Thread: H-1B is "the offshoring visa

To: H-1B/L-1/offshoring e-newsletter

It's the industry lobbyists' favorite threat to Congress: "If you don't
give us more H-1Bs, we'll have to send the work offshore." Congress, in
addition to being plied with lots of big campaign donations from the
industry (see http://heather.cs.ucdavis.edu/Archive/StealthBill.txt),
also doesn't want to be remembered as having "lost" the tech industry.
So the industry lobbyists know that their threat will work, even though
it doesn't make sense when viewed rationally. Consider:

1. Does Congress really think that the industry is keeping some jobs
here in the U.S. out of some sense of social responsibility or
patriotism? Come on, the firms have a responsibility only to their
shareholders. That's fine with me, but we must recognize it. These
firms will offshore as much engineering work as they believe can be done
cost effectively. U.S. workers will be left with only the semitechnical
or nontechnical work that I refer to as the "talking jobs," e.g.
customer support and marketing of tech products and services.

2. After Congress did expand the H-1B program in 2000, to a level
triple the pre-1998 cap, the industry INCREASED its offshoring
activities.

3. One of the major uses of the H-1B visa is to FACILITATE offshoring,
not to PREVENT it.

Here will focus on Point 3 above.

Firms that do offshore work told the congressionally-mandated National
Research Council commission in 2000 that H-1B (and L-1) workers form an
integral part of the offshoring process. H-1Bs are needed as liaisons
with the onshore clients, and the visa is used to bring in workers
temporarily to train for the offshore work. Later Prof. Ron Hira
quantified the process, finding that the typical ratio is that a
project will place one worker onshore (holding an H-1B or L-1 visa)
for every two people who are working on that project in the offshore
location (R. Hira, U.S. Immigration Regulations and India's Information
Technology Industry, Technological Forecasting & Social Change, 2004).

H-1B plays such a central role in offshoring that recently Indian
Minister of Commerce Kamal Nath called it "the outsourcing visa."
(See http://heather.cs.ucdavis.edu/Archive/T ... ngVisa.txt)

PLEASE NOTE CAREFULLY: The problems with the H-1B visa are not limited
to their connection to offshoring---far from it. The vast majority of
the clients of the Cohen & Grigsby law firm of "TubeGate" fame are NOT
offshoring companies, and they are NOT owned by Indian-Americans.
Congress could ban all use of H-1Bs and L-1s in offshoring tomorrow, and
we'd still have a huge H-1B/L-1 problem. But still, offshoring is a big
problem too, and this usage of the visas dramatically counters the
lobbyists' "Give us the H-1Bs or the jobs are going offshore" threat.
With this view in mind, let's continue.

What is most interesting about this article, to me, is that you have the
head of the alumni organization of the Indian Institutes of
Technology--the IITs, India's premier technical universities--taking
this same point of view: H-1B is "the offshoring visa":

# Q: Is the H-1B program overly weighted to take advantage of Indian
# immigrants?

# A: I think that has more to do with the nature of the outsourcing industry
# than the H-1B program. A very large part of IT outsourcing is from India.
# The industry didn't even exist 15 years ago, and as it started, much of that
# work has gone to Indian companies like Infosys and Wipro and Satyam.
# However, I think as the world starts to add other countries for IT
# outsourcing whether they be Bulgaria, Russia or China, the H-1B system will
# automatically start to become appropriate for different countries.

The other important issue here is the IITs themselves. The Indian
government, and many Indian-immigrant businesspeople in the U.S., have
been engaged in an effort to promote Indian interests in the U.S. for
some time now. Of course, every country does this, but in the case of
India, the key to these activities is the H-1B visa--and the IITs. Back
in 2003, they launched a "Brand IIT" PR campaign, which portrayed the
IITs as world class universities whose graduates were doing wonderful
things for the U.S. (See Big Guns Come Together to Promote Brand IIT,
Harihar Narayanswamy, Times of India, December 26, 2002.)

