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IT outsourcing industry doing little to prepare for H-1B visa reform

Stephanie Overby | June 24, 2013
Though IT outsourcing vendors and clients cite concern over the potential H-1B visa reform currently heading to the senate for a vote, they are, for the most part, taking a wait-and-see approach and are doing very little to prepare for the possible effects of the visa changes.

Survey results indicate that neither outsourcing clients nor providers nor advisers are preparing for the impact of visa changes and suggest that visa reform could lead to more offshore outsourcing.

As the Senate debates an immigration reform proposal that could significantly impact the way IT outsourcing providers use skilled foreign workers in the U.S., IT services clients, providers, and advisers appear to be taking a wait-and-see approach to dealing with the potential repercussions.

According to survey results released Wednesday by outsourcing analyst form HfS Research, 57 percent of IT services buyers said they had not evaluated the impact of changes to the H-1B and L-1 visa regulations on their outsourcing deals.

Of the 70 large outsourcing clients surveyed, 16 percent said they were not concerned about visa reforms, 37 said they were slightly concerned, 39 percent said they were quite concerned, and 8 percent said they were extremely concerned.

Among the 98 advisors asked, 32 percent said they knew a bit, but needed to know more about the details of proposed legislation for visa reform and 54 percent said they knew enough to understand the key points.

At the same time, 60 percent of those advisers said they were quite or extremely concerned about immigration reform's potential impact on their clients. "These are they guys who specialize in outsourcing, and they don't know much about it," said Phil Fersht in a webinar panel discussion.

"Even the advisors have not gotten well skilled on what this could do to their clients. Just one in seven advisors said that they were extremely concerned about visa reform. "They're almost as blasé as buyers about the impact on the business," Fersht said.

Similarly the majority of outsourcing providers admitted they needed a better understanding of potential visa changes (52 percent of offshore-centric providers said they knew "a bit" or "none at all" about the proposed legislation as did 61 percent of "Western-centric" providers).

The offshore providers "know enough to know if it passed it will make it harder to get H-1B and L-1 visas and have a big impact on their business," says Fersht. "But a big proportion of them plan to do nothing until the legislation passes."

Offshore Outsourcing Providers Would Suffer Most
The Senate version of immigration reform makes "significant changes to the H-1B and L-1 visa programs," said Steve Smerdjian, partner and immigration specialist with law firm Loeb & Loeb, during the HfS Research panel discussion, adding that those changes would have the greatest negative impact on offshore outsourcing providers.

That 844-page bill, which the Senate began debating last week, relaxed requirements related to layoffs and recruiting for companies for whom skilled visa holders make up a smaller percentage of their staffs, like American outsourcing giants IBM and Accenture, while subjecting those businesses deemed "H-1B dependent," like India's IT service providers, to much more stringent conditions, restrictions, and higher fees.


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