Date: Sat, 16 Jan 2010 23:40:26 -0800 From: Norm Matloff <matloff@cs.ucdavis.edu> To: Norm Matloff <matloff@laura.cs.ucdavis.edu> Subject: vaunted USCIS memo of no consequence To: H-1B/L-1/offshoring e-newsletter I'm receiving a lot of e-mail from activist critics of the H-1B program concerning a January 8 memo by USCIS titled, "Determining Employer-Employee Relation for Adjudication of H-1B Petitions, Including Third-Party Site Placements." You can read the press release at http://www.uscis.gov/portal/site/uscis/menuitem.5af9bb95919f35e66f614176543f6d1a/?vgnextoid=3d015869c9326210VgnVCM100000082ca60aRCRD&vgnextchannel=68439c7755cb9010VgnVCM10000045f3d6a1RCRD and download the memo itself from http://www.uscis.gov/USCIS/Laws/Memoranda/2010/H1B%20Employer-Employee%20Memo010810.pdf The memo's title sounds like a mouthful, but in essence it's about situations in which a rent-a-programmer firms such as Tata Consultancy Services (TCS), colloquially known as "body shops," supply H-1B workers to, say, IBM. Organizations critical of the H-1B program, notably the Programmers Guild, have cried foul in such situations, saying that having H-1Bs work at a third-party site is an abuse of H-1B. As a result, this has gotten a lot of attention. The Durbin-Grassley bill has a section dealing with it. I'll get to the USCIS memo shortly, but first wish to remind readers that I've always considered this a nonissue. I've strongly endorsed the Durbin-Grassley bill, but as I've said in the past, that particular provision on third-party placement is not a section I find useful. On the contrary, I consider the Guild to be misguided on this point. All the body shops could be shut down tomorrow and yet there still would not be more work for U.S. citizen and permanent resident techies. IBM et al would simply hire more H-1Bs directly, say maintaining its own pool of H-1Bs to move around the country into spot positions, just like TCS et al do now. And though they might have to pay a bit more, the H-1Bs would still be cheaper than Americans. It's like what would happen if Congress suddenly banned imports of toys from China; U.S. toy manufacturers would simply move production from China to some other Third World country, not to the U.S. The vested interests clearly agree with me that it's a nonissue. The industry lobbyists have never objected to proposals to clamp down on the body shops. They object strenuously to lots of other H-1B reform proposals, but not the ones concerning the body shops. Since they rent H-1Bs from the body shops, why don't they object? The answer is that they know that they will still get cheap labor, whether through the body shops or by direct hire. Similarly, there's never been a peep out of the American Immigration Lawyers Association (AILA) on the proposals regarding third-party placement. These guys are among the most active lobbyists on the Hill regarding H-1B, so surely they'd object if they thought the proposals would result in fewer H-1Bs being hired. Clearly, they don't see that as happening. And the two columns in the January 15 edition of Immigration Daily http://blogs.ilw.com/immigrationdaily/2010/01/jan-15-varick-closing.html are pretty ho-hum about the whole thing. Now for those who disagree with me on whether third-party placement is an issue, I must point out that this USCIS memo is basically useless. The body shops will have Business As Usual, having to make either a few cosmetic changes in procedure or none at all. Indeed, the USCIS memo even describes a model example of a situation in which USCIS will approve third-party placement (p.5): The petitioner is a computer software development company which has contracted with another, unrelated company to develop an in-house computer program to track its merchandise, using the petitioner's proprietary software and expertise. In order to complete this project, petitioner has contracted to place software engineers at the client's main warehouse where they will develop a computer system for the client using the petitioner's software designs. The beneficiary is a software engineer who has been offered employment to fufill the needs of the contract in place between the petitioner and the client. The beneficiary performs his duties at the client company's facility. While the beneficiary is at the client company's facility, the beneficiary reports weekly to a manager is employed by the petitioner. The beneficiary is paid by the petitioner and receives employee benefits from the petitioner. This is so tailored to firms like TCS that one must even raise the question of whether it was written by one of them. Note that innocuous-looking phrase, "using the petitioner's proprietary software." Some readers of this e-newsletter may recall its significance (http://heather.cs.ucdavis.edu/Archive/TataSpecialSW.txt): A June 15, 2003 article in the Dallas Morning News reported (emphasis added): India-based Tata Consultancy Services uses the L-1 visa program to transfer employees to the United States and send them out on consulting projects across the country. The primary reason is that its workers in India are trained in Tata software - TRAINING NOT AVAILABLE TO U.S. WORKERS, said resident manager of personnel Girish Surendran. I explained in my post that that "proprietary software" is likely CMM project-tracking, no big deal, but in any case, you can see that it gives TCS an excuse not to hire American workers. And now the USCIS has codified that excuse. But even without that excuse, the rest of that model scenario in the USCIS memo fits TCS and the other major body shopping firms to a T, with the item about "proprietary software" being icing on the cake. I had earlier predicted that if any legislation or regs addressed the third-party placement issue, they would be easily circumvented via cosmetic measures on the part of the body shops. I said, for instance, that TCS H-1Bs could wear TCS baseball caps, to symbolize that they work for TCS rather than for the "third party." But now with the USCIS memo, TCS can save money on those caps. Norm