As I said at the time, I am the first one to be pleased by the emergence
of India as a respected player in the tech world. I have also
interacted with many fine graduates of the IITs, several of whom are my
own faculty colleagues. But the IITs are not the sensational
institutions that the PR people are portraying. It is certainly not the
case that most, or even many, IIT students are geniuses. A few are
indeed brilliant, but most are comparable to top students in U.S.
schools such as those in the UC system. As noted in the interview here,
the IITs take the top 2% of India's students. Those who score in the
top 2% on the SAT in the U.S. might be considered very good, but no one
would think of that American group as being necessary genius level; why
does a 2% figure in India, a country which still has an illiteracy rate
of 40%, command such attention?

And the institution itself is merely good, not world-class. Its faculty
have not produced the seminal research papers, the patents, the
standard-setting textbooks and so on which are needed for world-class
status. It suffices to point out that it is the IIT graduates who come
to the U.S. for advanced study, rather than American students going to
IIT.

(And by the way, Vivek Wadhwa's U.S. patent study, much heralded
by the industry lobbyists, shows that the per capita rate of patent
awards are the same for the natives and immigrants; in other words,
it's not the case that the immigrants are producing more patents than
natives would in their place if we didn't have immigration.)

So while IIT is an excellent institution, it is not world-beating. Yet
they manage to convey this aura of greatness. The PR people got 60
Minutes to run a puff piece on IIT; Leslie Stahl was positively gushing
over them.

Gupta plays this perception well here:

# By and large, any immigration reform that helps to increase H-1B visas, any
# immigration reform that helps to improve the likelihood of IITians and other
# graduates like IITians entering America and doing well for America, as well
# as for themselves, is something that IIT supports.

But there's more: In that passage above, Gupta talks about "doing well
for America...and themselves." He is of course omitting his own main
purpose as head of this group--to help India. His group PanIIT's Web
page features a headline, "I-Day pledge: IIT Students to Put India
First," followed up by "The students of the institute have decided to
celebrate the country's 60th Independence Day by making a unique pledge
- to spend rest of their lives in the service of the nation."

Once again, there is nothing wrong with that. We in the U.S. have no
right to keep the tech industry to ourselves. But at the same time,
we certainly want to continue as a player, and our allowing the H-1B
visa to be used to ship our tech jobs abroad is just plain foolish.

Gupta gives the standard line, which is that innovation will still the
province of the U.S. If so, why has every major firm set up R&D shops
in India and China? If you think that the U.S. can simply keep "moving
up the food chain," think again; I would suggest reading
http://heather.cs.ucdavis.edu/Archive/U ... ainNOT.txt and
http://heather.cs.ucdavis.edu/Archive/C ... fshore.txt

Norm

http://www.sfgate.com/cgi-bin/article.c ... QN2IG1.DTL

San Francisco Chronicle

ON THE RECORD
Umang Gupta

Chairman, PanIIT USA

Sunday, July 1, 2007

The CEO of Keynote Systems talks about the Indian Institute of Technology as
engineering and business alumni gather this week in Silicon Valley.

Presidential candidate Hillary Clinton will be among the speakers who will
visit Santa Clara this week when several thousand graduates of India's most
prestigious university network, the Indian Institute of Technology, gather
for their alumni conference.

At a time when the India is exerting a growing influence on the world stage,
the IIT Alumni 2007 Global Conference offers a chance to understand the
experience of a group of business, political and academic leaders who have
played a particularly important role in Silicon Valley.

Representing this group of prestigious alumni -- who call themselves IITians
-- is Umang Gupta, chief executive officer of Keynote Systems, the San Mateo
Internet tracking firm. Gupta came to the United States during the Vietnam
War and worked in the technology industry. He was one of the first employees
at Oracle in Redwood City before striking out on his own.

In an hourlong interview last week, Gupta looked back on his three-plus
decades of experience in the tech industry, highlighted the accomplishments
of his fellow alumni, and explained the genesis and importance of the Indian
Institute of Technology.

