Visa Crackdown May Benefit Mexican Outsourcers

Nearshore technology outsourcers providing employees from Mexico may benefit from a recent crackdown by the federal government on temporary visas for IT professionals. Doug Gattuso, president of Neoris, a global business/IT consulting firm with operations in Latin America, says Mexico’s favored status under the NAFTA treaty makes it much easier for US companies to bring in temporary IT professionals from Mexico than from non-NAFTA countries.

“Temporary visas are facilitated under a TN visa, which is provided to US companies under NAFTA,” says Gattuso. “They are not restricted by number and are fairly easy to get.” It typically takes one to two weeks for a US company to obtain a TN visa, which is good for one year and renewable for two years. In addition, there is no restriction on the type of work an employee on this type of visa can perform, and the company does not have to pay the prevailing wage, according to Gattuso.

Neoris has undergone 60% annual growth each year for the past three years, which Gattuso partly attributes to the relative ease with which his company can provide US IT firms with temporary Mexican IT employees.

Visa Misuse Leads to Scrutiny

TN visas aside, Jeanne Batalova, policy analyst and manager for the non-profit Migration Policy Institute, says misuse of temporary visas for IT professionals has helped invigorate the federal government’s enforcement of visa policy. “Attention to the use and misuse of H-1B and L-1 visas has been mounting for some time,” Batalova said. “A 2008 report found that one in five H-1B visa petitions was either fraudulent or in technical violation.”

With the 2007-2009 recession intensifying fears of American workers losing jobs to cheaper foreign workers, Batalova says Congress included a provision in the American Recovery and Reinvestment Act of 2009 that made it difficult to hire H-1B workers by stimulus recipients.

India Feels the Heat

A lot of attention has recently been paid to the impact the visa crackdown has had on companies such as Tata Consultancy Services and Infosys who outsource US IT jobs to professionals based in India. A recent article in the Wall Street Journal quotes Tata Chief Executive N. Chandrasekaran as saying there has been a rise in the rejections of US visa applications for its consultants, although he doesn’t expect Tata’s bottom line to be affected. In addition, the article says Indian outsourcing provider Infosys is being investigated by the US government for alleged temporary visa abuses.

Batalova says the US government is not specifically targeting Indian outsourcing companies, but they are in the spotlight because they “disproportionately claim a large share of all issued visas.” In FY 2008, Batalova says Indian outsourcing companies received almost 10% of the 109,000 H-1B visas granted.

Visa Crackdown Offers US IT Industry Mixed Bag

According to Batalova and Gattuso, the US IT industry will likely receive a mixture of advantages and drawbacks from the temporary visa crackdown.  “The rest of the IT industry and non-IT employers, who might apply for only a few, truly needed workers, can end up being beneficiaries of such changes because they will no longer have to compete for visas with the companies that dominated the H-1B visa race,” said Batalova.

Gattuso was more measured in his assessment. “It will be more difficult for US companies to get their numbers and meet their resources, but I imagine companies increasing US staff may create demand for new jobs,” he said. “However, it may also impact their competitiveness.”