Surviving the New Immigration Regulations: Recommendations for Offshore Outsourcing Providers and their Clients

The End of Visa Availability for Indian-Centric Providers

As a result of proposed immigration regulations that will restrict the availability of visas for their employees, offshore outsourcing providers that employ large numbers of foreign workers in the U.S. now face enormous challenges to their business model.  Critics have long blamed offshoring for contributing to America’s economic woes, and some providers have been accused of violating U.S. visa regulations.  Partially as a result, the current Senate Immigration Reform Bill (S. 744) restricts visa employment visa availability and increases costs for large employers.  The Bill provides that no more than 75% of employees can be H1-B or L visa holders in 2015, and restricts employers to 65% in 2016, and to no more than 50% thereafter. In addition, 2014 L-visa filing fees will be $5,000 for employers with between 30% and 50% of employees on H1-B and L visas, and $10,000 for employers with between 50% and 75% working under such visas. (Sec. 4304, 4305).

Strategies to Respond to Offshore Outsourcing Legislation

Industry buyers and providers have long ignored the possibility that Congress would target offshore services providers  But now that it has, risk managers need to update their assessments of political risk in the U.S. and outsourcing buyers and providers need to address the current visa challenges as part of an overall comprehensive risk management program.  Stopgap measures may enable a given engagement to go forward, but may put the participants, and the industry as a whole, at increased political risk in the long run.  Particularly for service providers that are at or near the visa availability limits, important elements of a visa risk management strategy for global services buyers and providers that can mitigate the effects of the proposed visa regulations include:

  • Training a cadre of global services managers in the U.S.,
  • Developing the U.S. workforce for currently off-shored services, and
  • Improving U.S. visa compliance.

Global Management Cadre

One of the major reasons that large outsourcing providers transfer associates from India to the U.S. is the dearth of U.S.-based associates with knowledge of, and experience with, the global delivery model.  By training U.S. associates in the offshore delivery model, the pyramid structure (explained here), and the management of global teams, providers can simultaneously reduce both their visa risk and operational complexity.  Deliberate management training that includes assignments managing and operating within offshore teams would not only mitigate the effect of the U.S. visa regime, but also build a management cadre that is more easily deployed around the world from a visa perspective.  Rotations to India and emerging offshoring centers in Asia would create valuable associates for offshore providers.

U.S. Workforce Development

The easiest way to reduce the risk of visa availability is to increase the use of domestic workers.  Large employers like GE and Intel participate in programs such as Graduate 10K+, a program to stimulate comprehensive action at universities and colleges to help increase the annual number of new graduates in engineering and computer science by 10,000 (See  NSF Joins Forces with Intel and GE to Move the Needle in Producing U.S. Engineers and Computer Scientists).  Many employers of large numbers of visa holders conduct extensive training for new hires in India. Deploying similar programs in the U.S. could expand their labor pools in the U.S. by applying them to non-traditional technology hiring pools such as liberal arts graduates and professional groups that could be retrained such as veterans and the unemployed. Training some of these new associates in India could provide them insight to the global delivery model, valuable professional contacts, and expose them to global management programs.  Some of the same techniques currently used in India (i.e. employing  largely local employees, bidirectional rotations, and domestic [U.S.] delivery centers) could economically increase domestic employment.

Visa Compliance

Buyers and providers alike should ensure that policies clearly delineate the type of visa required for a given role, and train resource and project managers to understand the differences and make the appropriate choices. Written and enforced policies and procedures can mitigate penalties in the event providers are found civilly or criminally responsible.  In addition, incentives should be implemented so that managers and staffing associates are not enticed to ignore operational risks to meet revenue goals. When implementing stronger policies, providers should consider temporary amnesty periods during which managers and staff can highlight and correct visa issues on existing projects without fear of penalty for having reported or contributed to inappropriate visa use.

Conclusion

A multi-lateral delivery model that includes a minimum of fifty percent local employees will strengthen the existing global delivery model, improve the management cadre from which offshore projects can draw and, over time, significantly mitigate the effects of the proposed U.S. visa regime.  Providers that are able to demonstrate a comprehensive response ahead of the market will have an opportunity to grow their businesses in the face of this potentially disruptive change.

2 Responses to Surviving the New Immigration Regulations: Recommendations for Offshore Outsourcing Providers and their Clients

  1. […] a previous post I outlined how America’s proposed new immigration regulations (Senate Immigration Reform Bill S. […]

  2. Good information!Client must be aware of the laws in which the offshore outsource unit is situated and have agreements to work according to the jurisdiction.

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