Q: Tell us a bit about the conference.

A: The seven IITs in India have probably graduated more than 100,000 alumni
over the last 20 years. We refer to those alumni as the PanIIT movement. We
did one event in 2003 here in Silicon Valley where I think we had more than
2,000 people. We've done subsequent events in Washington, D.C., and in
Mumbai (Bombay) last year. And this one is going to be the largest, we
think, with more than 4,000 people attending.

Q: This has been a powerful business network. How has it impacted the Indian
business experience here?

A: IITians (graduates of IIT) are not just in business. Lots are in
academia. Subra Suresh recently became the dean of engineering at MIT. We
have many IITians who've done extraordinarily well in businesses. Victor
Menezes was senior vice chairman of Citigroup until recently. Ajit Jain is
No. 2 to Warren Buffett in the insurance business. So you have a network of
people who are very well-connected, obviously very talented individuals and
graduates in the lead institutions in IIT, and they certainly have quite an
impact on both India and our future.

Q: With that broad a network, what are the common themes, common interests?

A: The biggest common interest is how they got into the IIT. Historically,
2,000 kids get selected out of 100,000-plus by taking a joint exam. Then you
go through a five-year process of going to college together.

Even though you have seven different campuses, there are lots of intercampus
activities. So we're all really pretty well connected and you have the same
bonds that somebody would have if you came out of Harvard or Yale or
Princeton or Dartmouth. Many IITians are also part of a particular industry.
In many cases, the IT industry. The other aspect is that being Indian
immigrants here, they certainly have quite an element of being connected.

Q: What things do you promote in common?

A: No 1, to galvanize and network alumni to help each other, like any other
alumni organization would do. No. 2, to help strengthen our alma mater, the
IITs, through faculty recruitment, research projects, donating back. No. 3
is contributing to both the local communities that you're part of, or back
to India to the extent that you can help in connecting between India and the
communities that you're part of.

Q: For Indians coming to the United States, what has been their experience
regarding acceptance here over the past 20 or 30 years?

A: I can use my experiences. I came here in 1971 as a graduate student. This
was at the height of the Vietnam War. I went to Kent State University and I
absolutely had no angst or feelings of being not accepted or being
discriminated against. Academic institutions are always open, they're
incredibly liberal, and there's a great acceptance of folks coming from
overseas. However, once you leave the institution, and you get into the
working world, each one of us has had different experiences.

I was fortunate. I joined IBM as a sales guy. On the other hand, friends of
mine would say that they did feel discriminated against in those days. I
came out here to Silicon Valley in 1978. I was employee No. 17 at Oracle. I
wrote Oracle's first business plan. I was Larry Ellison's first executive to
leave to start a company of my own, which I then took public in 1993, called
Gupta Technologies and really the first Indian-run software company at that
time.

But I was not alone. About the same time, Vinod Khosla started Daisy Systems
and after Daisy systems he co-founded Sun Microsystems and has been one of
the most successful venture capitalists in the world today. So we had a few
entrepreneurs, I'm going to say probably a handful, in the late '80s.

But in the '90s, the world changed. Completely. India started to deregulate.
The Berlin Wall fell. There was no competing ideology to capitalism. By that
time, many IITians had gone through a 20-year process of maturing in their
particular jobs. Many of them had reached fairly good heights.

Rajat Gupta, who essentially graduated the same year as I did, ended up
becoming head of McKinsey (consulting firm) in the mid-'90s. Arun Sarin is
now CEO of Vodafone. These are all individuals who came to America in the
early '70s but ended up working the ladder. You had others -- some of us
here in Silicon Valley -- who ended up becoming entrepreneurs. It took time.
But then the third thing happened, and that was the Internet.

Previously the river could only flow one way. You could send smart Indian
guys out of college over here, and you could get a job but there were
limits. But with the Internet, you could actually send the work over that
made sense to do over there. And I know it's one of those things where
oftentimes people have different viewpoints. But it has dramatically
impacted both America and India for the good, because it has allowed so much
of Silicon Valley to be able to take work that otherwise it just couldn't
have done economically here and move it.

