Senator wants Foreigners to be laid off first

Washington: An influential senator has asked U.S. companies to make efforts to fire foreign workers first while making lay-offs during the current economic downturn - a move that could affect thousands of Indian professionals.In a letter to Microsoft, which employs thousands of people through the H-1B visa programme, a majority of them Indians, senator Chuck Grassley urged the IT giant to make efforts to retain qualified American workers during its recently announced lay-offs.

Noting that last year, Microsoft had advocated for more H-1B visas in the US Congress, he said the purpose of the H-1B programme for professionals in "specialty occupation" is to help companies hire foreign guest workers on a temporary basis when there is not a sufficient qualified American workforce to meet those needs, he said.

However, the programme is not intended to replace qualified American workers, Grassley said asking questions of both American and foreign based companies about their use of the H-1B visa programme. A majority of the 60,000 professionals given H-1B visa every year are from India.

In his letter reacting to Microsoft Corporation's reported move to layoff 5,000 jobs over the next 18 months, Grassley expressed concern "that Microsoft will be retaining foreign guest workers rather than similarly qualified American employees when it implements its layoff plan"."As you know, I want to make sure employers recruit qualified American workers first before hiring foreign guest workers," he told Microsoft Chief Executive Steve Ballmer.

It is imperative that in implementing its layoff plan, Microsoft ensures that American workers have priority in keeping their jobs over foreign workers on visa programmes, Grassley said."

My point is that during a layoff, companies should not be retaining H-1B or other work visa programme employees over qualified American workers," he said."Our immigration policy is not intended to harm the American workforce.

I encourage Microsoft to ensure that Americans are given priority in job retention.""Microsoft has a moral obligation to protect these American workers by putting them first during these difficult economic times," he said.Microsoft spokesperson in a statement said: "We care about all our employees, so we are providing services and support to try to help every affected worker, whether they are US workers or foreign nationals working in this country on a visa."

1,80,000 IT Employees may lose jobs

Washington: As many as 180,000 employees in IT and related areas will become jobless this year if the layoff announcements by companies are to maintain the current pace."At the current pace, the year-end total could reach 180,000, which would be the largest annual total since 2003, when technology firms announced 228,325 job cuts," says a report by Challenger, Gray & Christmas, a Chicago-based global consulting firm which tracks job-cut announcements.

Telecommunications, electronics and computer industry companies had cut 140,422 jobs through October 31 this year, says the report, adding that 69,654 tech-sector jobs had been cut in the third quarter of the year alone. The report did not include major layoffs announced since October 31 such as the 5,000 to 6,000 job cuts at Sun Microsystems."

The tech sector is simply the latest victim in this downturn that began last year with the collapse of the housing market, and quickly spread to the financial markets," chief executive John Challenger said in a statement. "Businesses and consumers have slashed their spending and no industry is immune," he added.

The 180,000 job cuts in the tech sector would be the most since 2003 but would still be far fewer than the 695,581 jobs lost in 2001, with the bursting of the dot-com bubble. In 2007, a total of 107,295 tech-sector jobs were cut.

Perot Systems Lays off 450

Perot Systems reported earnings of $28 million, or 24 cents a share, for its first quarter as the outsourcing company reported pressure on revenue and worker layoffs.

Earnings were up just slightly from a year ago when Perot (NYSE: PER) had earnings $28 million, or 23 cents per share.

Revenue was $621 million, down from $680 million from the first quarter of 2008. The company continued to see pressure on its revenue due to declines in contract renewals and decreases in project-based services.

Perot Systems said it is mitigating its lower project-based revenue with a layoff of 450 employees. The work force reduction is expected to save $30 million annually, once fully implementyed by the third quarter.

Perot said its earnings were in line with analysts' expectations, but its revenue was below expectations. For the second quarter, the company is expecting earnings per share of 23 to 25 cents.

Obama's move to end tax breaks for US firms who outsource

New Delhi: India Inc believes the move by the Barack Obama administration to reduce tax breaks for US firms that ship jobs overseas will hit American companies more than impact on the Indian outsourcing industry.

"It's a more US-US issue rather than one aimed at stopping outsourcing, or off-shoring, or anything to do with India," said Som Mittal, president of the National Association of Software and Service Companies (Nasscom), a representative boddy for the industry.

