Jinn of Quality and Risk

Using cheap offshore labour is an effective approach for manufacturing, but not for services. After all, services often require face-to-face conversations and on-location... service. It's hard to serve and understand your customers if you never talk to them. Hence, some companies have been looking for clever ways to introduce cheap labour in services.

NYT: In the nearly three years since the technology bubble burst, the use of L-1 visas to bring in workers — with a large percentage from India — has become a popular strategy among firms seeking to cut labor costs. The number of these temporary visas granted rose nearly 40 percent to 57,700 in 2002 from 41,739 in 1999.

The visas are intended to allow companies to transfer employees from a foreign branch or subsidiary to company offices in the United States. But they are now routinely used by companies based in India and elsewhere to bring their workers into the United States and then contract them out to American companies...

During the boom years, the technology industries successfully lobbied Congress to expand the number of foreign software engineers who could be permitted to fill programming needs in the United States. In 2000, Congress increased the annual cap on more restrictive temporary visas [~] known as H-1B visas [~] for highly skilled foreign workers to 195,000 from 115,000. That quota will drop automatically to 65,000 on Oct. 1 unless Congress approves an extension, a move that is considered unlikely.

In the last two years, the trend in the use of H-1B visas has declined sharply. Many experts say the use of L-1 visas will grow. Unlike the H-1B visa, the L-1 does not require employers to pay workers prevailing wages. In addition, there is no cap on the number of L-1 visas. ...in many cases, existing technology employees are asked to train their replacements. The L-1 visa requires that the foreign workers possess specialized knowledge of the work to be done.