International Beat

The recently introduced  US-Mexico border security bill -- that aims to raise $600 million by allowing a massive increase in the fees on H-1B and  L1 visas -- has two distinct effects. While it provides more money to the U.S.government to fight illegal immigration from Mexico, it also makes onshore IT outsourcing more attractive.

This is because by raising the H-1B and L1 visa fess by $2,000 per head per year (thus making these visas as expensive as $3,000-$5,000 -- depending on the attorney and premium processing fees -- the bill has made the import of foreign labor that much more expensive.

However even as this bill has dealt a major blow to the offshore ( mainly India's) IT outsourcing services companies, the onshore service providers -- who should be cheering the sudden misfortune of the competing offshore providers -- are hardly pleased.

According to them, the $2,000 hardly dents the cost-competitiveness of the offshore rates, even as H-1B and L1 visas would continue to be used as an effective tool for importing cheap labor and keeping the onshore labor rates suppressed.

Christopher Hytry Derrington is founder and CEO of Rural America Onshore Outsourcing, which  provides onshore IT outsourcing services at 25-40 percent less than U.S. urban labor.

"This fee adds a very small amount to the hourly overhead of the talent," said Derrington. "This is pure political posturing and doesn't address a bigger issue impacting the rural onshoring industry. The elephant in the room is the "guest worker program" (importing workers through the H-1B and L1 visa route) that allows U.S.companies to hire thousands of [skilled workers] from abroad and even [from the] USA on student visas, very, very cheaply and offering their services at rates undercutting the IT labor market."

The H-1B visa program allows American companies and universities to employ temporary foreign workers who have the equivalent of a U.S. bachelor's degree in a job category that is considered by the U.S. Citizenship & Immigration Services to be a "specialty occupation." The L-1 visa program allows companies to transfer certain employees from their foreign facilities to their U.S. facilities for up to seven years.

Each year the U.S. grants 65,000 H-1B visas alone, almost half of which are taken up by Indian IT outsourcing service providers to send cheaper Indian IT workers to the U.S.
   
Although, adds Derrington, the 65,000-person "cheap" labor "imported" every year hardly seems significant in an industry that employs hundreds and thousands of Americans, "when the top-10 IT outsourcing service providers use these visas to flood 20,000 foreign labor[ers] in the local job markets, and use their rates to beat local rates, its ripple effects can really hurt."

What's more: "There is rampant abuse of these visas," says the owner of a $25-million Wisconsin onshore services provider.  Requesting anonymity, he added that "some U.S. employers have abused the temporary work visa programs by using them to bypass qualified American job applicants."

He has been a victim of that abuse, he said, when recently his company was beaten by a top American IT outsourcing service provider that used these visas to undercut local rates.

"Smaller onshore services providers not only get beaten by larger IT companies," he said "It also creates incentives for local IT companies to avoid hiring Americans."

According to reports, these visas have been used to dupe state government departments as well. Earlier this month, for example, an Ohio state development department executive had to step down because the IT outsourcing services company to which she awarded an appliance rebate program contract, used an offshore call center.

Before awarding the contract, this officer, it is alleged, ignored an email charging the IT service provider with using offshore labor, a criterion that disqualifies a company for Ohio state contracts.  The IT service provider, it is alleged, also did not reveal to the state that it would use foreign labor.

Jolted by this, the governor of Ohio early this month issued an executive order prohibiting use of public funds for outsourcing.

According to onshore technology services providers, protectionist policies -- like the increase in visa fees or the "Buy America" program that many states are in the process of implementing -- may help to some extent, but such moves hardly drive the elephant out of the room.

So what helps? While there is no easy solution to the problem, experts suggest that an effective one may be reducing the validity of these visas to 12 months and extending them only after the employer demonstrates legitimacy of its use.
 
Other suggestions include prohibition of the outplacement of L1 visa holders and establishing a strong investigation process by the state governments to investigate and audit the use of these visas, as well as penalizing their misuse.

Mohammad Yunus, a Bangladeshi entrepreneur, discovered in 1976 that extending very small loans -- called microfinance -- could change the face of poverty alleviation. Yunus won a Nobel Prize for his work, and numerous microfinancing models have emerged to make a disproportionate difference to millions of poor around the world.

