Wednesday, November 20, 2013

US Finds India's IT Software and Services Exports Wildly Exaggerated

A 2005 study by US General Accounting Office (GAO) found that Indian government's figures for software and technology exports to the United States were 20 times higher than the US figures for import of the same from India.

U.S. General Accounting Office looked at the 2003 data showing the United States reported $420 million in unaffiliated imports of BPT (business, professional, and technical) services from India, while India reported approximately $8.7 billion in exports of affiliated and unaffiliated BPT services to the United States.

US-India IT Trade Discrepancy Source: GAO 
The GAO found at least five definitional and methodological factors that contribute to the difference between U.S. and Indian data on BPT services. First, India and the United States follow different practices in accounting for the earnings of temporary Indian workers residing in the United States. Second, India defines certain services, such as software embedded on computer hardware, differently than the United States. Third, India and the United States follow different practices for counting sales by India to U.S.-owned firms located outside of the United States. The United States follows International Monetary Fund standards for each of these factors. Fourth, BEA (Bureau of Economic Analysis) does not report country-specific data for particular types of services due to concerns about the quality of responses it receives from firms when they allocate their affiliated imports to detailed types of services. As a result, U.S. data on BPT services include only unaffiliated imports from India, while Indian data include both affiliated and unaffiliated exports. Fifth, other differences, such as identifying all services importers, may also contribute to the data gap.

In theory, India follows what is known as BPM 6 (MSITS) reporting method for software and information-enabled technology services (ITES) which counts sales to all multinationals, earning of overseas offices, salaries of non-immigrant overseas workers as India's exports. In practice, India violates it. BPM 6 allows the salaries of first year of migrant workers to be included in a country's service exports. India continuously and cumulatively adds all the earnings of its migrants to US in its software exports. If 50,000 Indians migrate on H1B visas each year, and they each earn $50,000 a year, that's a $2.5 billion addition to their exports each year. Cumulatively over 10 years, this would be $25 billion in exports year after year and growing.

There has neither been any acknowledgement nor any correction of the Indian government's methodology for reporting software and IT services exports since the GAO report was published in 2005. This raises serious questions about the accuracy of India's claims of $60 billion to $70 billion IT software and service exports being currently reported. If the 20X exaggeration still persists, the Indian IT exports could be as little as $3 billion to $4 billion today based on the US methodology.

Pakistan IT Exports BPM 5 Method Source: State Bank of Pakistan

Unlike the Reserve Bank of India's claimed BPM 6 methodology, the State Bank of Pakistan uses a much more conservative BPM 5 reporting system which does not include sales to multinationals located in Pakistan and earning of overseas offices and salaries of non-immigrant Pakistani overseas workers in Pakistan's exports figures. If the State Bank switched to BPM 6 method, Pakistan's software and IT exports of $294 million for 2012-2013 could easily become at least $5 billion.


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13 comments:

Riaz Haq said...

Here's a news report that helps understand why some Indian IT companies overstate exports to claim tax exemptions:

Did IBM India export software in 2008-09? Though the company says it did, the claim may not run deep as telecom service companies have said that they did not give any leased lines to IBM India to enable the IT giant to export its software.

Software is generally exported through leased lines — dedicated cables — that transmit data and connect the seller to the buyer in different locations. The telecom service providers’ statement during the tax department’s probe is significant in light of the income tax department’s notice to IBM India last week for evading crores of rupees in taxes under an export promotion scheme.

In response to dna’s questionnaire, IBM India did not specifically respond to queries on leased lines and its foreign bank account. However, the company’s spokesperson said: “IBM does not agree with the tax department’s claims and will aggressively defend itself through the appropriate judicial process.”

IBM India not only under-reported revenue of Rs7,288 crore in 2008-09 to evade tax to the tune of Rs5,357 crore but it also showed sales in India as exports to claim tax exemption under the STPI scheme, according to the tax department. Under the Software Technology Park of India (STPI) scheme, IT companies are eligible for 100 per cent tax exemption on income generated from software exports as defined in section 10A and 10B of the I-T Act 1961 or under 10AA if they are located in a special economic zone (SEZ). IBM India has several units in STPIs and SEZs across the country that claim tax exemption on income from software exports.

IBM India claimed that it had exported software in 2008-09. But telecom companies, VSNL (Tata) and AT&T and others, denied providing leased line services to IBM India to export software from their eligible Software Technology Park of India or special economic zone locations, such as in Bangalore, Hyderabad, Gurgaon, etc. Rather, the companies gave it connection only within the country, according to the tax department’s notice.