Q: Is there any limit to the work that can be outsourced?

A: I've always felt there's a limit. But let's go back and think about it.
The Japanese -- in the late '50s, people would talk about early transistor
radios being built by the Japanese. And everybody said, 'Oh, these are just
cheap Japanese transistor radios.' Eventually, they built some of the best
consumer electronics in the world. They did it because they ended up with a
robust consumer economy.

The same happened with cars like the Datsun. Everybody thought these were
cheap little cars. Eventually, when the local economy became big, they
really started to become world leaders.

Now let's move back to semiconductors. People have yet to be able to really
build the equivalent of an Intel somewhere else. The same is happening in
software. So what's moved overseas? SAP development, Oracle application
development, and those kinds of things have moved. But when you want to
build the next Google, you build it here. And many companies that may start
over there end up actually moving here.

You have to be close to that market. That's the reason why so many Israeli
companies move here. Without a huge home market, it is almost impossible to
build a world- leader company. Period. And those consumer markets for
software, at least, just don't exist today in India or China or elsewhere.

Q: What is your take on Silicon Valley? What is it about the valley that
makes it happen?

A: There's no place like it on Earth. It is a combination of an amazing
academic setup -- Stanford and Berkeley and others -- combined with venture
capital that has over time grown up here, so it's an institutional knowledge
of how to invest, combined with companies that are at the center of their
industries, whether it's the Internet or enterprise software or the
semiconductor or hardware industries.

A spirit has emerged over time, like the wildcat spirit emerged in Texas
when oil was discovered. Do similar ingredients exist elsewhere? Absolutely.
Bangalore certainly has that entrepreneurial spirit, along with a fairly
good set of technology companies there in the context of India.

But when you combine all of that with the presence of a local home market
and venture capital and all those other things, we're still talking of a big
difference. Austin certainly has a combination of venture capital and
universities. Massachusetts has those, but somehow Silicon Valley here seems
to definitely have a surfeit of everything.

Q: Some people would say this world that you describe has not dramatically
affected America for the good, although it may have affected India. Is there
a global elite, a global technocracy that's beyond nationalism?

A: Whether globalization is good or bad for America is a deeper question.
America has no choice -- and no country has a choice -- but to globalize
today. America led the fight against communism for the last century. What
was that fight all about? Freedom of expression, freedom of property rights.
There's a certain ideology of how to run one's life, country and society and
everything else. We won that fight and with that win came a certain
responsibility to help spread the notion of global capitalism in a global
way across the world. That's what we're doing.

The real question is how do we come out winners in the globalization battle?
I think the only way we're going to be winners is to continue to be highly
competitive as an economy. Always be ahead of the curve on technology. The
ability to innovate, the ability to explore new frontiers. That's what makes
America.

Q: Cisco CEO John Chambers says the American educational system needs a lot
of improvement. Is that where that logic would take you?

A: Absolutely. We can't just retreat into a shell. We have to be able to
build and win the battle for globalization. The only way you do that is to
help educate your citizens to be global citizens. You improve your K-12
system. You improve your college education, and you continually raise the
bar for what you've got to do. And the bar for many of us, you know, was
college. Many of our parents never went to college. Frankly, our
grandparents, some of them never even finished high school, and so the bar
just continues to go up.

Q: Why don't we move on to the root of the organization and what IIT is all
about.

A: The IIT system got started in the 1950s as a result of an early decision
by the first prime minister of India, Jawaharlal Nehru, who felt that in
order to compete there ought to be this elite set of engineering schools
that would produce engineering graduates to create the heavy industry that
India needed. So the five institutes were started.

One of them in Kharagpur was helped by multiple different countries. Then
after that, subsequent institutes, the one in Kanpur, the one I come from,
was helped by America. The one in Delhi was helped by Britain. The one in
Chennai was helped by Germany and the one in Mumbai was actually helped by
the Soviet Union at that time. 'Help' meaning a certain amount of financial
help, professors from universities would come.

