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An obscure work visa known as the L-1 has become the center
of a bitter controversy in the technology industry.
Much like the H-1B before it -- an equally obscure visa
that rose to prominence when American workers complained they
were being displaced by its recipients -- the L-1 is catching
the ire of tech workers and the eye of government regulators
who disagree on whether the visa is being used legally.
In the middle of the spat are Indian firms that undertake
tech projects for U.S. companies, including many in the Bay
Area, on a contract basis.
The L-1 visa was originally intended for multinational
companies that need to transfer key employees to U.S.
divisions. But in recent years, outsourcing firms such as
Wipro Technologies, Infosys Technologies and Tata Consultancy
Services have stepped up their use of the L-1 visa to bring
programmers and other professionals from India to work at the
offices of U.S. clients.
In the Bay Area, the firms' clients include
Hewlett-Packard, Cisco Systems, Visa International,
ChevronTexaco and Sun Microsystems.
Some U.S. tech workers, frustrated by growing unemployment,
say the L-1, like the H-1B before it, creates unfair
competition and eliminates jobs of American workers. In fact,
the workers like the L-1 even less than the H-1B because L-1
lacks the abuse-prevention clauses and annual limit that H-1B
has.
A bill introduced by a Florida congressman last week seeks
to ban the visa's use in outsourcing.
But the outsourcing companies, multimillion-dollar concerns
with thousands of employees in the United States and abroad,
say their use of the visa is legal and appropriate.
The companies make no secret of their visa use. Wipro and
Infosys, both listed on U.S. stock exchanges, disclose the
number of L-1 and H-1B visas they get in financial filings.
U.S. worker groups, including the AFL-CIO's Department for
Professional Employees and the Seattle technology union
WashTech, say outsourcers are using L-1 to get around what
they call the minimal worker protections attached to H- 1B
visas.
"We think it's the secret stealth visa," said Marcus
Courtney, president of WashTech.
L-1s "seem to be sprouting up all over the Bay Area, and
they're totally off the radar screen," said Peter Bennett, a
former computer programmer who works as a mortgage broker in
Danville. Because he runs a Web site protesting the H-1B visa
program (http://www.nomoreh1b.com/),
Bennett gets 50 to 500 e-mails a day from tech professionals
who are out of work or fear losing their jobs. An increasing
number of them complain that L-1 workers have shown up in
their offices.
Restrictions that apply to H-1B, but not L-1, include an
annual limit on the number of visas issued and a requirement
that the visa applicant have a bachelor's degree or higher.
H-1B visa applicants have to pay a $1,000 fee toward training
American workers; L-1 applicants don't.
Visa law also requires workers with H-1Bs to be paid the
prevailing wage in the region where they work, although the
Department of Labor does not routinely check up on this.
The L-1 visa carries no salary requirements, theoretically
allowing a foreign worker to continue drawing the salary he
was paid at home while working side-by-side with or replacing
Americans earning two or three times as much.
PROGRAMMERS EARN LESS
Outsourcing firms say they pay their L-1 workers wages
comparable to what American workers earn. But Tata
acknowledges that when it took over a project at Siemens
Information and Communication Networks in Lake Mary, Fla., it
paid some programmers only $36,000 a year -- below the average
local range of $37, 794 to $69,638 for a basic programmer
(determined by Department of Labor surveys) and far below the
$98,000 that one U.S. programmer there said she was paid.
Tata spokesman Tom Conway said taxes, Social Security and
other withholding bring the salaries up to the average range.
After Tata took over the project, Siemens let a dozen
employees go, said spokeswoman Paula Davis.
Some of those employees were outraged that they could be
replaced by foreigners. It especially stung that they were
asked to train Tata's workers before they left, a procedure
that Tata calls knowledge transfer.
"This is what they call outsourcing. I call it insourcing.
Import foreign workers, mandate your American workers to train
them, then lay off your Americans," said Michael Emmons, who
left Siemens last fall just before his job there was to end.
Emmons had worked as a contract computer programmer for the
company for six years, first in San Jose, then in Florida.
Davis said Emmons and other workers were not directly
replaced by foreign workers. "We actually outsourced a
function. It wasn't replacing this employee with that
employee," she said.