"If you look at Indian companies operating in the US, or elsewhere, they work there and pay taxes there. Hence, it is not about stopping outsourcing, or off-shoring, but just to collect taxes," Mittal told IANS.

His comments came after President Barack Obama said Monday that the current US tax system gave US-based multinationals that shipped jobs to places like India an unfair advantage over other domestic rivals and wanted corrective steps.

"It's a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York," Obama said, explaining why he intended to close tax loopholes and crackdown on overseas tax havens.

"I want to see our companies remain the most competitive in the world. But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens."

According to a McKinsey-Nasscom study, the Indian software and outsourcing industry employs some two million people, earning total revenues worth $52 billion, of which nearly $48 billion comes from exports.

The Confederation of Indian Industry also felt that the remarks were more in the nature of posturing and that it was not intended at curbing outsourcing of work by US firms to Indian companies.

"It's an internal issue. It will only reduce their competitiveness," said Hari Bhartia, vice president of the chamber. "It is a populist posture. Perhaps his (Obama's) intention was not the same. However, it sends a wrong message."

According to Girish Vanvari, a tax expert and executive director with accounting and consultancy major KPMG, the Obama administration's move was aimed at keeping American money within the country.

"I don't think this will happen. America is one of the largest free markets in the world - otherwise, you will have companies paying as much as 70 percent of their revenues as taxes," Vanvari told IANS.

Nasscom maintained that large US companies had subsidiaries across the world and that more than 50 percent of their revenues were coming from outside the US. The US move was to ensure that the large profits kept outside are also brought into the tax net.

"President Obama is intending to collect those taxes to create more jobs in US," said the industry lobby that sent a delegation to the US last month to meet lawmakers, urging them to refrain from protectionist measures.

Infosys Technologies, India's second largest software and outsourcing company, also felt that the US proposal was aimed at closing corporate tax loopholes and crack down on overseas tax havens.

"We do not believe that it has anything to do with IT outsourcing done by US corporations," a spokesperson for the company said.

Indian IT Professionals Upset with Obama

Bangalore: Indian IT professionals Tuesday slammed President Barack Obama's move to end tax incentives for US companies that ship jobs to countries like India, saying it will neither benefit the U.S. nor its corporate sector."Obama's latest move was expected, but unwelcome at a time when Bangalore's IT and BPO sectors are already reeling under the global economic meltdown," said Padma Nair, 26, an IT-professional working for a Bangalore-based American company.

"Obama's new policy is not going to benefit anyone, neither the outsourcing companies nor the country the job is outsourced to. The cost saved in outsourcing is higher than that saved by tax exemption," Nair told IANS.Expressing a similar view, Shankar Banerjee, 25, a quality analyst working for another American IT company, said if Obama's proposal is pushed through, it will hit business coming India's way and many Indians would lose their jobs."IT and BPO companies in India have already suffered due to the slowdown. A lot of people have lost jobs. Obama's latest move will cause more problems," added Banerjee.

The comments came after President Obama said Monday that the current US tax system gave US-based multinationals that shipped jobs to places like India an unfair advantage over other domestic rivals and wanted corrective steps."It's a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York," Obama said, explaining why he intended to close tax loopholes and crackdown on overseas tax havens."I want to see our companies remain the most competitive in the world. But the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens."

According to the National Association of Software and Services Companies (Nasscom), the US accounts for about 60 percent of India's software services export revenue. Bangalore-based firms account for one-third of this.A recent study by the association, conducted along with McKinsey, shows the Indian software and outsourcing industry employs some two million people, earning total revenues worth $52 billion, of which nearly $48 billion comes from exports.

American IT companies that have set up offices in Bangalore include Accenture, Microsoft, Amazon, AOL, Cisco, Dell, IBM and Intel.An estimated 600,000 people are employed in Bangalore's software and outsourcing sectors. And industry professionals say many could lose their jobs following Obama's latest move.

UNITES-Professionals India, a trade union for IT enabled services sector, predicts 50,000 employees in India will be handed the pink slip over the next few months. Bangalore, hailed as India's Silicon Valley, could be the worst affected.Concurred Sumana Prasad, 32, an IT employee working for an Indian company: "The slowdown has already hit Bangalore's IT and BPO companies. Obama's latest step will affect more people."