In order to milk the export promotion scheme, IBM India also violated the Foreign Exchange Management Act and deceived the Reserve Bank of India. These and other violations came to light after the tax department initiated a thorough probe into the company’s affairs when IBM India failed to furnish software development agreements, software export forms (softex) despite several summons and show cause notices. The investigation reveals that thousands of invoices submitted by IBM India to STPI and SEZ authorities were different from the invoices referred to in its HSBC bank account in New York in which sale proceeds were credited. The department suspects these to be “bogus invoices”....


http://www.dnaindia.com/india/report-ibm-india-exported-software-minus-lease-lines-1916031

Riaz Haq said...

Lots of inflated claims of Indian "accomplishments" in America have been debunked by Times of India Washington correspondent Chidanand Rajghatta.

It seems exaggerating achievements is a common Indian trait. Even the Indian government does it shamelessly as evident from highly inflated IT exports figure.

Here's a Times of India story on Indian exaggeration of Indian professionals in US:

It's an Internet myth that has taken on a life of its own. No matter how often you slay this phony legend, it keeps popping up again like some hydra-headed beast.

But on Monday, the Indian government itself consecrated the oft-circulated fiction as fact in Parliament, possibly laying itself open to a breach of privilege. By relaying to Rajya Sabha members (as reported in The Times of India) a host of unsubstantiated and inflated figures about Indian professionals in US, the government also made a laughing stock of itself.

The figures provided by the Minister of State for Human Resource Development Purandeshwari included claims that 38 per cent of doctors in US are Indians, as are 36 per cent of NASA scientists and 34 per cent of Microsoft employees.

There is no survey that establishes these numbers, and absent a government clarification, it appears that the figures come from a shop-worn Internet chain mail that has been in circulation for many years. Spam has finally found its way into the Indian parliament dressed up as fact.

Attempts by this correspondent over the years to authenticate the figures have shown that it is exaggerated, and even false. Both Microsoft and NASA say they don't keep an ethnic headcount. While they acknowledge that a large number of their employees are of Indian origin, it is hardly in the 30-35 per cent range.

In a 2003 interview with this correspondent, Microsoft chief Bill Gates guessed that the number of Indians in the engineering sections of the company was perhaps in the region of 20 per cent, but he thought the overall figure was not true. NASA workers say the number of Indians in the organization is in the region of 4-5 per cent, but the 36 per cent figure is pure fiction.

The number of physicians of Indian-origin in the US is a little easier to estimate. The Association of American Physicians of Indian Origin (AAPI) has 42,000 members, in addition to around 15,000 medical students and residents. There were an estimated 850,000 doctors in the US in 2004. So, conflating the figures, no more than ten per cent of the physicians in US maybe of Indian-origin – and that includes Indian-Americans – assuming not everyone is registered with AAPI.

These numbers in themselves are remarkable considering Indians constitute less than one per cent of the US population. But in its enthusiasm to spin the image of the successful global Indian to its advantage, the government appears to have milked a long-discredited spam - an effort seen by some readers as the work of a lazy bureaucrat and an inept minister.

The story has attracted withering scrutiny and criticism on the Times of India's website, with most readers across the world trashing it. "The minister should be hauled up by the house for breach of privilege of parliament (by presenting false information based on hearsay). We Indians are undoubtedly one of the most successful ethnic groups in USA, be it in Medicine, Engineering, Entrepreneurship. BUT, that does not translate to those ridiculous numbers that have been presented....this is a circulating e-mail hoax," wrote in Soumya from USA, who said he worked at the NASA facility in Ames, California, and the number was nowhere near what was mentioned in the figures given to Parliament.

http://articles.timesofindia.indiatimes.com/2008-03-12/us/27742502_1_indian-origin-indian-parliament-indian-american

Riaz Haq said...

Here's Yahoo Finance news on Pakistani start-up Convo getting $5 million from US VC Morgenthaler Ventures:

SAN FRANCISCO, Sept. 16, 2013 /PRNewswire/ -- Convo, a cloud-based collaboration service, today announced a $5 million Series-A investment from Morgenthaler Ventures. This financing is the company's first investment by an institutional venture capital firm. The funding will be used to evolve its offerings, introduce their service on more platforms, and accelerate user reach and growth.

