Visa Reform – Wait and See, Ask Questions

The prospect of H-1B visa reform raises a gamut of issues, ranging from potential impact on service provider profit margins and strategies, to client sourcing options, to labor relations, to the state of technical education in the US.

It’s therefore surprising that, as recent media reports suggest, many in the outsourcing industry have paid little attention to the legislation currently under consideration by the U.S. Congress.  The lack of interest could be partly explained by the high level of uncertainty currently surrounding the fate of the larger immigration reform package. Possibilities range from “business as usual” to dramatic changes in H-1B quotas and application fees. While we likely won’t know the ultimate outcome of the debate until October or November, we believe it’s imperative for clients and service providers to consider the challenges and opportunities that significant changes in H-1B regulations could entail.

To summarize very briefly, the key points regarding the H-1B debate are as follows:

• A proposed doubling or so of the current 65K quota on H-1B visas, along with higher application fees (the increased quota is beneficial to the industry, but some SPs may pass the increased fees to clients)
• Limits to the proportion of visa holders that a service provider could employ (a provision that would likely have a short-term negative impact on India heritage firms)
• Stricter requirements that H-1B visa holders be paid prevailing wages (a provision designed to level the playing field for qualified U.S. employees)

If enacted, such dramatic changes could be game-changers. That said, we’ve recognized for some time that H1-B visas play a critical role in outsourcing strategies. Last year, we conducted an analysis of how visa policies are impacting sourcing transition plans, and outlined what clients and providers can do to mitigate risk.  While we don’t claim to have a crystal ball during the current “wait and see” period, we currently are actively engaged with clients to develop risk mitigation strategies to address potential risks related to visa reform.  Some of the key issues and questions we’re discussing include:

• Who would benefit from changes in H-1B quotas?
• How would changes impact existing outsourcing contracts and negotiations for new deals?
• How would changes affect individual providers and their business strategies?
• How would a client assess the preparedness of a provider to deal with changes in visa policies?
• While the outcome of the legislation remains uncertain, what contingency plans should clients and providers be implementing today?
• Would changes in visa provisions affect sourcing strategies by, for example, making offshore captives more attractive or increase domestic sourcing opportunities?

In future discussions, we’ll address some of the broader macro-level issues associated with visa reform, such as how it reflects on the state of U.S. job training and technology education, whether temporary visas are unfair to U.S. workers and how changes might play out over the long term. What are your thoughts on the visa reform issue?

About the author

As a partner and member of the Executive Board, Mr. Hall leads ISG’s Digital Strategy and all ISG Service Lines for the Americas. He also leads ISG’s Alliance group and is ISG’s Executive Sponsor to the TBM Council. During his time with ISG, Mr. Hall has led some of the company’s largest and most complex engagements with clients as diverse as United Airlines, Symantec, BP, World Bank, CEMEX and Motorola. He is a seasoned professional who brings considerable experience in emerging technologies to ISG clients. Prior to his position at ISG, Mr. Hall held senior roles at a number of renowned IT services companies, including Unisys and MCI. He also led large-scale eBusiness initiatives for technology solutions providers C-Bridge and CBSI and gained deep outsourcing and offshore software development experience as a delivery executive with Covansys. Mr. Hall co-authored Managing Global Development Risk: A Guide to Managing Global Software Development. He earned his degree in Computer Science from Regis University.