Program Bugbear

Guy Santiglia has been without a job for 12 months. But instead of just being gloomy, this 36-year-old American software engineer is gripped by a surging anger. This fury is against his former employer, Sun Microsystems, who he thinks prefers foreign (read mostly Indian) workers to locals. Santiglia thinks that while Sun sacked Americans, it hired techies with H-1B visas. (The visa allows foreigners to work in the US for six years and Indians account for half the H-1Bs issued by US Immigration each year.) "It is a common practice among US companies," he complains.

Incensed with Sun's behaviour, Santiglia and other former Sun employees approached the US Department of Justice (DoJ), which is currently investigating the cases. The DoJ is also looking into the accusation of Jenlih Hsieh, a 50-year-old US citizen from Taiwan, that he was fired by the Milpitas, California-based SwitchOn Networks, and replaced with an H-1B worker. Allan Masri, a 52-year-old engineer from San Jose, is peeved that while he was sacked by Netscape, his colleague, an H-1B visa holder with the same designation, was retained.

"It's true firms like Netscape seem to have a policy to hire more H-1Bs," says an enraged Masri. Adds another New Jersey-based US software engineer: "We're not xenophobes, racists or socialists but we're concerned about the future of our jobs." Like it or not, the opposition against the influx of Indian (and other foreign) software engineers is growing by the day. The decibel levels are reaching fever-pitch as a new wave of nationalistic paranoia sweeps across America.

The H-1B visa programme was started in the early '90s to relieve the then-perceived shortage of software engineers by allowing skilled labour from countries like India, China and Pakistan. Over the years, visa limits for entry of such workers were raised by US Congress; since 1998, it has gone up threefold to 1,95,000 per year.

But as the tech slowdown refuses to ebb, and thousands of workers continue to lose jobs each month, the H-1Bs, who are still trooping in, are under attack. "It's going to be the next big battle," warns John Miano, the founding member of The Programmers Guild, which has filed 20 cases with the DoJ on behalf of laid-off US engineers.

"I can understand what's happening out there. The Indian H-1Bs who lose their jobs can return home. But what can an average American do?" explains Arjun Malhotra, chairman of TechSpan, a Sunnyvale, California-based software firm that employs close to a hundred H-1Bs. But in the same breath, he dismisses the allegation that H-1B workers are being favoured.

Well, so do the other US companies. Netscape's spokesperson, Derick Mains, dismissed Masri's imputation as "baseless" and told Outlook that "every job action in the company is based on either the employee's performance or on what happens to the division they worked for. The employee status has nothing to do with it". Sun's Diane Carlini also felt that Santiglia's complaint "was without merit" and added that her firm was "confident that the matter will be resolved in Sun's favour".

Her confidence stems from the fact that the number of H-1B entrants has declined in recent times. According to figures doled out by the US' Immigration and Naturalization Service (INS), only 60,500 H-1B visas were issued between October 2001 and June 2002, a 54 per cent drop compared to the same period in 2000-01. That is an indicator that US firms are applying for visas only when they need skills not available at home. In addition, like their US colleagues, thousands of H-1Bs have lost their jobs and were forced to leave the US.

Shailesh Gala, president of the Immigrants Support Network, a non-profit organisation dedicated to equitable treatment of all legal immigrants in the US, says that H-1B visa-holders have been the worst affected."They don't get unemployment benefits, nor do they get training facilities even though they have been paying taxes and social security all these years," he points out.

Such logic is little consolation to US workers. They feel US firms are hiding the truth that Americans are being replaced by foreigners. Otherwise, asks Santaglia, why would Sun lay off 3,900 engineers (mostly Americans) in October 2001, even while hiring 5,000 H-1Bs in the preceding 12 months? Another study reveals that the top 10 tech companies in Silicon Valley sacked 41,000 employees last year but still hired 2,000 H-1Bs.

In the recent past, both companies and recruiters have asked only H-1B visa-holders to apply for new openings. A few think that foreigners may be better than locals. The Texas-based Adea group admitted it was keen to hire H-1Bs (as opposed to US citizens) "because they (H-1Bs) most likely have the experience we need and a sense of urgency in securing new employment if they have been recently laid off".

What Adea didn't confess was that H-1Bs are cheaper and, probably, more pliable. In 2000, the US Department of Labor estimated that the average annual salary earned by H-1Bs ($47,000) was lower than the median salary of US engineers ($58,000). Another ins study concluded that a fifth of H-1Bs are not even paid the salaries mentioned by the firms in their visa application forms. "It's hard to compete with Indians who get paid less, at least initially," agrees Masri.

However, as per US laws, companies have to pay H-1Bs a minimum wage to prevent discrimination against US workers. That's why corporates deny that foreigners are underpaid. Netscape's Mains feels that it may actually be more expensive to hire H-1Bs because of the additional costs like visa fees and travel expenses that have to be borne by the employers. But no one can deny that foreigners are more docile.

An H-1B worker has inherent disadvantages. For instance, he has to leave the country in case he is unable to find a new job within 10 days of getting fired. During the boom days, such limitations didn't matter because they were in demand and many of them arrived in the US armed with two or three H-1Bs from different employers. But as the job market got crunched, the H-1Bs find themselves in a difficult situation.

Norman Matloff, professor of computer science, University of California (Davis), sums up their position perfectly: "Most H-1Bs are de facto indentured servants, unable to switch jobs. Thus, they cannot leave for a higher-paying job elsewhere, nor can they negotiate higher wages with their present employer by threatening to leave." Therefore, the higher-paid US workers are more likely to get pink slips today as firms desperately try to cut costs.

Industry associations claim this is exactly what's happening. The Institute of Electrical and Electronics Engineers(IEEE-USA), with 235,000 engineers as members, estimates that the unemployment figure for scientists and engineers has gone up to 4 per cent in the second quarter of 2002, compared to 3.6 per cent in Q1. This is happening while the overall unemployment rate has fallen from 5.9 per cent to 5.4 per cent during the same period.

In a letter sent to all US Congress members this July, theIEEE-USA has stated that this trend "is not a short-term...phenomenon but represents a more fundamental shift in engineering utilisation that has potentially negative impacts for our nation". Adds Vin O'Neill, senior legislative representative atIEEE-USA: "We don't think the H-1Bs are causing the unemployment, rather the significant increase in the caps leads to a situation where they complicate the unemployment situation."

To correct this wrong, LeEarl Bryant,IEEE-USA's president, has urged US Congress to investigate "the impacts of increased hiring of non-US guest workers and the outsourcing of engineering work overseas as causes of the unemployment problem".So, will the H-1B scheme be scrapped? Or will the Bush administration lower the visa cap, as being demanded by certain sections, to 65,000 per year?

People who understand the policy-making process in the US feel there may be moves soon to curtail the entry of foreign labour. According to TechSpan's Malhotra, "the mood is such that the US administration will listen" to some of the demands made by US workers. Clearly, the life of an H-1B holder, already hit by the slowdown, is bound to change for the worse. For Indian software companies though, it could be a boon in disguise as US companies farm out more projects back home.