Convo is a multi-platform service designed to allow teams to share and work together simply and naturally by combining discussions with messaging, images, docs, presentations and PDFs.

Since 2012, Convo has seen exceptionally high levels of engagement in their paying accounts, with an average monthly-active over daily-active ratio of 75%, which is noticeably higher than even the 30% of most social games.

Convo is available across all major platforms and has launched versions of its software for Windows, Mac, Web, iPhone, and Android.

"We built our company with slim resources and a small team, and therefore are excited about our prospects with Morgenthaler Ventures in our corner. They have helped companies at our stage and with our enterprise focus grow exponentially," said Faizan Buzdar, founder and CEO of Convo. "Our immediate priority is to use the new infusion of capital to continue delivering a service that meets the ease-of-use, reliability, and security demands of our customers."

Said Rebecca Lynn, Partner at Morgenthaler Ventures, "We have been amazed at the level of engagement we have seen from Convo's early customers, including many global brands. These organizations won't settle for inconsistent, light-weight solutions. Multinational organizations have selected Convo after putting them through a battery of security tests. There are collaboration services you use to run chit chat, and there are those that run your company. Convo is relied on for the latter."

"Looking across our portfolio, there is a common trait amongst our entrepreneurs, one of extraordinary tenacity and vision, which Faizan has in spades," said Alex Nigg, Venture Partner, Morgenthaler Ventures. "Faizan started his business in Pakistan, moved it to San Francisco, and overcame considerable odds to attract a list of loyal customers from around the world."

About Convo

Convo (www.convo.com) is designed to help any group of people working together to achieve great things. Convo allows creative and innovative teams to easily have the real-time conversations needed to advance a cutting-edge campaign, launch a new product or break the latest news story. Convo, an interactive workspace, is made for people who thrive on the creative process and who want to "get there first." The company (formerly Scrybe) has recently reincorporated in the United States and is headquartered in San Francisco with an offshore office in Pakistan.



http://finance.yahoo.com/news/convo-secures-series-funding-morgenthaler-113000482.html

Riaz Haq said...

Here's more from Express Tribune on Faizan Buzdar's Convo:

The funding will be used to evolve the company’s products, introduce its service on more platforms, and accelerate user reach and growth. Convo will also use the money to more than double its team in Pakistan, the company’s Director Marketing and Operations Shehryar Hydri told The Express Tribune.
The product is making big waves already and giving social enterprise giants, the likes of Yammer and Jive, a run for their money according to reviews published by top technology blogs; it has even taken away a chunk of their clientele.
The company’s market position couldn’t be determined because it didn’t disclose financial data. It did say however that over 10% of the Fortune-500 companies use their product, and they have 6,000 customers in more than 150 countries.
What really brought Convo to the limelight were the rave reviews it received from customers and leading technology blogs, such as TechCrunch and The Next Web, for its innovative features. In fact, this innovative product even got the attention of the United States President Barack Obama few months ago.
“Faizan,” Obama tweeted, “is a perfect example of why we [America] need immigration reform.”
Obama’s tweet, which praised Buzdar, was meant to gather support for an immigration bill that would allow non-US citizens into the country to help promote innovation in the country’s technology industry.
Buzdar, too, faced a host of immigration hurdles before getting his green card recently. “America needs immigration reform or it risks losing out on innovation,” he had told The Next Web prior to getting his resident permit.
Launched from Islamabad in 2005 as Scrybe and later renamed Convo, it is one of the few software product-based companies that originally started in Pakistan and gained a global footprint in terms of funding and customers.
Buzdar started his company from a five-member team working from a small room in the federal capital but he is determined to make it big, perhaps the biggest in the market it serves.
“Our customers say that Convo is the first app they check as soon as they wake up, even before email or Facebook. I want to see that behavior across many more organisations,” Buzdar said.


http://tribune.com.pk/story/631651/up-and-coming-pakistani-startup-raises-5m-from-venture-capitalist/

Riaz Haq said...

Here's Hindu BusinessLine report on cloud computing apps in Pakistan:

Emerging markets such as Pakistan, Vietnam, the Philippines and Malaysia are adopting cloud-based applications at a faster rate than India, according to Doug Hughes, Vice-President, Product Management (JAPAC), Application Development, Oracle, the $35-billion US-based IT company.

In the last few years, India has moved to a dominant market from an emerging market. However, countries such as Pakistan and Malaysia are challenging India by deploying cloud rapidly. Starting with a low base, cloud-based application gives them the flexibility not to invest in hardware or software but to rent them on a monthly basis, he told Business Line.

