There's a growing global backlash against Indian IT engineers. From the US to Europe to East Asia, our techies are facing the ire of local co-workers, policymakers and powerful unions. So, whether it's a case of pushing through new legislation or plugging holes in existing ones, several governments are aiming to curtail Indian firms from expanding their tentacles. Kiran Karnik, Nasscom president, admits: "Our success has led to some resistance...a kind of a pushback."
Whatever the phrase you use, ground realities are stark. In the US, senators and lobbyists are working on bills to restrict outsourcing and plug loopholes in the existing visa regime. In the UK, unions are pressuring corporates not to shift backend offices to South Asia. And in Asian countries, Indian professionals are routinely rounded up by local cops.
Cut to Kuala Lumpur's Palm Court condominium, home to hundreds of Indian IT and other professionals, mostly from Andhra Pradesh. Many of them work for firms in the Malaysian Silicon Valley, the Multimedia Super Corridor. Almost all are here on professional visit passes. Last Sunday (March 9), the residents received an early morning shock when the police rounded up 270 people, mostly IT professionals.
Of them, 195 were taken to the police station; some were handcuffed and their mobile phones seized to prevent them from calling friends or the Indian high commission. "We were treated like criminals," said one. Another claimed that "my friend from Singapore, who had come to visit me, was also dragged off".
New Delhi immediately protested against the ill-treatment of its citizens. On Tuesday, the issue was raised during meetings the visiting Malaysian entrepreneur development minister, Nazri Abdul Aziz, had with commerce minister Arun Jaitley and textiles minister Kashiram Rana. "We have expressed our anguish and concern," said Jaitley. Andhra Pradesh chief minister Chandrababu Naidu also wrote to Malaysian PM Mahathir Mohammad seeking the latter's intervention in the matter.
By then, only four people were still in police custody. The Indian external affairs spokesperson felt this "means that the others were not in contravention of any laws". To pacify New Delhi, Malaysian foreign minister Syed Hamid Albar clarified: "The police acted on complaints about people without documents and were performing their duties." If that was true, countered the livid Indian high commissioner in Malaysia, Veena Sikri, "why weren't their documents checked at Palm Court itself?"
Back home, many experts saw a conspiracy angle to it all. For them, it was Mahathir's way of hitting back at India for short-circuiting several Malaysia-backed proposals at the recent nam summit in Kuala Lumpur. India had opposed Malaysia's demand to set up a permanent secretariat, instead of a rotating one, for nam. It also rejected Mahathir's insistence on naming the US as "aggressor" in the resolution on Iraq and introducing a clause in another resolution stating the "root cause" of global terrorism was the Palestine-Israel issue.
Obviously, India didn't wish to be seen as voicing anti-US sentiments, and justifying 'cross-border terrorism' in Kashmir by admitting there was an underlying "root cause". But mea sources told Outlook, "While there were differences at the nam summit, we are treating this incident as a separate issue. We are not making any linkages now."
But the connections are quite sharp when it comes to events in the US. The anger against "foreign (read: Indian) workers" there is palpable. Initially, unemployed Americans in the IT sector filed cases against firms, alleging they were favouring Indian workers. Simultaneously, they forced senators to push through bills to curtail outsourcing that implied further loss of jobs.Now, they want curbs on the L-1 visa programme which they claim is being "abused" by big Indian firms in a bid to sidestep tougher restrictions on the popular H-1B scheme.
In fact, the names of Wipro, Tata Consultancy Services, Infosys and Satyam are being bandied about lightly in this alleged scam. While the H-1B visa was meant for skilled workers (unavailable in the US), the use of L-1 was restricted to intra-company transfers of managers within mncs. L-1s became attractive due to restrictions on H-1Bs, including the clause that holders be paid a minimum wage in line with the average earnings of an American engineer.
Indian companies realised they could still export cheap labour through L-1, which had no such restrictions. A handy subsection said that L-1 applies to "specialised knowledge staff" who possess "knowledge of the company's products/services, research, systems, proprietary techniques, management, or procedures". Most techies fit this definition. The only difference was instead of applying for H-1Bs to allow their engineers to work directly at clients' sites, Indian firms would now opt for L-1s to transfer them to their own US offices and then shift them to the relevant worksites.
Scipio Garling, director of research at the Federation for American Immigration Reform, declares there was "unquestionably an abuse of the process. It's pretty straightforward that US companies are cutting costs. The L-1 has no labour department certification which the H-1B does. It's faster and you can bring in more people."
Indians rank as the topmost recipients of L-1s. Stuart Patt, spokesman for the State Department's consular section, says of the 59,369 L-1s issued worldwide last year, 18,966 were to Indian passport holders—60 per cent higher than in 2001. The story becomes more interesting when company-wise figures come into play. While half of tcs' 5,000 staff in the US are on L-1s, it's higher for Wipro and Satyam. As on December 31, 2002, while Wipro had 1,004 L-1s and only 726 H-1Bs, the respective figures for Satyam were 1,079 and 865.
So why is it a matter of concern? Contends Wipro's Sridhar Ramasubbu, GM finance and investor relations in the US: "We fully comply with the laws of the country we operate in. We bring in people to have effective customer interface. They are not replacing anyone." Adds K.K. Natarajan, ceo (enterprise business), MindTree Consulting: "We have used L-1s only for transfer of senior executives or specialists. When a person is not that, we use H-1Bs."
Despite such logic, Indian companies have become the villain of the show. The US justice department is investigating whether the "current use of the L-1 programme is in accordance with the intent of the US Congress," a Congressional staffer told Outlook. John Mica, a Republican, is preparing legislation to prohibit US companies from "obtaining workers on L-1 visas through other companies that may have a US subsidiary". Says Gary Burns, a spokesman for Mica: "The bill will not be a cap but it will address the practice of outsourcing because that was not envisioned when the law was enacted." He, however, stressed the bill will only be introduced if the justice department determines that US workers are being replaced. "Our efforts aren't directed against any country or foreign workers."
In a post- 9/11 atmosphere, almost all developed countries are tightening visa regimes. A spokesperson in the US embassy in New Delhi admitted "all schemes are being reviewed by the immigration authorities". Even Germany is in the process of enacting a new overriding immigration law. Under it, the green card facility for overseas IT engineers will be discontinued after July 2003, when it lapses. (From August 2000 to January 2003, Germany granted 13,566 green cards, of which 3,262 have been to Indians.) A German embassy spokesperson in New Delhi, however, clarifies that the green card facility "will be a part of the new law and may be extended to other professionals in areas like biotech".
But the time has come for Indian IT firms to realise that migration procedures will only become stricter. Nasscom's Karnik puts it aptly: "The profile of a would-be terrorist has changed after 9/11. Today, he's more likely to be highly educated and technology-savvy."
The only consolation is there's a strong logic for migration of hi-tech labour. "I think no amount of sentiment can defeat the cold economic logic of outsourcing," says Harsh Singh Lohit, MD, TechSpan India. This will even happen in the East Asian economies. Says Polaris ceo Arun Jain, recently arrested by the Indonesian police on charges of fraud: "India is becoming a powerhouse of software competencies, so the thinking of some Asian countries' has to change...from trading thinking to handling the knowledge business." Hope it happens sooner than later.
Seema Sirohi In Washington And M.G.G. Pillai In Kuala Lumpur with Arindam Mukherjee, and Archana Rai in Bangalore; research by Sandeep Singh