Anti India Bill Introduced in the US

WASHINGTON: A legislation has been introduced in the US Senate on reforming the H-1B and L1 visa programmes, popular among Indians, under which th e American firms looking for skilled foreign professionals are required to make a "good faith" attempt to recruit local workers first.
Given that the skilled professionals from India are the one who account for the maximum number of H-1B and L1 visas, Indian professionals followed by those from China are likely to be hit the most if the legislation introduced by Senators Chuck Grassley and Dick Durbin is passed by the Congress and then signed into law by the President.

The bill, introduced yesterday, requires all employers who want to hire an H-1B guest worker to first make a good faith attempt to recruit a qualified American worker. Employers would be prohibited from using H-1B visa holders to displace qualified American workers.

"Our bill will put a stop to the outsourcing of American jobs and discrimination against American workers," Senator Durbin said in a statement. "The H-1B visa programme should complement the US workforce, not replace it," he argued.

The bill prohibits the practice of 'H-1B only' ads and prevents employers from hiring additional H-1B and L-1 guest workers if over 50 per cent of their employees are H-1B and L-1 visa holders, Grassley said in a statement. It gives power to the Department of Labour to investigate, audit and penalise abuse of H-1B and L1 visa employers.

However, Grassley argued the bill does not eliminate the programme or change the numerical cap of visas available to petitioning employers. "The H-1B programme was never meant to replace qualified American workers. It was meant to complement them because of a shortage of workers in specialised fields. In tough economic times like we're seeing, it's even more important that we do everything possible to see that Americans are given every consideration when applying for jobs," he said.

If there are not qualified Americans, companies can use the legal immigration programmes available, "but we must return the H-1B and L visa programmes back to their original intent," Grassley said.

"Congress created the H-1B visa programme so an employer could hire a foreign guest worker when a qualified American worker could not be found. H owever, the H-1B visa programme is plagued with fraud and abuse and is now a vehicle for outsourcing that deprives qualified American workers of their jobs," Durbin said.

He claimed that the H-1B visa programme is currently being used by some companies to outsource American jobs to foreign countries. "Under current law, an outsourcing company can use American workers to train H-1B guest-workers, fire American workers and outsource the H-1B workers to a foreign country where they will do the same job for a much lower wage. In fact, Indian Commerce Minister Kamal Nath has referred to the H-1B as 'the outsourcing visa," he said.

It was Grassley and Durbin who were mainly instrumental in the Congressional legislation early this year which stopped hiring of foreign workers by US companies receiving the federal stimulus money. As a result of this, coupled with the general economic recession, the filing of H-1B visas has dropped quite significantly.

In the first three weeks after they started receiving applications, US authorities received about 44,000 H-1B visa petitions against the Congressional mandated quota of 65,000. In previous years, they had been receiving H-1B petitions several times the number of Congressional mandated quota.

In October last year, they had released a Benefit Fraud and Compliance Assessment that highlighted rampant fraud in the H-1B programme. The report revealed more than a 20 per cent violation rate by those who use the H-1B visa programme.

"When Citizenship and Immigration Services report that there is more than a 20 per cent violation rate in the H-1B visa programme, it's pretty clear that many companies are abusing the programme and not using it as was intended. Fraud and abuse of the H-1B visa programme will not be tolerated and our bill puts companies on notice," Grassley said.

"Our legislation to reform the programme will benefit American workers, while still ensuring that US companies get the highly specialised workers they need."

Grassley alleged that fraud and abuse had become all too prevalent in the H-1B programme and thus there was need to close loopholes and enact reform.

Microsoft: First Time Drop in Revenues

Microsoft reported a drop in quarterly revenues for the first time in the 23 years since it went public.
But investors still gave the world largest software company their approval, sending Microsoft shares higher in after-market trading as its aggressive cost cutting measures preserved profitability.
The Seattle-based company said its revenues dropped 6 per cent to $13.7 billion, compared to the year-ago quarter. Profits of $3 billion represented a 32-per cent drop from the $4.4 billion it earned in the same period last year.
The company has been hit hard by a drop in consumer spending, with people delaying or canceling purchases of new computers. Sales of Microsoft's Windows operating system were down for only the second time in history, but Microsoft said it saw signs that the worst may be over.
"While market conditions remained weak during the quarter, I was pleased with the organisation's ability to offset revenue pressures with the swift implementation of cost-savings initiatives," Microsoft chief financial officer Chris Liddell said.
"We expect the weakness to continue through at least the next quarter."