L1s Slip Past H-1B Curbs

Date: Tuesday, January 07, 2003 9:02 AM

H-1B and JOB DESTRUCTION NEWSLETTER

www.ZaZona.com

This is one of the first articles to describe the L visa. Linda Vaas is one
of the best reporters on high tech work issues and she didn't disappoint
here.

L-1 visas don't have a numerical limit so an unlimited number of them can be
issued. While H-1B is still used more often this may change because the H-1B
cap is scheduled to go down to 65,000 in the year 2004. It's a good bet that
the L visa will take up the slack.

Laxman Badiga, chief executive at Wipro, claims that contrary to rumor,
Wipro pays the same payroll taxes in the United States on all employees, no
matter what visa is involved. If he is saying that his L-1s pay full taxes
then I would advise his workers to seek out a better bodyshop like TATA.

Aliens that work in the U.S. with L-1 visas don't have to pay income tax or
social security if they know how to play the game right. Companies like TATA
just deposit their pay checks in Indian banks, and then send them a "living
allowance" which is tax free. Perhaps when Badiga said that he pays the same
payroll taxes it's because he pays none at all.

http://www.eweek.com/article2/0,3959,809079,00.asp

January 6, 2003
L1s Slip Past H-1B Curbs

By Lisa Vaas

Dec. 20 was supposed to be Michael Emmons' D-Day, the day he was to lose his
contractor position.

It would have been, had Emmons not quit his post at Siemens AG's Siemens
Information and Communication Networks division, in Lake Mary, Fla., on Nov.
22 rather than wait to be replaced by a worker from Tata Consultancy
Services holding an L1 visa. Tata is a Mumbai, India, IT services company
contracted by Siemens to do, among other things, Emmons' job: connecting Web
sites to SAP R3 applications.

The story line is familiar: Large U.S. company outsources work to offshore
service provider that uses foreign nationals with temporary work visas to
take what could have been domestic IT jobs. What's not familiar to many IT
professionals is the L1 visa. Although the L category visa has been around
some 50 years, it hasn't received a fraction of the attention the H-1B visa
has from legislators, the media and outraged domestic IT workers, many of
whom believe companies have given their jobs to lower-paid foreign IT
workers brought in on H-1B visas. While many of those resentful workers have
attempted to mount political pressure to reduce the number of H-1B visas
given each year, no such movement has been mounted against the L1 visa.

In some respects, however, the L1 visa is easier for employers to use than
the H-1B. And there's some evidence that use of the L1 visa is rising. The
latest figures released by the Immigration and Naturalization Service show
that the number of L1 visas granted climbed from 112,124 in 1995 to 294,658
in 2000. But they still haven't caught up to the H-1B numbers: In 1995,
117,574 H-1B visas were granted, compared with 355,605 in 2000.

To IT workers such as Emmons who say they feel they're facing unfair
competition from imported workers, statistics mean little. What matters is
that they've lost their jobs, they've had to train their replacements and
many of those replacements are here on L1 visas.

Although there's little evidence that it is about to overtake the H-1B in
terms of numbers granted, the L1 visa has clear advantages for employers.
Technically, the L1 is an intracompany transfer visa that allows U.S.
companies to import employees from foreign subsidiaries, affiliates or
parent companies. One big plus for the L1—at least in the eyes of
employers—is that there's no limit on the number that can be issued each
year. H-1Bs are currently limited to 195,000.

Another advantage is that the L1 can be used to import large numbers of
workers at one time.

The L1's relative anonymity also works in its favor, experts say. "I have
not seen L1 visa use increasing, but I can see why anyone would want an
escape route out of the H-1B," said Carl Shusterman, an immigration attorney
in Los Angeles. "[The H-1B] is the most overregulated part of immigration
law over any visa that exists."

With the L1 visa relatively easy to get, it's not surprising that more
domestic IT workers such as Emmons are beginning to worry about competition
from companies relying on L1s. What is surprising is that some H-1B holders
are also becoming concerned about competition from L1s, according to Norm
Petereit, CEO and president of Analysts Express Inc., of Houston, the
staffing company through which Emmons was contracting. Analysts Express,
like many IT service providers, has seen its business shrink in recent years
and, with it, its size. The company, which in 2000 employed 62 contractors,
now has 18, 12 of whom are on H-1B visas. According to Petereit, in
Stoneham, Mass., even his H-1B consultants live in fear of their contracts
ending in this miserable economy, since large consultancies such as Tata can
so easily bring in employees from India on L1 visas. "If [Analysts Express
consultants'] contracts ended today ... their concern is they'd have
difficulty getting a new contract at the prevailing wage," Petereit said.

Unless the L1 program is changed, it's likely many employers will continue
to make liberal use of it. Software company Wipro Technologies, a Bangalore,
India, division of Wipro Ltd., is a good example of why. According to Laxman
Badiga, chief executive of talent transformation and external relations at
Wipro, the company can get L1 visa applications approved four to eight weeks
faster than it takes to process an H-1B visa. (And, contrary to rumor, Wipro
pays the same payroll taxes in the United States on all employees, no matter
what visa is involved, Badiga said.)

And that's helped Wipro, and other Indian contract IT services companies,
steadily grow despite the down economy. According to Badiga, Wipro recruited
about 2,300 workers between April and September last year.

To Wipro, said Badiga, the L1 is just one more tool that's helping the
company prosper. To Emmons, however, it's a "nasty tool Congress created to
get cheap labor for their corporations." And to a growing number of
recession-scarred IT workers, the L1 visa is just one more thing to worry
about.

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