Yet the most common complaint about this form of financing has always been that it is too expensive; microfinance lenders often charge interest rates almost as high as credit cards. Besides, many also complain that despite being over three decades old as an industry, microfinance still has a global estimated average outreach to just about 20 percent of the poor. This means that a large section of potential borrowers continue to remain out of its ambit.

It is also a fact that despite years of raging debates over these issues; hardly anyone has come up with a solution to address them. Given these facts, then, it is heartening to note that two innovative entrepreneurs from India -- a husband and wife team -- are trying at least, and that too, with the help of ICT.

Called Rang De (www.rangde.org) -- which literally means "making life colorful" -- it is India's first online micro-lending platform that enables the public to lend money to any poor borrower engaged in a legal money-earning venture.

Rang De started in 2008 and is headquartered in the Indian city of Chennai (formerly Madras). Ramkrishna NK, one of its founders prefers to say that Rang De is not just a business but "a pioneering, Web-based social initiative with a mission to make poverty history in India."

And how? Primarily by ensuring that interest rates are way lower -- which at 8.5 percent is about a third lower -- than what all other microfinance lenders charge, and by reaching out to every borrower that registers on the website. The most notable feature of Rang De is that it uses ICT to bring an individual lender with a philanthropic bent to a needy borrower. 

All one needs to participate in micro lending is to register on Rang De "to become a social Investor" and choose borrowers that are registered on the website. "As long as you are willing to lend at the interest rate set by Rang De, you can choose any borrower and invest as little as $2.15," says Ramakirshna.

After the lender transfers his money to Rang De, its field partners take over the responsibilities of disbursing it to the identified borrower. The responsibility of interest collections and repayments also lies with them. Lenders can withdraw most of their lent money  -barring the mandatory minimum lent amount of $2.15- after the lock-in-period of 50 weeks.

"The biggest advantage of this model is that unlike a typical microfinance lender, which is almost always a professional institution with a profit motive, lenders of Rang De are either individuals or corporate entities who are aiming for social returns. Their main aim is not to derive a market rate of return for their investments but more to derive the satisfaction of serving the society. This is why it is easy for us to keep borrowing costs low," he says.

ICT is at the heart of this model and is used with the mix of Internet and mobile phones. While the website connects the lenders with the borrowers virtually, Rang De also facilitates a personal contact between the two through mobile phone conferences at regular intervals.

"India's wide digital divide is not a hindrance either, since all the technological assistance to the borrowers are provided by the field partners," says Ramakrishna.  Currently, Rang De operates with 18 NGO field partners in 10 Indian states.The founders claim that Rang De has about 1,500 individual and corporate lenders who have so far lent about $0.4 million to 3,600 borrowers.

Future expansion plans not only includes covering all 28 Indian states but going offshore, to the U.S. as well. "Indian laws do not allow Rang De to accept lenders who are not Indian citizens. But next January, when we complete 3 years of operation, Rang De will be allowed to accept non-resident Indians as lenders, and that's when we plan to tap them in the U.S.," Ramakrishna said.

So does Rang De want to replicate its business model there? "Why not?" he says. "Although there is a similar venture (called Kiva), the difference is that they haven't been able to cap the interest rate. We believe  that what we have done in India, can be done in the U.S. as well."

Ask any expert from industry or government: "What is the greatest threat facing our future society and economy?" and the answer is very likely to be global warming. Ask them what they are doing about it, and more often than not, you will draw a blank.

 

Although both governments and industry, say experts, are collectively responsible for addressing the need for climate protection, precious time is being lost. Countries, their governments, and even businesses are hesitant when it comes to seriously addressing the problems of climate change.

 

The reasons could be many. Some say the foremost being that most stakeholders are unable to reach consensus on what should be their respective responsibilities.

 

But, according to insurance giant Allianz SE, and World Wide Fund For Nature (WWF), there is another reason why climate protection efforts remain largely in a state of limbo. Although some are aware of a need to address the environment, most, including many in government, are unaware of what needs to be done to address those issues.

