A front page report in The Times of India on Wednesday talks about three American entrepreneurs who plan to house an international crew of software developers on a ship just off the California coast. This way, say promoters of the company called Sea Code, US jobs will stay close home, foreign workers will be free from immigration hassles, and US firms will get competitive rates for projects. Sea Code will be registered in the Bahamas, not subject to US labor laws. The trio has already identified a $10 million ship called the Carousel for their experiment.

The promoters, San Diego techies David Cook and Roger Green backed by investor Barry Shillito, a former assistant secretary of defense say they will hire around 600 programmers from all over the world — including US and India. "With Hybrid-Sourcing Sea Code brings already off-shore jobs back to the US and assures that 90 cents of every dollar from our clients stays in the US instead of flowing to foreign locations," the company said. Cook, a former sailor-turned-techie, says he expects the venture to sail smoothly, adding: "We’re not a slave ship." His partner Green says it will be more "like the International Space Ram Station."

Well, it remains to be seen whether the trio pull it off, but their attempt surely is a reflection (even if slightly bizarre) of the US industry feeling the pinch of US federal government policies to keep a check on the number of foreign skilled workers. Short on ideas such as hybrid sourcing Microsoft chairman Bill Gates echoed similar sentiments when he directly slammed the US administration’s strict limits on temporary visas for technology workers (a bulk of whom are Indians), saying that if he had his way, the system would be scrapped entirely.

"The whole idea of the H1-B visa thing is, don’t let too many smart people come into the country,’’ the world’s richest executive has. "The thing basically doesn’t make sense."

Gates was reacting to the current annual cap of 65,000 with an additional 20,000 exempt visas (for foreign graduates out of US universities), taking the total to 85,000 subsequent to the outsourcing backlash as well as Americans losing jobs to skilled workers from Asia. Prior to 2000, the H1-B programme had a visa ceiling of 65,000 but was increased to 1,15,000 in 2000 and subsequently to 1,95,000 for a period of three years, during the tech boom. But, after the three-year period ended, H1-B cap was brought back to the original 65,000 per year, due to protests by American workers in an election year. Last year the quota was exhausted on the very first day the new allocations opened, the first such occurrence.

H1-B is the specialty-occupation visa status under which a large number of Indian information technology (IT) firms send their employees to the United States for on-site project development work, popularly known as body-shopping. The United States is the prime export destination for the Indian software industry, while more than 50 % of the H1-B visas issued worldwide by the US going to Indian professionals. India is also currently the second-largest source, after Mexico, of legal immigrants to the US.

Echoing Gates words, Ravi Venkatesan, chairman, Microsoft India has said: "There exists a demographic challenge in the US with an aging population whereas India has dynamic and highly educated youth. It is in
the natural interest of both the economies to allow this integration of resources and talent. In this day of globalization, dropping of artificial barriers such as this is essential to allow free flow of trade and talent to benefit both countries while fostering economic development at the same time."

As things stand, the Bush administration does not seem to be in any mood to comply to Gates and US industry demands. The H1-B visa program has been criticized by unemployed US professionals for "taking away’’ their jobs. The administration is of the view that unemployment among US computer engineers regularly exceeds the figures in other industries.

Indian information industry czars are predictably happy at Gates clarion call which they feel highlights the mismatch between the availability of skills and demand for tech workers in the US, despite the US administration claims. The Indian IT industry views that the limit will affect Indian software firms, which have a large number of clients in the US, though it would bring more off-shore work to India from the USA.

The problem is aggravated by the fact the supply of unskilled labour is very high, and hence, the wage they can command is very low. On the other, the demand for specific skills is very high, and often, unmet. For an instance, in spite of the boom in the construction sector, simple skills like water-proofing, fencing, or scaffolding are in short supply. It is this mismatch – large amount of unskilled and unemployable labour when there it’s a huge demand gap for simple types of sills – that needs to be corrected.

The correction is not impossible because India has a unique opportunity. It is the youngest population in the world; its median age in 2000 was less than 24, compared to 38 for Europe, 41 for Japan and 30 for China. Alternatively viewed, this means that India has the unique opportunity to complement what an ageing rest of the world needs the most – productive workers. India can also capitalised on the fact that in 2025, it will have a dependency ratio of 12.1, i.e., for every 100 working age adults there will be slightly 12 persons who are above the age of 65. For China, Japan and Europe, the ratio will be 19.4, 49 and 33.2 respectively.

If we view this as an opportunity, we have to re-orient our low productivity labour in a way that enables them to earn higher wages through greater productivity. There are two necessary steps for this. First the unskilled labour has to be skilled. This requires trainers and training infrastructure. Second, their skill has to be recognized and accepted by the potential employers. This requires credible certification of the skills acquired y labour. An added advantage of certification is that labour markets become integrated. It does not matter where the labour has been trained, or resides. It can always move, it wants, to where it gets the highest wages.