India's IT Sector protests discriminatory US Protectionism;May Sour Close Relations between World's Largest Democracies

India’s IT sector led by Infosys,Wipro and TCS is the showcase of India’s knowledge economy.These companies have grown despite the GFC and have emerged as stronger players challenging the likes of IBM and Accenture in the field of IT services.India’s IT sector gets almost 70% of its revenues from the USA and has a large presence there.The competitiveness of the companies is due to their low cost model in which they send their employees to work onsite at US location on temporary visas.This business model is complemented by a bigger offshore workforce which supports the onsite employees.The success of the Indian IT companies has made it mandatory for every decent IT company in the world to have a base in India.Companies like CapGemini,Oracle,HP,IBM etc have tens of thousands of Indian employees working out of big steel and glass offices in cities like Bangalore and Hyderabad.The loss of IT jobs to low cost locations has long been a big beef for US politicians who threaten these companies with sanctions.However nothing had been done till now

U.S. Senate Targets India Outsourcers – Businessweek

How unpopular are Indian outsourcing companies from India in the U.S.? They can manage to unite squabbling Democrats and Republicans in the Senate. With the GOP filibustering most of the time, it’s news when Senate Majority Leader Harry Reid and his Democratic colleagues manage to get 60 votes to pass anything at all. Getting all 100 Senators to vote unanimously on a bill is near miraculous. On Thursday, though, the Senate unanimously passed a bill sponsored by New York’s Chuck Schumer to increase visa fees on companies that send workers to the U.S. if more than half of their America-based employees use work visas. In other words, Indian IT outsourcing companies. (Companies like Microsoft and Google that bring people to the U.S. on these work visas, too, don’t have to worry since those employees are just a tiny percentage of their U.S. workforce.) The extra money will pay for additional security measures on the U.S.-Mexico border.

US Senator calls Infosys a “Chop Shop”;20% Real Unemployment makes Indian IT Sector an Easy Target

The Democratic  Senator from NY has gone so far to call Infosys a “Chop Shop” which is a derogatory term used to classify establishments which help in “stealing auto parts”.With real Unemployment hovering around 20% in the US and little job creation despite trillions of bailouts and stimulus,Politicians need easy targets.India’s IT sector has little support in the US and makes for easy pickings.Infosys which has the highest standards of corporate governance has been naturally been shocked by this unexpected attack.The company has protested against this term and said that it was discriminatory in nature.Infosys employees 1300 US nationals currently.

US Senator Charles Schumer calls Infosys ‘chop shop’ – TOI

Criticising companies outsourcing highly-paid American jobs, a US Senator has described Indian IT major Infosys as a “chop shop”, a place where stolen cars are dismantled and parts sold separately. The comments were made by Democrat Senator of New York Charles E Schumer during discussions on the Border Security Bill, a $600-million emergency package aimed at strengthening security along the porous Mexican border. “The emergency border funds will be paid for by assessing fees on foreign companies known as chop shops that outsource good, high-paying American technology jobs to lower wage, temporary immigrant workers from other countries. “These are companies such as Infosys,” Schumer said on the Senate floor on Thursday.

Indian Government protests against arbitrary fees;May Sour Close Relation

The Indian Government after watching the situation for a couple of days has sent a letter to voice its concerns about the matter.The Indian government is defending the companies as these companies also  pay $1 billion annually in Social Security fees without any benefit.The $250 million burden will be used to fund $600 million in an emergency fund to secure Mexico’s borders which is facing drug wars.The new law will impose a $2000 annual via fee for companies with more than 50% of its employees in the US who are working on visas.The law is  specifically targeted at Indian IT companies from the letter and spirit of the law.It remains to be seen how this affects the growing closeness in India-USA relations.Though India has shown maturity by not coming out with a sharp retaliatory action,it will  sour relations.

India raises concern over US move to hike visa fees – Yahoo

India Tuesday voiced concern over a new US proposal to sharply hike the visa fees for professionals, saying it is ‘discriminatory’ and will impose an additional burden of $200 million on its companies.Commerce Minister Anand Sharma in a letter to the US Trade Representative Ron Kirk said the move went against the commercial interest of Indian companies to undertake projects locally in the US.

Terming the US legislation as discriminatory, Sharma observed: ‘Though the US need to strengthen its border security is understandable, it is inexplicable to our companies to bear the cost of such a highly discriminatory law.”The Indian software industry is already deeply burdened in the absence of a Totalisation Agreement, requiring them to pay more than $1 billion every year to the US government in the form of social security, with no benefit or prospect of refund,’ he added.