I still remember many of my professors there were from either Stanford or
MIT or Cal Tech or elsewhere. I studied computer programming on the first
computer ever brought to India.

It was an IBM computer, an IBM 1620, with punch cards and the whole thing.
This was in the late '60s. These universities started to graduate mechanical
engineers, electrical engineers and chemical, and then computer science
graduates. As I mentioned, the process of getting into school was a very,
very competitive exam. My graduating class was about 300. There were five
institutes in the beginning, so 300 times 5 is 1,500 people out of 100,000
selected to get in. And now there are seven institutes, so there are about
2,000.

Q: Were these scholarships or were you paying?

A: We're paying, but they are heavily subsidized, no question.

Q: Why only 2,000 students?

A: Many people believe there should be more IITs. Within India there is a
movement to add more IITs. Others say there should not be more IITs if you
want to keep them to extremely high standards. I think over time there will
be more IITs. But how many more it's hard to tell.

Q: Are we lifting up our brains in the United States in comparable ways?

A: My kids who go to school here, Ivy Leagues, and so there is absolutely no
question that we produce an amazing set of elite kids in some of our Ivy
Leagues today.

I think ultimately the real question is: Are we lifting up the large
majority of Americans to those levels required to compete in the global
world? We do a pretty good job of educating the broad majority of our
citizens compared to most other countries. However, we could and we should
do a better job.

Q: Where does the PanIIT organization come down on the immigration reform
issue in the United States?

A: The first thing to know about our group is that we do not consider
ourselves a political organization. We are first and foremost an alumni
organization. To the extent that we have any opinions relative to politics,
they are generally noncontroversial, at least from our viewpoint. As an
organization, we believe America needs to retain its competitiveness. In
order for America to retain its competitiveness, immigration reform clearly
needs to focus on improving the capability for people who can help America
going forward.

By and large, any immigration reform that helps to increase H-1B visas, any
immigration reform that helps to improve the likelihood of IITians and other
graduates like IITians entering America and doing well for America, as well
as for themselves, is something that IIT supports.

Q: Is the H-1B program overly weighted to take advantage of Indian
immigrants?

A: I think that has more to do with the nature of the outsourcing industry
than the H-1B program. A very large part of IT outsourcing is from India.
The industry didn't even exist 15 years ago, and as it started, much of that
work has gone to Indian companies like Infosys and Wipro and Satyam.
However, I think as the world starts to add other countries for IT
outsourcing whether they be Bulgaria, Russia or China, the H-1B system will
automatically start to become appropriate for different countries.

Q: China seems to be the biggest emerging threat to your present IT
outsourcing. Northern Africa, Bangladesh, Pakistan and Eastern Europe seem
to be emerging areas. How do you stay ahead of the curve on that?

A: Ultimately, any industry has to stay ahead of the curve by constantly
being ahead of either the technology or events or sticking to its core
competencies or doing better with its customers. In the initial IT world, a
lot of outsourcing was: Can I do something relatively simple or cheaper?
Today, the tasks require a certain level of quality that is much higher than
say 15 years ago. So maintaining cost-competitiveness and ensuring high
quality are the keys to sound successful outsourcing.

Q: English fluency helps.

A: That's a natural advantage India has that I think is not going away soon.

Q: IT companies in India are trying to move up to research and development
rather than being just cost-cutting outfits.

A: I think you will always find the ability to go up the food chain is a lot
easier than going down the food chain. It is much easier to move from doing,
let's call it SAP- and Oracle-style coding for an IT shop in any of
corporate America's Fortune 500 companies, to move up to do programming for
companies like Google or Microsoft where you are actually building parts of
an operating system.

But, going the other way, which is to find rural Indians who don't
necessarily speak English or even if they do speak English, it's rudimentary
English. They may have a B.A. degree, but that B.A. or B.S. degree from a
rural college in India is not the same thing as an IIT degree.

