Another of the Risks for Cognizant
By Willian Trent, CFA of Stock Market Beat
We have written in the past about some of the risks faced by Indian IT outsourcing firm Cognizant Technology Systems (CTSH) and its peers such as Infosys (INFY.) We also noted recently that the legal limit for 2007 H-1b visas was met before 2006 was halfway finished. Cognizant relies on such visa-holders to work on-site at US firms and oversee the work done by the Indian employees abroad.
Then we came across this article, published in Mass High Tech: The Journal of New England Technology, which illustrates another risk: political backlash in the US. We last saw it during the 2004 Presidential campaigns, when John Kerry spoke out against offshoring. It appears we may be seeing it again.
One of the intents of the H-1B visa program is to give U.S. companies access to foreign high-tech workers when qualified U.S. citizens cannot be found. Too often, however, our citizens don’t even know of job openings filled by H-1B workers because the law doesn’t require their availability to be posted.
(David) Huber is one of thousands of qualified Americans who were hurt by the H-1B program, which currently allows U.S. employers to hire more than 100,000 non-U.S. citizens annually.
Huber’s experience is not unique. Thousands of U.S. citizens have been replaced by H-1B holders, often at lower wages. In the first quarter of 2005, despite persistent unemployment among New England’s high-tech workforce, companies in the six New England states received permission to hire 19,197 H-1B workers.
The administration’s Office of Management and Budget concluded in a 2005 report that the H-1B program is “vulnerable to fraud or abuse.” Nevertheless, Congress is considering granting more than 50,000 additional H-1B visas per year.
The problem is one of perception more than reality. If 50,000 new visas are issued Cognizant and others will take eight weeks rather than six to use up the quota. If they are cut in half, Cognizant will just have to find alternatives - just as they have done since the H-1B program declined from a peak of 165,000 in 2000. Further, the number of such visas, even if risen by 50,000, would barely exceed one tenth of one percent of the total US workforce. So it really isn’t a big deal.
But it is bad publicity. And in a market like we have had recently, nobody needs bad publicity.
http://stockmarketbeat.com/blog1/
We have written in the past about some of the risks faced by Indian IT outsourcing firm Cognizant Technology Systems (CTSH) and its peers such as Infosys (INFY.) We also noted recently that the legal limit for 2007 H-1b visas was met before 2006 was halfway finished. Cognizant relies on such visa-holders to work on-site at US firms and oversee the work done by the Indian employees abroad.
Then we came across this article, published in Mass High Tech: The Journal of New England Technology, which illustrates another risk: political backlash in the US. We last saw it during the 2004 Presidential campaigns, when John Kerry spoke out against offshoring. It appears we may be seeing it again.
One of the intents of the H-1B visa program is to give U.S. companies access to foreign high-tech workers when qualified U.S. citizens cannot be found. Too often, however, our citizens don’t even know of job openings filled by H-1B workers because the law doesn’t require their availability to be posted.
(David) Huber is one of thousands of qualified Americans who were hurt by the H-1B program, which currently allows U.S. employers to hire more than 100,000 non-U.S. citizens annually.
Huber’s experience is not unique. Thousands of U.S. citizens have been replaced by H-1B holders, often at lower wages. In the first quarter of 2005, despite persistent unemployment among New England’s high-tech workforce, companies in the six New England states received permission to hire 19,197 H-1B workers.
The administration’s Office of Management and Budget concluded in a 2005 report that the H-1B program is “vulnerable to fraud or abuse.” Nevertheless, Congress is considering granting more than 50,000 additional H-1B visas per year.
The problem is one of perception more than reality. If 50,000 new visas are issued Cognizant and others will take eight weeks rather than six to use up the quota. If they are cut in half, Cognizant will just have to find alternatives - just as they have done since the H-1B program declined from a peak of 165,000 in 2000. Further, the number of such visas, even if risen by 50,000, would barely exceed one tenth of one percent of the total US workforce. So it really isn’t a big deal.
But it is bad publicity. And in a market like we have had recently, nobody needs bad publicity.
http://stockmarketbeat.com/blog1/
posted by douglas mcintyre at 5:51 PM
Subscribe
<< Home