BANGALORE, India — Fearful that the United States will restrict the use of outsourcing services or limit the number of H-1B visas granted to immigrant workers, India's National Association of Software and Service Companies (Nasscom) is doing some proactive damage control, releasing a report designed to allay industry concerns in both the United States and India.
The United States continues to be the main market for Indian software and technical services, but the Nasscom report reveals that the number of H-1B visas used by Indian engineers traveling to the United States fell by more than half between 2001 and 2002 and is expected to decrease even further during 2003. Indian parliamentary delegations, meanwhile, have been visiting the United States to lobby against bans on outsourcing.
"There has been a lot of interest . . . about the impact of a possible reduction in visas and the introduction of anti-outsourcing bills. There has been no immediate impact; it's business as usual for the [Indian] industry. The issue is long-term," Nasscom states in the report.
Nasscom argues that outsourcing has not caused layoffs but, on the contrary, has helped some U.S. companies avert them. U.S. banks, financial-services companies and insurance firms saved $6 billion in the past four years by sourcing work to India, Nasscom says. During that time, part of the money saved via outsourcing has gone toward the addition of 125,000 jobs at those institutions.
"Indian IT companies have [contributed] and continue to contribute to the U.S. economy by employing nearly 60,000 people in the U.S. in 2001," Nasscom states. "Nearly 170 Indian IT companies have physical establishments in the U.S."
Nasscom released findings of a study by global consulting firm McKinsey & Co. to "reaffirm the fact that outsourcing to India will continue." While India's projected software and service exports to the United States in 2003-04 are expected to come in at $8.5 billion, the savings to the U.S. economy by outsourcing work to India over the period is estimated at between $10 billion and $11 billion. And high-tech imports into India from the United States (some of which will be used to write software for export) are expected to total $3 billion.
The annual contribution by Indian engineers to the U.S. Social Security system, meanwhile, totals about $500 million, and a similar amount in income tax flows into U.S. coffers from Indian engineers working in the United States, according to the study. Add the $1.8 billion that Indian engineers will spend on U.S. goods and services while working for U.S. companies, and the aggregate benefit to the U.S. economy is $16.8 billion, the report states.
The software export services industry here has the most to lose if cuts are made in H-1B visas, especially in the wake of Germany's recent decision to restrict the number of green cards issued annually to foreign workers. Adding to the fears here, the United Kingdom is similarly reviewing a fast-track visa scheme that currently affords skilled professionals easier access to that country for jobs.
On the other hand, India's growing information technology-enabled services industry, which includes call centers and business process fulfillment, is more worried about the prospect of restrictions on outsourcing.
Nasscom's report quotes a McKinsey & Co. analysis showing that the IT-enabled services market will grow to $142 billion in 2009, against the current cost to U.S. business of $532 billion for such services-the difference, $390 billion, being the net savings the U.S. economy can expect from outsourcing work offshore.
Nasscom also cited figures to assuage fears that visiting engineers are taking jobs from U.S. engineers. India accounted for 77,000 H-1B visas in 2001 but only 33,000 in 2002, and the total is expected to drop to 30,000 this year, the report states.
"As of March 2003, India's software exports industry has approximately 120,000 H-1B visas and 15,000 L1 visas. These are a fraction of 195,000 H-1B and 315,000 L1 visas issued in a year by the U.S.," Nasscom states. The report adds that about 40,000 Indian H-1B visa holders have returned to India in the past two years as the U.S. economy has slumped.
