eye of a storm as
anti-immigration lobbies get to work. In recent times, however, a lot
of attention is being directed at L1 visas, which are also used by
Indian IT services providers. WashTech (a Washington area IT workers
union), for instance, called it a "Stealth Visa" used by companies to
bypass stringent H1B regulations. Heres a rundown on some of the key
features of both visas...
The H1B Visa
n One of the most regulated immigration visas to the US
n Normal validity 2-3 years
n If an H1B loses her job, she has to return to India immediately. If
she changes job, an H1B transfer from the new employer is required.
n Any company that has more than 15% of its workforce on US soil on H1B
visas is called an H1B Dependent company. (All large Indian software
houses for instance would be H1B dependent)
n H1B employers have to show two things:
n An NDA (non- displacement attestation): That is, companies have to
show that no American employee with similar skill sets was fired 90
days before or after an H1B with those skill sets was hired.
n A Recruitment Attestation: That is, show a "good faith" effort to
find similar kind of employee locally.
n Some minimum wage requirements have to be met.
The L1 Visa
n The L-1 visa an "intra-company transfer" visa where the outsourcing
company (client) does not even come into the picture. Its a
temporary transfer though the visa can and is given for periods of upto
6 years.
n Requires that the employee going on an L1 must have worked for the
company for at least one year.
n L-1 employees can be paid any agreed-upon salary, without having to
meet U.S. government standards.
n To be eligible for the L-1 category, the employee must be offered a
position in the U.S. as either a "Manager," "Executive" (referred to as
an L1A), or a person with "Specialized Knowledge" (referred to as an
L1B).
n Can be used on multiple locations. So typically used for employees
who are likely to move from project to project in the US.
n Based on some qualifications companies can be given Blanket L1s
which allows them to send any number of employees on transfer.
Continued from Page 2
The issue on the Net
STOP H-1b and L1 visa abuse AGAINST AMERICAN CITIZENS
nomoreh1b.com Sign the Petition to Stop H-1b
We Americans should not be MANDATED by management to TRAIN foreigners
then be laid off!
But it happens and Corporations will do anything to cut costs. And
Congress will do anything for Corporate Campaign Dollars.
They dont care about you nor I so I have taken it upon myself to
fight this Corporate and Congressional greed.
-NEW Meet Our Indian Replacements NEW
Hire American Citizens
Home of the National Hire American Citizens Professional Society
Take Action! J O I N N O W !
Americas best paying jobs should be held by American Citizens.
Congress sold our high-tech jobs to foreigners and industry lobbyists.
Companies continue to import foreigners at the same time they are
laying-off Americans.
Be American Hire American!
Replace H-1B Workers With Citizens
PERMANENT GUESTS: How Guestworker Programs Harm America
Proposals for "guestworker" programs that would allow millions of
foreign citizens to work in the U.S. guarantee that U.S. taxpayers will
get the short end of the stick:
n Guestworkers displace American workers and lower American workers
wages and working conditions in certain job sectors.
n Guestworker programs are a drain on the tax system.
n Guestworkers rarely go home.
n Any guestworker program that involves "earned legalization" is an
amnesty, a reward for law-breaking that is vociferously opposed by the
American public.
>From the Federation for American Immigration Reform (FAIR) website
(http://www.fairus.org/html/04194302.htm)
Recent News H-1B Impact on Americans
Approximately 800,000 highly-skilled U.S. workers are now unemployed as
a direct result of Congress H-1B visa legislation, which failed to
include ANY protection for U.S. workers. Employers may hire foreign
workers even when qualified and equally qualified Americans are
available, and may lay off Americans while retaining H-1Bs in the same
job category.
