One day it was a political bombshell; the next day, it was a bomb. The fallout over H-1B visas and a terrorist bombing and subsequent riot here in Hyderabad, India, were unrelated, but they illustrate the disruptive potential such incidents can impose on this booming city of 8 million people that leans so heavily on companies outsourcing their work.

A May 17 report in the local press that two U.S. senators posted letters on their Web sites questioning nine India-based IT outsourcing firms about their heavy and possibly illegal use of H-1B visas riled numerous Indian executives. The letters suggest that India-based companies are skirting U.S. immigration laws while facilitating the outsourcing of American jobs to other countries.

The following day, 11 people were killed when a bomb exploded at a Hyderabad mosque, igniting massive protests during which police shot and killed four people.

Yet, Indian executives were confident that neither the rioting at home nor the political posturing in the United States would throttle Hyderabad’s vibrant 24/7 economy.

The latest uproar over H-1B visas was merely political, executives say, a sentiment underscored by the fact that a week later, officials at one of the Indian companies had not received the letter from Sens. Dick Durbin, D-Illinois, and Chuck Grassley, R-Iowa, a company executive said.

It’s hypocritical of U.S. politicians to argue for open global markets yet take a protectionist stance against outsourcing, says Prabir Jha, global chief of human resources for Dr. Reddy’s Laboratories, an Indian pharmaceutical company.

"It’s a two-way street," he says. "And that makes it very exciting."

"H-1Bs are an integral part of the business we are in," he says. "A fair amount of the work we execute requires people to travel to understand customer requirements."

Thalapalli believes the accusations aren’t prompted by anything in particular.

"There is nothing new that has happened in the U.S. for them to be looking at this issue," he says.

Likewise, executives say, the reaction to the bombing was more subdued than similar disturbances in years past.

"Ten years ago, it would have been a bloodbath," says Venkat Ramana Rao, a retired captain in the Indian army who is an executive recruiter for Bridgehead Consulting in Hyderabad.

The bombing was a test for companies, especially those with round-the-clock operations. The primary concern was transporting employees to and from work.

Because many roads into the city were closed, UBS employees working in a newly constructed granite and glass office complex in Electronic City, a sprawling business park 20 miles outside Hyderabad, were put up in hotels for the evening.

An executive at the Indian office of the Switzerland-based financial services firm, which has 900 employees in Hyderabad providing back-office support, convened his crisis management team, spoke with UBS executives and kept in contact with vendors to assure them the bombing did not affect operations.

"Just going by the book," says the executive, who requested anonymity.