However, adoption of cloud-based applications in India is faster than in China, he said without giving any data.

While small- and medium-size Indian companies are embracing cloud, there is hesitancy among large companies on security concerns. Bridging the gap between conventional cloud solutions and traditional company applications is emerging as a growing trend across segments, he said.

Managing consulting company Zinnov said cloud computing market in India is expected to reach $4.5 billion by 2015 with SMEs driving the growth.

The bigger the company, the bigger the decision making team. New customers are willing to consider cloud, but not the old ones. “We need to address too many questions raised by big companies especially on security. We need to find within big businesses a few champions who truly believe on cloud. For small business I do not need as they are the champions,” said Hughes. Oracle offers applications in a public, private or hybrid cloud, he said.

“With a large customer we start the discussion with the success in Australia. They will listen to it but say show me somebody who has done here. If it is not done here, it does not exist. I cannot say why clients here do not feel ready. The challenge is how to make them comfortable with cloud,” he said.

Companies need not deploy the entire suite of cloud-based solutions but pick up a HR or supply chain management application. Oracle is not going behind customers to change the entire spectrum of customer base from the very large company to the smallest – consider cloud as a solution, he said.


http://www.thehindubusinessline.com/industry-and-economy/info-tech/emerging-nations-adopt-cloud-apps-faster-says-oracle/article5375713.ece

Riaz Haq said...

Here's hedge fund manager Jim Rigers on India as reported by LiveMint:

Singapore: Hedge fund manager Jim Rogers has always been an India bear and a critic of the policies of the Indian government. The chairman of Rogers Holding who moved to Singapore in 2007 because he believes the centre of the world is moving to Asia, lashes out in an interview at both national political parties and dismisses Goldman Sachs’ recent report on how it was turning bullish on India because of the possibility that the Bharatiya Janata Party’s (BJP’s) Narendra Modi could be the country’s next prime minister. “I won’t invest in India” till the country opens up more, said Rogers. Edited extracts:
What do you think of the whole controversy regarding the Goldman Sachs report titled “Modi-fying our view: raise India to Marketweight”. Do you agree with what the brokerage firm said on change?
Firstly, India has been badly managed for the past 60 years. I am not talking about just the two main parties in India—get rid of all the politicians. Who knows as to who is the worse between the ruling party and the opposition. Both Congress and BJP have not been and will not be good for India, until they completely open its economy and catch on to how the world really works. India will continue to suffer—I am not saying that the opposition will be better. Everybody who has had anything to do with running India in the past so many years have failed India.
Now, it is a different issue if Goldman Sachs be allowed to comment. If they can’t comment, then can newspapers from outside (India) be allowed to comment? What Indian politicians are saying if you criticize is that you can’t comment if you are an outsider. That is one of the problems for India, and this is why India has been a disaster for so long. It keeps fouling up—telling anybody they cannot criticize or comment is a terrible, terrible mistake for India. Does that mean only Indian media can comment on what is happening there? Are politicians trying to say you can’t comment unless you agree with what they say? I find India’s reaction to the Goldman Sachs report ludicrous. I’m no fan of Goldman Sachs, but India’s reaction to the report is embarrassing. Indians should be embarrassed to have politicians who react like that to a report.
Has the BJP said or done anything revolutionary, or said anything different? They say we like business people better than Congress, but can they do anything other than making some cosmetic changes? Yes, if they (BJP) win, Goldman Sachs will be happy; they can buy stocks and markets will go up. But a year later everyone will look around and say that nothing has changed. It will still be impossible to do business in India unless you are in bed with politicians and bureaucrats. It will still be impossible for people to buy and sell currencies the way they want to…. I can buy gold nearly anywhere in the world, but not in India because I am foreigner. What kind of garbage is that?...


http://www.livemint.com/Companies/b4EhUDAftUAdTquWxdv2GP/Jim-Rogers-Both-Congress-BJP-have-not-been-and-will-not-be.html

Riaz Haq said...

Here's a Forbes piece on Goldman Sachs's report on "Modi-fying India":

Global investment firm Goldman Sachs probably didn’t think it would be accused of meddling in India’s domestic politics when it upgraded its view on India. But with national elections due within a few months, it made the mistake of attributing some of its positive sentiment to the leading opposition party candidate.

