The U.S. India Business Council is upset about the immigration bill. In particular, it's worried about a provision that would make it a whole lot harder for Indian IT services companies, like Tata and Infosys, to do business in the United States: Companies that have more than 15 percent of their workforces on H1-B visas wouldn't be able to send workers to work for American companies on-site, and would have to reduce the overall number of H1-B workers to less than half of their total payroll by 2017. That could force American companies that employ them to change their business models, which could get expensive. (I explained the issue more fully for The New Republic last month.)
I sat down with USIBC president Ron Somers to ask what the fuss is all about.
Lydia DePillis: So how are India-U.S. relations these days?
Ron Somers: Where do I start? Pick a date.
LD: How about January 2009.
RS: January 2009. We had just concluded the U.S.-India Civil Nuclear initiative. You might also remember that 26/11/2008 was the attack on Mumbai. It was the first time in U.S.-India history where our intelligence services began working very closely with Indian intelligence services to trace back as to who perpetrated that attack, and it began to open up whole new areas of cooperation and collaboration that we had not explored as two democracies. So at that point in history, as we had both suffered attacks on our homeland, and the fact that that we had just succeeded in clinching civil nuclear cooperation, given all those milestones, I would say that January 2009 was truly a high point in the U.S.-India strategic partnership, and in the commercial relationship.
And here we are today, in 2013. And in just that four-year timeframe, literally, you have a defense relationship that has grown from zero to $10 billion just in the last five years. It's been quite extraordinary. India is re-arming itself, and has been re-equipping its air force, its navies, its armed services. And they're looking for the best technologies the world can provide, and of course U.S. firms provide the best technologies, and this is going to be a massively important period of time where the U.S. and India services begin deep collaboration.
In 2006, our two-way trade between the countries was $25 billion. Today, we've just crossed $100 billion. And that's pretty evenly balanced. And what is India buying? They're buying Boeing aircraft, they're buying Caterpillar, they're buying Cummins engines, they're buying high end technology goods, creating thousands of jobs in the United States.
LD: So most of that increase is selling defense technology.
RS: No, most of that increase is selling power equipment, oil and gas discovery equipment. India just had the biggest discovery of natural gas just a few years back, also the greatest oil discovery, up in Mangala. A lot of it is high-end technology that the U.S. produces and still is a world leader in.
LD: So tell me about your concerns about the immigration bill in the Senate.
RS: Okay, we are for comprehensive immigration reform, one hundred percent. There are problematic provisions in the Gang of Eight bill, however, that really will harm American companies' interests. The touchpoint really is about choice. There are provisions in the bill that say that if 15 percent of your employees are on H1-B visas, then you will not be able to place personnel at a client's site. That destroys the business models of many of our American companies that are trying to establish between the United States and a global IT services provider. We've been able to develop a 24-7, seven-day-a-week ability to add value in whatever we do. At the end of the business day, we are able to send our link overseas, and have that work carried out by our knowledge partners. That has allowed us to remain competitive, and frankly to emerge from this recession as strongly as we have.
And all of a sudden, to be told by the U.S. Congress, unintentionally perhaps, that you will not be able to avail ourselves of those global IT services providers, it disrupts your business model. So this is an issue with the U.S. Congress telling U.S. companies how to do their business. That's just not the American way.
LD: My understanding of the bill is that the Gang of Eight wanted to prevent companies from simply bringing thousands of employees to the U.S. temporarily, not having work done overseas. How does that disrupt the 24-7 business model?
RS: That's a misreading of actually what happens. By raising H1-B visa caps, which is what we all support, where are we going to get those people? They are going to come from the talent sources, and in this case, the talent source is India. In the end, whether it's company A or company B, the talent is still going to come from where there is science, technology, engineering and math availability, and India of course is absolutely blessed by that. They have the skilled professionals that we need to keep moving freely between our economies. And this bill, in a way, discriminates against against certain types of those companies, and favors others, picking winners and losers. And since when should the U.S. Congress be involved in deciding which firm...So if the people are still going to be coming from the same location, from India, let's keep the playing field level.
