Indian industry groups know they can't reverse a freshly inked fee on their workers and are instead trying to head off what they fear could become a wave of discriminatory U.S. employment laws, arguing that new fees on work visas represent a dark cloud hanging over President Obama's upcoming visit to India in November.
Obama signed into law Aug. 13 a bill that spends $600 million in emergency funds to beef up U.S. border security by increasing fees (subscription) on the H-1B and L-1 visa programs for foreign firms operating in the United States. The fee hikes apply to companies that employ more than 50 workers and use the visa programs to hire more than half their workforce.
Although the fee increases apply to any company from any country, major Indian information technology firms and service companies in the United States are expected to bear the brunt of the costs, given their business models.
Those companies, and the associations representing them, have largely accepted that they cannot do anything to roll back the fee increases. But they are now launching public relations and lobbying campaigns to defend their business models and block any other laws that they would view as discriminatory.
"The bigger concern for us is whether this will happen more," said Som Mittal, president of the National Association of Software and Services Companies, the Indian chamber of commerce. "Clearly this recent incident is poorly timed, in my opinion, and has left a sour taste."
Mittal said he expects the fee increases to be brought up when Obama makes a historic visit to India in November focused on how to continue improving U.S.-India business relationships.
"Each individual piece may sound small... as compared to the larger climate change and nuclear deals," Mittal said. "But I think these ones are as important and should be a topic of discussion during the visit."
Sen. Charles Schumer, D-N.Y., who wrote the border security bill, blasted Indian firms during an Aug. 12 speech on the Senate floor, calling them "body shops" and charging them with violating the intent of the visa programs.
Ron Somers, president of the U.S.-India Business Council, fired back during an interview. He said Indian firms provide critical support around the clock to U.S. companies, helping them remain competitive in the global market.
"I don't think [the business model] is something that should be disparaging at all," Somers said. "I would argue it's a matter of remaining competitive."
Somers and Mittal also challenged another claim leveled by Schumer that the hiring practices of Indian firms are taking jobs away from U.S. workers. They said the visa programs are used to hire highly skilled workers in the technology industry, which has not seen the job losses that other sectors such as construction and retail have experienced.
The U.S.-India Business Council also points to a report it released in 2008 concluding that Indian companies in the United States have contributed to the creation and retention of more than 30,000 U.S. jobs. The report noted that the Essar Group invested $1.6 billion into preserving a steel mill in Hibbing, Minn.
It is not clear what percentage of H-1B and L-1 visas issued by the U.S. government go to Indian firms. According to the Indian government, fewer than 12 percent of visas issued go to Indian companies. U.S. Citizenship and Immigration Services, however, could not confirm that figure.
Somers said he did not know if Indian firms could operate in the U.S. under a business model in which less than half their workforce came through the visa programs.
Mittal asserted that the U.S. government does not have any other visa programs that would meet Indian business needs, even though the Indian government has been lobbying for one. "So you must ask: What is the other visa available? And there is none," he said.
Mittal and Somers both fear that the U.S. government is moving toward making it too costly for some Indian firms to operate in the United States, driving them offshore or leading to price increases for products and services. "Will it cause companies to shut shop and leave the United States? I hope not," Somers said. "But who ultimately bears that price? It's going to be the American consumer."