In its latest report on India earlier this week, Goldman Sachs said it was “Modi-fying our view: raise India to market weight.”

The ‘Modi-fying” was a clear play on the name of Narendra Modi, the prime ministerial candidate of the Bharatiya Janata Party, the main opposition party to the ruling Congress Party-led United Progressive Alliance.

The report said:

“Equity investors tend to view the BJP as business-friendly, and the BJP’s prime ministerial candidate Narendra Modi (the current chief minister of Gujarat) as an agent of change. Current polls show Mr. Modi and the BJP as faring well in the five upcoming state elections, which are considered lead indicators for the general election next year.”

----
A smarter thing for Minister Sharma would’ve been to cite the rest of the reasons that Goldman Sachs listed in its report for raising its investment case on India–a variety of measures taken by the current government and India’s central bank in the past few months and that are finally beginning to bear fruit, making India a better investment case.

Specifically, the report says:

BJP and Mr. Modi, in particular, have been focussed on infrastructure and capital spending in the past and a BJP-led government may be beneficial for the investment demand pick up, in our view.
the central bank (RBI) has taken various measures to relieve immediate pressure on the current account and encouraged capital flows which have helped arrest [rupee] weakness
Some of the key data points and lead indicators related to investment demand have started to show signs of pick up. The decline in new project starts in industrial and infrastructure projects seem to have halted in 2QFY14, although project starts still remain at low levels. We are also seeing early signs that fewer new projects have stalled – an indication that we may be close to a trough in the investment cycle given recent policy initiatives from the government and new approvals coming through in power and road projects.
Over the last month, earnings sentiment has improved significantly… with early signs of pick up in investment demand.
Foreign inflows into Indian equities have remained strong this year despite the excessive volatility and sell-off in emerging markets…. While FII flows have been strong and “sticky”, which has been supportive of the rally in equities, domestic institutions have been net sellers of equities…. If the recent rally and optimism regarding leadership change stem the redemption flow, the equity demand/supply balance could shift more favorably.
As elections loom closer and turnouts at Modi’s rallies easily outstripping those at Congress rallies, was Minister Sharma’s outburst a sign of panic? He would’ve better served his party by just holding up the report and taking some credit.


http://www.forbes.com/sites/meghabahree/2013/11/08/indian-minister-lashes-out-at-goldman-sachs/

Riaz Haq said...

Here's an ET story on SMS award for Election Commission of Pakistan:

The Election Commission of Pakistan has won its first ever international award today, as an international parliamentary organization acknowledged its services for promoting democracy during the elections.
The win was announced at the International Electoral Awards 2013 held in Kuala Lumpur, Malaysia.
The ECP was nominated for this award by the International Centre for Parliamentary Studies on its launching of services for millions of voters to verify their votes through the ‘8300 SMS Service’ prior to the May 2013 elections.
The ECP won the Accessibility Award, beating other finalists, the Republic of the Philippines Commission on Elections and the Independent Electoral Commission of South Africa.
“Khizer Aziz, Director General IT, today, received an award in Malaysia,” a senior ECP official told The Express Tribune.
The ECP also received applause from several other parliamentary organizations on its active role for conducting fair polls in Pakistan.
The winning system
In a bid to remove errors from electoral lists, the Election Commission of Pakistan had launched an SMS service to facilitate 85 million voters to verify their votes before the general elections this year.
The service had been launched in collaboration with the National Database and Registration Authority to help registered voters check the status of their votes and other particulars.
Registered voters could send their Computerised National Identity Cards (CNIC) number without hyphens via SMS to 8300 at anytime from anywhere in the country.
After sending the SMS, the voter would subsequently receive a message containing their name, village, city, tehsil or district, location (electoral area) and the serial number of vote registered in the preliminary electoral rolls. The system later also provided the address of their polling station.
Usage
More than 51.8 million citizens used the SMS service to verify their voting information ahead of the May 11 polls.
A whopping 29.2 million voters between the ages of 18 and 35-years-old used the service, according to details provided by NADRA. Over 10.4 million people belonged to the 36 to 46-year-old age bracket, 6.7 million from 46 to 56-years old, 4 million voters from the 56 to 66 age bracket and 1.5 million from the age of 66 and above.
Some 28.8 million voters hailed from urban areas and 23 million voters from rural areas.

