Forget H1-B, protect L1

BS OPINION

 In the new US financial year beginning this month, the annual quota has fallen by two-thirds, to the 65,000 level that existed till 1998. On the face of it, this is a new hurdle in the way of the rapid growth of Indian software, because slightly over half of the revenue of frontline Indian companies comes from on site work. And the US is by far the biggest IT market, accounting for over 60 per cent of the revenue of most active Indian companies.

 The truth is less worrying and must be understood in context. Indian software was as affected as anybody else ever when the technology bubble burst in 2000 and the global economy encountered a brief recession in the wake of 9/11. Now US economic activity is picking up with stocks, particularly technology ones, moving up at a faster pace.

 But this is turning out to be a case of jobless growth. Naturally, anxiety levels are high about high levels of unemployment despite the up-tick in growth, the situation not being made any better by Americans getting ready to elect another president late next year.

 High unemployment in an election year does no politician any good and American ones have predictably opted for what is politically safe as opposed to what would have been good for the US economy in the longer run. Adoption of IT, aided by outsourcing, massively drove US productivity through the nineties.

 Fortunately for Indian software, various factors have limited the downside of the latest US action on visas. First, the cut is not as big as it looks. In the last US financial year, only 79,100 H1-B visas were issued (in 2001 there were 1,63,600 visas).

 Even if you assume that the majority of H1-B visas are issued to Indians, the impact on India