 

According to Allianz and WWF, this seems to be a bigger hurdle for climate protection efforts than the absence of a general consensus. And, alarmed by the fact that the window of opportunity for ambitious greenhouse gas reduction is closing fast -- the world has to act by 2020 to limit global temperature increase to 2 degrees Celsius (3.6 degrees F) by 2050 -- these two groups are trying to speed up the process by raising global awareness. They have created a Web-based game that not only throws light on the nuances of climate change issues, it also helps its players craft appropriate strategies to address these issues.

 

Called CEO2 (available at www.ceo2-game.com), the game is more of a simulation program that puts a player in the role of a decision maker, say its creators. Eric Mahleb, of LGM Interactive -- the Berlin-based agency that specializes in green digital communications, which has designed this game -- says it "enables a player to learn and understand the complex dynamics and play of the climate protection issues."

  

A significant feature of this game is that it does not just preach. Players can gather hands-on experience as well. For instance a player can slip into the role of a CEO and show which business strategy will reduce carbon, reduce risks and be most profitable.

 

The game also allows the player to identify which investment at what time will set the course for a profitable growth in the low-carbon economy of the future. "This simulation helps a player to understand what the real issues are with regard to the industries it covers, as well as to get an idea of what needs to be addressed while formulating environmental policies," says Mahleb.

 

CEO2 covers four industries: chemical, automobile, utility and finance. This is because these are expected to impact the environment going forward 20 years. Others will be added soon, says Mahleb.

 

Nevertheless although the simulation was designed keeping industry in mind, Mehleb says that the government sector, including local government "can extract enough valuable information that would help address the local environmental issues as well."

 

"Like the industry, the government can play a significant role in protecting the climate and we hope that CEO2 will help the governments understand the dynamics and complexities of the world we live in, and the complexities they have to face to address the environment," he says.

 

Launched on May 27, CEO2 has come at a time when representatives from 182 nations, have started preparing for the second round of the United Nations Climate Change Talks for 2010 summit to be held 2-6 August in Bonn, Germany. Here world leaders are expected to pick up on issues that were not resolved in the Copenhagen meeting last December,and to pave the way for the full implementation of climate change action across the globe. 

 

The main topic of discussion will be the contentious issue of who (countries, governments, communities and industries) -- is responsible for greenhouse gas emission reduction and to what extent they must engage to limit the temperature rise below two degrees Celsius compared to pre-industrial levels and avoid dangerous consequences of climate change.

 

 

"In addition to the privacy and health concerns that have been raised, we are becoming increasingly aware of growing doubts about the effectiveness and safety of the devices as well as the very real offense to deeply held religious views.

Many religious leaders have spoken recently in opposition to body scanners.

We join them in urging you to suspend this program.

We further believe that the full body scanners are contributing to a negative perception of the United States and reducing the number of foreign visitors who will travel to the US.

If the program is suspended, there is the very real possibility of saving taxpayers over $400 million this year and much more in the years ahead.

 

We support a proposal to undertake a comprehensive study to evaluate the effectiveness, health risks, and privacy impacts of the devices.

We also ask you to consider the importance of sincerely held religious opposition to the digital undressing of air travelers by TSA officials, as well as the economic impact on the US tourism industry."

Photo: Counterfeit jeans in a market in Bangkok (The label reads: =if(Label="","RMA","?") This is an Excel or Microsoft Access function. The factory is using Excel or Access to store all the logos for the different jeans they make and then print them onto leather. (Photo by Ben Donley. CC Attribution-Share Alike 2.0 Generic)
 
Ever since its birth, the Internet has been the central theme of the tussle between the United States and the rest of the world over who should control it. And thank god that it was designed as such so that barring the somewhat limited control companies and countries exercise, the Internet is largely a free-for-all wonder.
 
However, going by the draft text of the Anti-Counterfeiting Trade Agreement Control (ACTA), if the new international agreement-in-process has its way, it could soon be controlling the Internet on behalf the United States, the UK, and a dozen other countries.
 
After keeping the terms of negotiations tightly under wraps -- despite global pressure -- for three years, ACTA finally revealed a draft text of the agreement on April 21. This revealed what has been feared all along: overruling each country's local laws, the ACTA would seek to significantly regulate what you can and can't do online.
 