Earlier, the ECP had been nominated for launching the “World’s Biggest Voters SMS Service” of over 83 million data density and for over 100 million mobile users in the country in ‘one go” by the Guinness World Records.


http://tribune.com.pk/story/641092/ecps-8300-sms-system-wins-international-award/

Riaz Haq said...

Here are a few excerpts from a recent book "Street Smarts" by Hedge Fund Manager Jim Rogers:

"Many Asians say that the Asian Way is first to open your economy, to bring prosperity to your country, and then, only after that, to open up your political system. They say thar the reason the Russians failed is that did it the other way around. Russia opened up its political system in the absence of a sound economy, everybody bitched and complained, and chaos inevitably ensued. As an example of the Asian path to political openness, they point to South Korea and Taiwan, both of which were once vicious dictatorships supported by the United States. Japan was at one time a one-party state supported by the US military. Singapore achieved its current status under one-party, authoritarian rule. All these countries have since become more prosperous and more open.

Palto,in The Republic, says that the way societies evolve is by going from dictatorship to oligarchy to democracy to chaos and back to dictatorship. It has a certain logic, and Plato was a very smart guy. I do not know if the Asians ever read The Republic, but the Asian way seems to suggest that Plato knew whereof he spoke."

Not only is the Asian model different from that of the Soviets, it stands China in marked contrast to those thirty-year dictatorships previously mentioned. Chinese leaders have put a high premium upon changing the country's economy, presumably to seek prosperity for the 1.3 people who live there."
------------
"And yet,in 1947, when it achieved independence, India was one of the more successful countries in the world, a democratic country. But despite democracy, or maybe because of it, India has never lived up to its potential. China was a shambles as recently as 1980. India was far ahead of it. Bt since then China has left India, literally in the dust....As China rises, India continues to decline relatively. Its dent-to-GDP ratio is now 90 percent, making a strong growth rate virtually impossible."



http://books.google.com/books?id=t_t9swbrmAoC&printsec=frontcover&dq=street+smart+jim+rogers&hl=en&sa=X&ei=mN-lUsDxEYbuyAHw6oGIBA&ved=0CEgQ6AEwAA#v=snippet&q=ASEAN&f=false

Riaz Haq said...

Here's an excerpt from US Bureau of Economic Affairs (BEA) on source of differences between Indian exports and US imports of IT and related products and services:


BEA follows international standards for balance-of-payments accounting by excluding the compensation paid by U.S. firms to U.S. residents. Foreign workers who are in the United States for less than one year are considered to be foreign residents, and typically their earnings are included as compensation of employees (under “income” in the balance of payments accounts). Workers who are in the United States for more than one year are considered to be U.S. residents, and so their earnings are excluded from the balance of payments accounts. According to the GAO study, Indian officials acknowledged that temporary Indian workers in the U.S. have accounted for about 40 to 50 percent of their data on exports of BPT services.



b) Sales through affiliated companies. India’s data on services exports to North America include sales of services to affiliates of U.S. companies located in India or another foreign country, as well as sales by affiliates of Indian companies located in the United States to other U.S. residents. According to international standards, BEA excludes these sales from U.S. trade in services because the transactions did not occur between a U.S. resident and a non-resident. A U.S. company’s foreign affiliate that is located in India is an Indian resident, and so its transactions with other Indian residents should not be included in the balance of payments. Similarly, an Indian company’s affiliate in the United States is a U.S. resident, and so its transactions with other U.S. residents should not be included. According to the GAO study, an Indian official stated that inclusion of sales to affiliates of U.S. companies is “likely a significant factor” accounting for differences between U.S. and Indian data.



c) Sales of goods. India’s data on trade in BPT services include some sales of goods, such as prepackaged software and software embedded on computer hardware. The U.S. data on trade in these products are included in the goods trade data, not in the services trade data. According to the GAO study, Indian officials stated that embedded and prepackaged software account for about 10-15 percent of India’s estimate of exports of BPT services to the U.S.



d) Sales of technology-enabled services. India’s data on trade in BPT services include some technology-enabled services (such as some financial services). BEA includes these services in other services categories.



e) Intrafirm trade. Through 2006, U.S. data for trade in services are collected separately for cross-border trade between unaffiliated companies and for intrafirm (or affiliated) trade. The surveys that BEA uses to collect data on unaffiliated trade are detailed enough to allow BEA to identify trade in BPT services vis-à-vis India. Affiliated trade, however, is collected on separate surveys, and data for individual foreign countries that separately identify BPT services are unavailable. Therefore, reported BEA data for BPT trade with India cannot be directly compared with the Indian data, because BEA’s data for BPT services include only unaffiliated trade and India’s data on BPT services include both affiliated and unaffiliated trade.





