Optical networking vendors have won the latest battle over access to foreign workers, but changes in the law may make competition for such visas more intense.

Last month, President Clinton signed into law a bill that would increase the number of H-1B visas given out each year to foreign technology workers, which should benefit large companies that aggressively recruit overseas. But the new law also has a catch for such companies -- it makes it easier to transfer visas to other employers, including startups.

Like almost everything else in optical networking, workers are in short supply. Nortel Networks Corp. (NYSE/Toronto: NT), on its conference call last week, cited a shortage in technicians as one of the reasons it missed its quarterly numbers (see Nortel's Fright Night). H-1B visas have provided one way to allow foreigners to work in the U.S., alleviating at least some of the pressure for workers. But only a limited number of these visas are given out each year.

In 1998, the annual cap on such visas was 65,000, and the limit was reached in May, more than four months before the end of the 1998 fiscal year. After a dramatic battle, Congress raised the cap to 115,000 for the 1999 fiscal year. But even with this increase, the H-1B cap was hit in March of 2000, six months before the end of the fiscal year.

Traditionally, large companies like Cisco Systems Inc. (Nasdaq: CSCO) and Lucent Technologies Inc. (NYSE: LU) have been affected more than startups by limits in H-1B visas. According to a report published by the U. S. Immigration and Naturalization Service, Cisco ranked as the third largest technology user of H-1B visas, with 398 petitions filed by February 2000. Lucent ranked thirteenth with 255 petitions filed as of last February. Lucent probably would have hired more H-1B workers if the cap hadn’t been reached so early in the year, says Rosemary Yaecker, manager of international public relations for Lucent.

“We are in a war for talent,” she says. “Anything that can increase the pool of high-tech talent is very good news for us.”

The new law, which raises the number of H-1B visas to 195,000 by 2002, also affects the technology sector by exempting anyone employed at a college or university or a related nonprofit entity.

“Because people in academia won’t be competing for the same limited number of visas, a lot more visas can be used by technology workers,” says Greg Siskind, a partner at Siskind Susser Haas & Devine, a Memphis-based law firm that follows immigration and H-1B visa law closely.

But the second provision in the law may not bode so well for the Ciscos and Lucents of the world, who are battling startups for talent everyday. Not only does the law eliminate competition from academics for visas, but it also helps make the visas more portable.

This is also good news for workers who have often felt trapped by their sponsoring employer. Under the old system, an employee couldn’t begin working for a new employer until his application had been completely processed, which usually takes up to eight weeks.

“Generally, we’ve been able to get the candidates we wanted by waiting,” says Tom Biehl, director of human resources for startup Tellium Inc.. “But if it comes down to two candidates with the same skill set, and one has to transfer an H-1 visa, we’d be more likely to hire the citizen or resident alien, than wait the three months for the H-1 visa to be transferred.”

Under the new law, workers will be able to transfer their visas to new employers as soon as they apply. Because it’s expensive and time consuming to bring workers over to the U.S. from overseas, startups usually don’t recruit outside the U.S. But the new law streamlines and accelerates visa transfers, which is great news for startups that can skirt the expense of relocating a foreign worker.

"H-1B transfers are definitely more attractive to startups, because someone else has gone to the trouble and expense of relocating and getting the visa,” says David McCarthy, president and founder of DWDM Recruiters LLC, a recruitment consultancy. "And they’ve already financed the learning curve of the immigrant to come up to speed on the U.S. technology and culture.”

As a result, this second provision in the new law could present more problems and headaches for bigger companies, which are usually the ones sponsoring these workers.

“We expect it will cut both ways,” says Lucent's Yaecker. “It will make it easier for us to transfer H-1B visas from other companies, but it also means that workers can leave us much easier, too.”

-- Marguerite Reardon, senior editor, Light Reading, http://www.lightreading.com