LD: Do you think it's inevitable that India will always have more of the skilled labor that the U.S. needs than the U.S. can provide itself with?
RS: No, it's important that we as a nation work diligently in building out our own domestic capabilities in science, technology, engineering and math. Do we incentivize American companies and tell U.S. students to get into those fields? Absolutely, let's encourage more and more of our young people to be taking these kinds of courses. But what do you do in the meantime? Do you then begin to pretend that the world is not a global economy? That indeed all of our markets at this point in time are global? No longer can we keep thinking about this parochially.
LD: How much would this bill actually hurt your Indian members, like Tata and Infosys, that depend on sending Indian employees to the U.S.?
RS: It's not Indian members. it's American companies that would be damaged by this. It's companies that you wouldn't even expect would have any interest in this bill that have a knowledge partnership established outside the United States. These are companies that are developing all of their engineering services here in the U.S. and around the globe, and they happen to have an engineering research center in Gurgaon, and they're developing in San Francisco during the day and Gurgaon during the night. This outplacement provision will upset that business model. So all of a sudden a company is going to have to stop in their tracks and start over with a brand new partner that is being basically forced upon them by this legislation.
Are we not disrupting our ability to grow when we insert special interest provisions in the immigration bill that limits our choice and cuts down our ability to source the talent we desire, whenever we desire it, wherever we desire it? It does. And that is not going to help American competitiveness and create American jobs.
LD: So what are you going to do about it?
RS: The U.S.-India Business Council is the largest bilateral business association in the United States. It's got 365 member companies. By far the majority of my members are Fortune 500 brand name companies. And they are interested in getting the message out to Capitol Hill that there are provisions in the bill that will damage their business. And yet we all support comprehensive immigration reform. So how can we go into the bill, or into the conference process, or into the House, and with a very careful surgical knife, cut out those particular provisions that we believe could impair our ability to remain competitive?
LD: Why was it allowed to get there in the first place?
RS: All of these bills have their own dynamic. At the end of the day, if you really think about the great debate, it's been about the 11 million [people who would get a path to citizenship] and about the border security, and everybody's been completely focused on those two aspects. now we're getting into the granular details. And the high tech industry has always been for increasing H1-B visas, which thankfully has survived the bill, and we applaud that.
LD: People have been very vocal about that part.
RS: Yeah, you've got Mark Zuckerberg and others. And that's good. So there's a recognition implicit in that that we don't have enough of that talent available in the United States, at least right now.
LD: Is any of this in response to India's actions to limit American companies' access to its markets?
RS: Well, it makes it awfully difficult for us to argue to India to open their markets if, in the process with this immigration reform bill, we're closing down our own markets. So it basically undercuts any moral high ground we may have in arguing to India, 'why don't you lift the caps on foreign direct investment in insurance.' We think that long-term capital will help India build out its extraordinary infrastructure requirement, a trillion dollars needed over the next 10 years, we would love to see American companies get the bounty of. We'd love to see India restore its openings in the pharmaceutical sector, from 49 percent back to 100 percent, because we really believe we could collaborate. But India really is quite open. It's done a great job since 1991 in opening its economy in a really systematic way, with different kinds of governments.
LD: How did this issue play during Secretary of State John Kerry's recent visit to India?
RS: I'm sure he would've heard from the Indian side their concerns about what they would perceive to be concerning language in the Gang of Eight bill that will ultimately force American companies to choose partners that they might not otherwise have chosen.
LD: Which are sometimes other big American companies, like IBM.
RS: Other companies that are global, that may have larger workforces, and for them, the percentage issue doesn't matter, because they have this many employees--they may have a division that's all on H1-Bs, but because they're such a massive global company, they never reach that threshold, and therefore they don't have to face the discrimination of not putting personnel on a project site. So in that sense, boy, what's wrong with a scrappy, more agile American company that really specializes in this service, but now they're discriminated against participating simply because they don't match that threshold.