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BEA adjusted its own data to include an estimate of affiliated transactions, which are collected on surveys that do not allow for BPT services to be separately identified by individual foreign country. In order to estimate affiliated imports of BPT services from India, BEA used a ratio calculated from global affiliated and unaffiliated imports of BPT services. BEA used the same procedure to estimate affiliated imports of computer services

http://www.bea.gov/faq/index.cfm?faq_id=324

Riaz Haq said...

Despite H-1B lottery, #India body shops dominate H-1B visa use http://www.computerworld.com/article/2954612/it-outsourcing/despite-h-1b-lottery-offshore-firms-dominate-visa-use.html … via @computerworld

Offshore outsourcing firms that do most of their work in India remain the largest users of the H-1B visa for computer-related jobs, seemingly unaffected by the odds of the visa lottery, according to new data.

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With the exception of a few tech firms -- notably Microsoft, Google, Amazon and Oracle -- the top 25 H-1B-using firms are either based in India or are U.S. firms running large offshore operations.

These firms include Tata Consultancy Services, the leading H-1B user with 7,149 approved visa petitions for last year, and Infosys, which ranked third on the list at just over 4,000 approved visas. Both were major contractors at Southern California Edison, where IT employees were fired as work was shifted to contractors.

HCL, one of the contractors at Disney Parks and Resorts, was approved for just over 900 visas. IT employees at Edison and Disney complained of training their visa-holding replacements prior to losing their jobs. (Disney later said it was canceling its recent IT outsourcing plans).

The IT services firms in the top 25 H-1B using firms accounted for approximately 43% of the 76,272 H-1B approvals in new computer-related jobs only in the U.S. government's fiscal year 2014, which ran from Oct. 1, 2013 to Sept. 30, 2014.

This is the first time we have data broken down by job type, via a federal Freedom of Information Act request. These totals will likely be lower than H-1B totals reported in prior years when Computerworld did not have breakdowns by employment categories. Visa requests for employment changes (as opposed to new employment) are not included in these totals.

The U.S. has been distributing its annual 85,000 H-1B allotment via a lottery because of high demand. This system works against many small U.S. tech firms that make up the bulk of the visa applicants. They must compete against large-volume IT services firms that submit multiple H-1B visa applications to improve their odds of winning the lottery, according to immigration experts.

New computer-related employment last federal fiscal year represented almost 64%, or two out of every three, such visas issued. Other job categories included engineering, medicine, science, law and, yes, modeling. (While rumors persist this is a large use of the H-1B program, in fact there were only 38 visas approved for fashion model new employment last fiscal year).

Computerworld requested but did not receive information about how many of these approvals were not subject to the H-1B cap, as well as a breakdown of approvals by gender and data about wages.

The tally of top H-1B users includes Computerworld analyses to combine various iterations of company names; there were, for example, 64 different versions of Cognizant Technology Solutions, including Cognizant Tech Solns US Corp, Cognizant Technology Solns US Corp and so on. The analysis also combines a company's different divisions and business units -- IBM Corp and IBM India, among others.

Riaz Haq said...

#India is pissed about the #US now charging more money for #H1B temp worker visas: https://news.vice.com/article/india-is-pissed-about-the-us-now-charging-more-money-for-guest-worker-visas … via @vicenews

The annual gold rush in Silicon Valley to fill out applications for guest worker visas began Friday, as the federal government began distributing some of the 85,000 H1B visas it is authorized to issue this year.

But the dash to grab visas is set against the backdrop of a political debate both within the United States and abroad about the regulations surrounding H1B visas, the government designation for visas designed for highly-skilled employees in "specialty occupations."

Just weeks ago, India filed a complaint with the World Trade Organization over an increase in fees on H1B visasthat the US imposed on companies with workforces comprised of more than 50 percent foreign workers. A provision included in last year's federal spending bill tacked on a new $4,000 fee the H1B visas, which India argues is discriminatory to the country under its trade agreement with the US.

India's complaint comes as Congress has been mulling other reforms to the H1B program to address allegations that companies are using the visas to hire cheaper foreign workers to replace American workers. The Senate Judiciary Committee held hearings earlier this year in which senators, including Ted Cruz and chairman Jeff Sessions, probed experts on whether US tech firms really needed more H1B visas to fill open positions, as they claim, and what protections might be put in place to ensure that American workers are being given preference for positions over foreign workers.

