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Last Updated: Friday, 25 May 2007, 00:13 GMT 01:13 UK
India smoulders as US ignites visa row
By Karishma Vaswani
Business correspondent, BBC News, Mumbai

Braving the sweltering heat and rising temperatures in Mumbai, a long line of visa applicants waits patiently outside the US consulate in Mumbai, for what they feel is the chance of a lifetime.

Queue for visas in US Embassy in Delhi
Indian outsourcing firms are accused of using the visas to avoid hiring American staff

Hundreds of applicants come here on a daily basis, and can wait for hours to

escape the searing Indian sun into the consulate's cooler air-conditioned offices.

There, they will sit down in front of a consulate officer, who has the power to grant them what many see as a one way ticket to success - the H-1B visa.

Saurabh and Nena Jogi, a young couple from Pune, are here to try their luck. They have travelled the 200km or so from their home town to Mumbai to renew their temporary working visa to go back to the United States.

They've been living in San Diego for the last few years, working in an Indian technology firm there.

'It makes your career'

Saurabh says the working visa has given him a chance to build his career overseas.

"It's really good once you get it," he says, wiping the perspiration off his face with his sleeve.

"Immigration is a sensitive issue... Letters from congressmen create uncertainty
Kamal Nath
Indian commerce minister

"It gives you the chance to be mobile. It's portable, you see - and that means you can work for different employers with it. It can really help you make your career and gives you lots of opportunities."

The potential of those opportunities and a chance to work in the US are the reason why the H1-B visas are so coveted. Only 65,000 of them are issued each year worldwide, and this year they were snapped up within a few hours of being issued.

Of these, about 30% were allocated to Indian companies, most of them technology firms.

Millions of young Indian technology workers like Saurabh and Nena have seen their incomes rise because of these working visas.

India's software trade body, Nasscom, says that thanks to Indian outsourcing Western firms have been able to make cost savings of at least 40% over the past few years, and technology services now account for a fifth of India's economy.

Allegations of fraud

But now there have been cries of foul play.

Two American senators, Charles Grassley and Richard Durbin, have alleged that Indian outsourcing firms are using the visas to avoid hiring American staff.

They have issued a letter of enquiry to nine Indian technology firms - amongst them Infosys, Wipro and L&T Infotech - asking them to provide details of how many H1-B or temporary working visa holders they are currently employing, and what percentage of their total workforce are H1-B holders.

In the letter, which is also on the senators' respective websites, they say they are "concerned about theż impact on American workers.

L&T boss VK Magapu
Just 65,000 H1-B visas are issued each year

The letter goes on: "Some groups have analysed the wages paid to H1-B visa holders. They have found that the average annual salary of foreign workers is significantly lower than that of new US graduates."

Indian firms that have received these letters deny H1-B visas are being misused and say are crucial for their work.

"If we take the view that outsourcing is going to continue in coming years - and by all accounts it will - then the number of visas we need to function needs to increase as well," says VK Magapu, chief executive of L&T Infotech.

"It is impossible for us to do this offshoring work without these visas."

Nasscom agrees. "Constraining the supply when demand is high gives rise to problems for both US companies as well Indian IT companies," it says. "Nasscom feels that the cap should be large enough to allow market forces to operate freely."

Two-way street?

The visa row has reached the diplomatic circles as well, with Indian Commerce Minister Kamal Nath weighing in.

"Immigration is a sensitive issue, but it needs to be taken into account that professional services visas should be available because they are short-term visas," the minister says.

American clients have boosted Indian income

He broached the subject with his American counterpart in Brussels at the World Trade Organization talks last week.

"Letters from congressmen create uncertainty," he says. "I have mentioned this to the US representative."

Ultimately, the brand-new shopping malls springing up across India, filled with foreign brands, and the increasing wealth of many young Indians owe much to the professional services Indian technology workers provide to American clients.

And that, in turn, has tempted foreign companies - many of them American - to set up shop in India.

The US has often urged India to open up its economy to foreign competition, but India feels that if the US is to reap the rewards from India then it, too, should keep its borders open.

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