U.S. Senate Targets India Outsourcers

How unpopular are Indian outsourcing companies from India in the U.S.? They can manage to unite squabbling Democrats and Republicans in the Senate. With the GOP filibustering most of the time, it’s news when Senate Majority Leader Harry Reid and his Democratic colleagues manage to get 60 votes to pass anything at all. Getting all 100 Senators to vote unanimously on a bill is near miraculous. On Thursday, though, the Senate unanimously passed a bill sponsored by New York’s Chuck Schumer to increase visa fees on companies that send workers to the U.S. if more than half of their America-based employees use work visas. In other words, Indian IT outsourcing companies. (Companies like Microsoft and Google that bring people to the U.S. on these work visas, too, don’t have to worry since those employees are just a tiny percentage of their U.S. workforce.) The extra money will pay for additional security measures on the U.S.-Mexico border.

In case the message wasn’t clear enough, senators made a point of singling out Indian IT outsourcers. Missouri Democrat Claire McCaskill said the bill would hit “a handful of foreign-controlled companies that operate in the United States such as Wipro, Tata, Infosys and Satyam,” Indian wire service PTI reported. PTI also quoted Schumer turning up the heat on the Indians. “The emergency border funds will be paid for by assessing fees on foreign companies known as chop shops that outsource good, high-paying American technology jobs to lower wage, temporary immigrant workers from other countries,” Schumer said during debate on the Senate floor. “These are companies such as Infosys.”

Chop shops! I’ve followed the debate about outsourcing for a while, and this is the first time I’ve heard of a top lawmaker likening India’s blue-chip IT services companies to crooks who specialize in taking apart stolen cars. Nasscom, the Indian IT industry’s lobbying group, came out with a statement after the Senate vote pointing out that less that 12 percent of H-1B visas. “But U.S. compnanies, which use the bulk of these visas, would remain unaffected by the legislation,” Nasscom President Som Mittal said in the statement. “This is simply unfair to foreign companies.” For now, the new tax won’t hurt Infosys and other Indian companies too much; Bloomberg News quotes Kaufman Bros. analyst Karl Keirstead saying the new fees will be “relatively innocuous” for a company like Infosys, which earned $1.3 billion in the most recent fiscal year. With the U.S. unemployment rate hovering near 10 percent, though, Infosys and other Indian IT companies should expect more over-the-top attacks from American politicians from both sides of the aisle. They can’t agree on much, but they all know that there’s little downside to beating up on Bangalore.

Read the original story at BusinessWeek Eye on Asia Blog