Initiated in October 2007 by the United States, the European Community, Switzerland and Japan, the objective of the ACTA was to fight counterfeiting and piracy of physical goods like medicines, luxury items, and some softer items like movies, music, books, etc. - all which  negatively impact States and companies around the world.
 
The growth of this menace spurred the ACTA participants to agree to develop an instrument that will strengthen international cooperation. And this subsequently attracted countries like Australia, the Republic of Korea, New Zealand, Mexico, Jordan, Morocco, Singapore, the United Arab Emirates and Canada to join in as participants.
 
Yet, a very disturbing feature of ACTA has been the fact that despite global pressure, the negotiations' details were kept a closely guarded secret. However, various leaked versions over  the last three years indicated that the deliberation of the terms of the agreement focused not just on fake Guccis and medicines. It is also considering new rules to control online piracy of intellectual property and, by extention, some believe, the free flow of information over the Internet.
 
And now, the official draft has confirmed this fact.
 
"ACTA has several features that raise significant potential concerns for consumers' privacy and civil liberties, for innovation and the free flow of information on the Internet, legitimate commerce, and for developing countries' ability to choose policy options that best suit their domestic priorities and level of economic development," says Electronic Frontier Foundation, the US-based civil liberties group that claims to fight to defend rights in the digital world.
 
Similarly the European Digital Rights, says "This agreement is meant to become a global standard for trade agreements. If this happens, what will be left of the EU's historical credibility in the fight for free speech and democracy when it starts asking grateful undemocratic governments to place obligations on Internet access providers to terminate or prevent infringements? Of course, those measures, procedures, and remedies shall also be fair and proportionate but it is almost absurd to think that legal action would be taken if one party's implementation was excessive. It is, after all, an intellectual property agreement and not a human rights instrument."
 
According to EFF the draft language also indicates provisions that will include mandated disclosure of personal information in alleged IP disputes, a new global requirement that commercial scale piracy will also capture non-commercial copies, and new powers to place injunctions on IP violations with lowered standards of proof and limited due process.
 
What becomes evident here, as notes EFF is, that the global entertainment industries have been able to lobby well. "Much of the language is reminiscent of entertainment industry demands -- and nowhere in the draft is there mention of the rights of individual consumers and the IP balance driving innovation in the knowledge economy," it says.
 
"Most disturbing of all", added EFF is "an entire section of the treaty is devoted to rights management technology/the Internet suggesting that both negotiators and lobbyists are choosing to ignore the complex dangers of regulating the Internet across jurisdictions to match the demands of rightsholders."
 
Nevertheless even as ACTA threatens the carefully crafted balance of many countries' copyright laws that protects intellectual property rights and citizens' freedom of expression, an international framework that ACTA seeks to establish is indeed needed to effectively combat the proliferation of counterfeiting and piracy, which undermines legitimate trade and the sustainable development of the world economy.
 
Consider this: according to OECD estimates, infringements of intellectual property traded internationally (excluding domestic production and consumption) account for more than $200 billion per year (higher than the GDP of more than 150 countries).
 
This illegal trade is also growing phenomenally. For instance, OECD adds since 2007, seizure of fake cosmetics and personal care products has grown by 264%; toys by 98%; foodstuff by 62%; computer equipment by 62%; and medicines by 51%.
 
ACTA however argues that since counterfeiting and piracy are not only growing in the physical world, but also increasing alarmingly as well in the digital environment, it is important to bring in online counterfeiting and piracy within its purview as well.
 
Besides it adds there is no proposal to oblige ACTA Parties to require their border authorities to search travelers' baggage for IPR infringing goods or their personal electronic devices for IPR infringing downloads.
 
Neither does it wish to oblige ACTA Parties to require Internet service providers (ISPs) to terminate users' connections on the basis of accumulated allegations of online IPR infringement (the so-called "three strikes" rule).
 
Although there is no fixed time frame and no concrete end-date that has been set for the ongoing negotiations, participants are aiming to conclude the negotiation by the end of
2010.