Senator Chuck Grassley demanded a probe yesterday into the hiring practices of Infosys, one of the largest Indian IT companies providing services in the United States, which allegedly used the B-1 visa program to get around the strict H-1B program restrictions. B-1 is a visa issued to business visitors while the H-1B is a work visa sought by professionals with specialized skills that are offered a full-time job by a company operating in the United States. There is no limit to the number of B-1 visas that may be issued every year but the H-1B has strict requirements including a cap of 65,000 per year and payment of a dollar wage on par or higher than prevailing wages in the market. If Infosys violated any laws by employing workers at below-market rates for its American operations, the company should be held accountable and the appropriate individuals prosecuted.
However, this episode also highlights the need for a structural change in the legal immigration policies of the United States and the current administration. Firms pay the government fees in the range of $2,500 to $4,500 for every employee they petition to hire on an H-1B, in addition to bearing the cost of immigration attorney fees of approximately $2,000. Additionally, the cap of 65,000 visas is reached within a few hours of the first day petitions are accepted (April 1) in prosperous times, and within days or months even in a recession. The excessive fees, unfair caps, and other bureaucratic hoops described in this Fox News article are a hurdle to the free flow of skilled labor. The biggest losers from the H-1B restrictions are small firms, according to the recent Government Accountability Office report “H-1B Visa Program—Reforms Are Needed to Minimize the Risks and Costs of Current Program”:
Small firms were more likely to fill their positions with different (that is, less suitable) candidates, which they said resulted in delays and sometimes economic losses, particularly for firms in rapidly changing technology field.
The Fox News article also highlights how the Obama administration has exacerbated the problem:
President Obama signed the Making Emergency Supplemental Appropriations for Border Security (P.L. 111-230) in August 2010. It placed an additional $2,000 fee on H-1B employers who employ 50 or more employees with more than 50 percent of its employees in the United States on H-1B or L visas. This law targets foreign information technology companies investing in the U.S.
It will only harm Americans in the long run if the government prevents companies from hiring skilled foreign workers who are increasing the nation’s productivity through their contribution to sectors in which America has a dearth of talent. The United States will become less productive and firms will move to countries with higher growth rates and a more hospitable immigration environment.
The September edition of the Lancet 
We thought it ironic and worth pointing out that The British East India Company, which paved the way for the military and political takeover of India by the British crown in 1857, was recently purchased by an Indian entrepreneur, Sanjiv Mehta. You can watch his interview on CNBC