Unfair litigation will hit Indian IT cos in US

Unfair litigation against outsourcing and prohibitive visa fees will hurt India’s showpiece industry.

A lawsuit by two sacked employees of Walt Disney World against the company and two IT partners, HCL Technologies and Cognizant, is the latest in a series of obstacles faced by India’s IT industry in the United States that smell of non-tariff barriers. In the past, India has had to wrestle with quota ceilings on the H1B visas, which function as work permits for Indians. Infosys had to face an investigation into allegations of using temporary visas to employ its staff at client sites for longer terms. Though it denied charges of fraud, Infosys paid $34 million in 2013 to end a probe. US authorities or labour lobbies put up various barriers that go against the market-friendly policies Washington expects when its own companies come to do business in India. Last year, the US doubled visa fees for Indian IT companies, and this is expected to add a $400 million per year burden in costs. The US accounts for more than 60% of India’s IT-business process management exports, which have crossed $100 billion.

Labour unions in the US routinely target Indian IT companies for taking away local jobs, although independent studies have shown how these companies strengthen the US economy. The noise tends to peak during election years, and this year on that count needs extra watching. In the immediate instance, Disney’s employees accused the company and its IT partners of conspiring to replace US workers with costly foreigners. Common sense tells us that no company would pay more for trouble. The lawsuit says the companies violated US laws that require them to ensure that comparable domestic employees will not be adversely affected. The law in itself is protectionist, and unfair litigation with undertones of intimidation makes it worse. Such fiery rhetoric requires some effective dousing.