>From http://nomoreh1b.com/
"Every year, over 1,000,000 Americans are terminated from employment in
the current economy. At the same time, the Government of the United
States dispenses over 600,000 H-1B and L-1 Visas expressly to fill
American jobs with foreign labor. If you believe that the American
people should not be relegated into such wholesale unemployment, this
site provides you with the means to help put this dynamic to an end,"
>From www.zazona.com
TV Mahalingam
Continued from Page 3
Call Centers Can be Exploitative>>>
Paul Saffo, Director and Roy Amara Fellow, Institute for the Future
Based out of Menlo Park, California, Paul Saffo is a technology
forecaster with a yen for making assertions that often seem to fly in
the face of common sense. He was the man who said technology would not
abolish intermediaries, that technology doesnt drive change people
do, that the personal computer revolution never really happened. Once
again flying in the face of popular rhetoric, technology forecaster and
futurist Paul Saffo says call centers could end up being exploitative
of Indias youth; and that the threat to US jobs will only get
worse...
Paul Saffo, Director and Roy Amara Fellow, Institute for the Future
l Do you see a long-term impact of outsourcing/offshoring on the US
economy? Will US services jobs moving out be a long-term issue?
Its going to get worse. In fact, its going to accelerate. Folks
can wring their hands all they want about it, but their jobs are going
to go out. And guess what? They are going to go to countries like India
not just because of low cost but because of better quality. Today 40%
of Silicon Valley consists of Indians. They are better technically,
they are beginning to get into management consultancy, they are even
better at handling phone calls in contact centers. Outsourced workers
are everywhere. Recently the Pentagon bought a supercomputer, gave the
software out to a US company and parts of its code is written by
Chinese programmers. Wait till the nay-sayers hear that an ex-commie is
writing code for the Pentagon.
The US has a whole world of problems coming its way both in the short
term and the long term. There is structural unemployment in Silicon
Valley and when the US economy recovers, Silicon Valley is not going to
recover with it. In fact there is already a recovery underway but
its a strange kind of jobless recovery. Those lost jobs are not
likely to come back automation, increased efficiencies and offshoring
will take care of those.
l Which is one of the reasons weve seen a lot of vocal opposition to
outsourcing to India in recent months. The New Jersey bill and four
other states for instance. Do you see a long term impact on India as a
result of this?
Well, the US is a nation that likes to blame others. So yes, India is
going to get some of the blame for lost US jobs. And post September 11,
the US is reacting in a really stupid manner. Were making Silicon
Valley a very hostile place for foreigners.
And were already beginning to see the affects of the H1B protests. A
north western hospital complex for example says it is losing a billion
dollars a quarter because of inability to get skilled people in.
Universities are complaining that H1B restrictions are affecting basic
research. The only ray of hope is that the current administration is so
profoundly stupid that I think we are soon going to see George Bushs
popularity drop and a lot of the ongoing repercussions of the so called
war against terrorism might come to an end. Americans are basically
good people. They take a little long to recognize injustice but when
they do, they protest.
l There is a lot of optimism in India about the Back Office/Call center
industry. The argument is that anything that creates jobs is a good
thing. Whats your take on the long term impact of the call center
industry on India?
Shortening education to go to work is a mistake. We did that in the
1950s when we told our young people you dont need to go to college
youll get a job at General Motors right out of high school. And
guess what happened when General Motors moved manufacturing out of the
US. Call centers are a job, but it not clear that they can offer a
career. As the industry grows in India, care has to be taken to ensure
that there is a career path beyond call centers otherwise, what began
as well-intentioned creation of jobs could end up being exploitative of
Indias most important resource, its youth.
In particular, the Indian industry should look closely at the evolution
of call centers in the US. Back there, call center workers have
complained of stressful work environments and over-supervision. Some
have even called some US call-centers "sweatshops," comparing them to
the problems of overwork on factory floors. India has the chance to
learn from mistakes made in America, and thus avoid the risk of
burning-out the very people who will make the next Indian revolution
happen.
There is one other risk advances in voice recognition and AI eating
into the low-end of the call center business. Computers wont replace
humans answering complex questions, but they are already are replacing
operators at AT&T and elsewhere for simple voice-interaction with
callers. White caller tele-center workers in the US have already lost
jobs to computers, and the trend will continue as technology advances.
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