Related: The Los Angeles Unified School District Has Banned Immigration Raids on Its Campuses

"The intent of the program is to fill skills gaps in the US when American workers aren't available, but the reality is that the program has become a way for firms to create a business model that's about bringing workers who are cheaper into the US and to either substitute or directly replace Americans," said Ron Hira, a political science professor at Howard University, who testified at the hearing on February 25.

Hira said that foreign workers make anywhere from 20 percent to 40 percent less than their American counterparts within the program.

Two recent lawsuits accused companies, including Disney, HCL, and Cognizant, of firing Americans in order to hire H1B workers for less money. Leo Perrera, a former Disney employee who brought one of the suits, testified at the Judiciary hearing in February that "20 years of hard work, a bachelor's degree in information technology and an IT job for Disney were all over when my team along with hundreds of others were displaced by a less-skilled foreign workforce imported into our country using the H1B visa program."

The debate over whether the H1B program is hurting American workers rose to public consciousness amid the Republican primary debates earlier this year. Donald Trump said in one debate he supported expanding the H1B visas in one instance, but later said the system was "rampant with abuse." Ted Cruz has introduced a bill in the Senate that proposes some reforms to the programs, including minimum salary requirements for foreign workers, while Bernie Sanders has called for changes to the program. Hillary Clinton has, in the past, called for an expansion of the H1B program.

Cruz's bill is one of three bills proposing reforms to the H1B program currently in Congress. A bill proposed by Senator Chuck Grassley and Senator Dick Durbin would put in place a requirement that companies first seek American workers to fill open roles before applying to have them filled with foreign workers and would limit how many H1B workers a company could hire, while a proposal by Sessions and Senator Bill Nelson seeks to cut the number of H1B visas allocated each year.

Riaz Haq said...

Are H-1B visas being "hijacked" to lower labor costs?
Author of the H-1B visa bill is "outraged" over corporations that he says have "hijacked" it to outsource American jobs and lower labor costs

http://www.cbsnews.com/news/are-h-1b-visas-being-hijacked-to-lower-labor-costs/

Former Rep. Bruce Morrison authored the H-1B visa bill in 1990 to allow American corporations to recruit the best foreign talent for emerging engineering and scientific jobs. But now Morrison says he is outraged by the way companies are abusing loopholes to outsource jobs to low-cost foreigners -- and sometimes even pressuring the displaced American workers to train their replacements. Morrison talks to Bill Whitaker for a report on the H-1B visa program to be broadcast on 60 Minutes Sunday, March 19 at 7 p.m. ET/PT.

Originally intended to help fill gaps in the high-tech workforce with highly skilled employees in situations where there aren’t enough Americans, the congressional framers of H-1B promised to protect U.S. jobs. Yet today, nearly every Silicon Valley tech company has brought in foreigners on H-1B visas and argue they can still use more because there are not enough Americans to fill those jobs. Morrison is mad. “There are a lot of qualified American workers, but companies will do better financially if they hire the foreigner worker,” he tells Whitaker. “I’m outraged. The H-1B has been hijacked as the main highway to bring people from abroad and displace American workers.”

One loophole H-1B companies are taking advantage of allows them to outsource jobs without even looking for Americans, if those jobs pay approximately $60,000 or higher. Many hi-tech jobs typically pay double that. Saving money on labor was never the bill’s intent. Says Morrison, “It’s really a travesty that should never have been allowed to happen.

Adding insult to this travesty is the practice of pressuring displaced employees to train their replacements, usually through a modest financial incentive. The practice was called “knowledge transfer” at Northeast Utilities, says Craig Diangelo, who along with some of his colleagues at the company were let go. He says they were replaced with Indian workers being paid half his salary with no benefits. “I didn’t get laid off for lack of work, I got laid off because somebody cheaper could do my job,” says Diangelo.

Diangelo and his fellow workers were also financially incentivized to remain at Northeast Utilities, now called Eversource, to train their replacements. During the process, he and his fellow staffers placed small American flags outside their offices as a quiet protest. A flag came down as each worker left the company after training a replacement. Diangelo’s flag came down last. “I went in and took the last picture. There were no more flags left,” he tells Whitaker. “You have a queasiness in your stomach...and you’re saying, ‘This can’t be possible. This didn’t happen.’”