Q: Your group has a rising influence. What do you talk about and what are
those things that are important to you?

A: Is there something common that all Indians would generally say, 'Yes,
this is something we should stand behind?' It certainly would be
immigration. We all believe that more immigration is good. We should
encourage more globalization, more openness. We must move forward with being
able to help be more competitive as a nation. Those are all things that
IITians would unite on.

Q: How about domestic issues, health care?

A: Not at this point. Individuals absolutely do, but not as an organization.

Q: How has the environment changed in Silicon Valley in terms of the way
folks who immigrate here are treated. Is there racism in the valley?

A: I have not felt personally, or known of, instances of racism. This is an
amazingly open part of America. Silicon Valley is another meritocracy, very
much so, and that's probably one of the reasons why our IITians love being
here, because they've been part of a meritocracy so long in the IIT system.
The answer is no. We haven't seen any racism.

Q: Is there a wall for advancement to the executive suite for Indians? Is
that final frontier for Indians to be at the top of the heap in the valley,
to be the financiers and the venture capitalists?

A: It is definitely happening. I don't think Vinod Khosla is the only one
who has done well as a venture capitalist. Promod Haque of Norwest Venture
Partners has done extremely well in the venture capital industry. You have
people who have done well with major corporations like Vodafone, for
example, or McKinsey. So I think that is definitely happening.

It just takes a long time. I think back to my days when I joined IBM. I
could speak English reasonably well and so was very well accepted by and
large. But I never thought of myself as the guy who was going to rise up the
chain and finally end up being president of the IBM Corporation. I didn't
look like somebody who could be president of IBM and I never even thought
that's what I wanted to do. I just at some point left and said, "Fine, I'll
start my own company and that's the way I'll do it." I think there are a lot
of Indians who feel that way.

Q: Has America become the place whose lunch everybody wants to eat? Does
America get to eat the world's lunch, or is America disadvantaged in the
future?

A: I think it's a deeper economic question. If you go back in history again
when New York was in the ascendancy and the Midwest and the West were just
being discovered and people were saying, "Well, gee, you know all the money
goes into New York," the issue of deficits between New York and Iowa never
existed.

Why? Because we're all one nation. People thought it was OK. People could
move back and forth and move money back and forth. The globalists would
argue that we are becoming one large globe. And to the extent that has
occurred, or to the extent that American values are going everywhere and
American capitalism is going everywhere and people are trading with each
other in peace, generally speaking in a way so that we can all improve our
standard of living. Nobody has to eat anybody else's lunch. There is plenty
for everybody.
__________________________________________________ _______________

Umang Gupta

Age: 57

Title: Chairman and chief executive officer, Keynote Systems Inc.

Education: Bachelor's degree in chemical engineering from the Indian
Institute of Technology at Kanpur in 1971; MBA from Kent State University in
1972.

Work experience: Started his career with IBM in 1973. Joined Oracle Corp. in
1981 and wrote the company's first business plan. Served as vice president
and general manager of Oracle's Microcomputer Products Division through
1984. Founded one of the early enterprise client/server computing firms,
Gupta Technologies Corp., which he took public in 1993. Chairman and CEO of
Keynote Systems since 1997.

Personal: Married to Ruth Gupta. Two surviving children, daughter, 25, and
son, 18. The Guptas support charities for the developmentally disabled,
including the Raji House in Burlingame, named in memory of their middle
child.

Participating in this interview were Business Editor Ken Howe, Deputy
Business Editor Alan T. Saracevic, staff writers Tom Abate, Ralph Hermansson
and Jessica Guynn, and editorial assistants Colleen Benson and Steve Corder.

This article appeared on page G - 1 of the San Francisco Chronicle

good post

The Jobs are going off shore anyway. That is the biggest non threat there is . It is already happening and has been for quite sometime. This is another Bush plan. He is going to get us one way or another.