What happened in Florida follows the general pattern of how
Indian outsourcing firms use L-1 visas: The Indian firms take
over a project, such as software maintenance, at low rates for
an American client and send in a team of visa holders to learn
the company's procedures. As much of the work as possible is
then transferred to the company's headquarters in India, where
wages are much lower. But some visa holders continue working
at the client's office.
INTERPRETATIONS VARY
Whether this is a legal use of the L-1 visa is a matter of
interpretation. An official at the Department of Homeland
Security, now responsible for immigration, said this kind of
use is fraudulent because the L-1 is designated to let workers
move from one office to another within a company -- not from a
company to a client.
"If an L-1 comes into the United States to work, they're
coming to work for their specific company that petitioned for
them, not for another company that they're being contracted
out to. That would be a fraudulent use of an L-1 visa, " said
Christopher Bentley, spokesman for the Bureau of Citizenship
and Immigration Services, a division of the Department of
Homeland Security that replaced Immigration and Naturalization
Services. The bureau is assessing the L-1 and other visa
programs for fraud, he said.
The companies say they would never risk using the visas if
officials had not assured them it is legal. Wipro immigration
attorney Terry Helbush said she is puzzled by Homeland
Security's statement. "The L-1 visas are all approved by the
consulate or by the INS. In our submissions, we're very clear
that . . . some of the employees are on site at the client."
Tata also said it complies with visa law. Infosys declined
to comment because it is in a quiet period before a financial
transaction.
The way the outsourcers see it, they are complying with the
law because their employees are ultimately working for them,
whether sitting in a cubicle in Silicon Valley or sitting in
one in Bangalore.
Tata and Wipro both strive to differentiate themselves from
what they call body shoppers, firms that provide nothing more
than inexpensive workers for clients.
Wipro Chief Operating Officer Lakshman Badiga said it is
precisely because the company has moved from just bringing in
workers to running complex global projects that it has
increased its use of L-1 visas.
The State Department says the outsourcers are within the
law.
"The fact that someone is on the site of (a client) does
not make them ineligible for an L-1 as long as . . . the
company they actually work for is truly functioning as their
employer in terms of how they're paid and who has the right to
fire them," said Stuart Patt, spokesman for the State
Department's Consular Affairs Bureau.
ATTORNEYS CAN'T AGREE
Not even immigration attorneys who specialize in procuring
work visas can agree.
Memphis immigration lawyer Gregory Siskind said, "It's
largely inappropriate for companies to be using the L-1 to
bring in workers that are being contracted out to other
companies. I would be very surprised if it continues for very
much longer without a crackdown."
If using L-1s for outsourcing is legal now, it won't be
under legislation introduced last week by Rep. John Mica,
R-Fla. Calling L-1 "a back door to cheap labor," Mica said his
bill would ban L-1 visa holders from being transferred to
client companies.
It's not clear whether the legislation would actually ban
Wipro, Tata and others from using the visas just as they have
been because the companies say the workers are their employees
even when they are doing work for clients.
L-1 visas have been used in relative obscurity since 1970.
But during the past two years, an increasing number of the
visas are going to workers from a single country: India.
Thirty-three percent of the 32,416 L-1 visas issued so far in
2003 went to Indians, up from 20 percent in 2001.
At Wipro and Infosys, L-1 visa use rose considerably during
the same time. Wipro, for example, had 624 H-1B employees in
2000 but only 289 L-1 workers. Since then, its L-1 count has
soared to 1,157, while the number of H-1B employees has
increased to 705.
The limit on that other contentious tech visa, the H-1B, is
scheduled to go from 195,000 to 65,000 in the fall unless
Congress intervenes. Worker groups are gearing up to fight
industry lobbyists to make sure the limit is lowered.
Some say the L-1 visa could make the H-1B limit irrelevant.
"If the H-1B becomes more difficult to get, (companies)
will just adapt and go to L-1s," said Ron Hira, a volunteer on
workforce policy issues at the Institute of Electrical and
Electronics Engineers-USA. Hira is also a Columbia University
researcher on science and technology policy.
E-mail Carrie Kirby at ckirby@sfchronicle.com.