Human resources executives who don’t hire foreign workers directly for stateside jobs might not think they have a dog in the fight over reforming H-1B visas.
They would be wrong.
From Silicon Valley to Washington, D.C., groups are actively seeking to change the federal government’s H-1B visa program, which all parties agree needs an overhaul. When or if such an overhaul happens, it could affect hiring practices in the tech industry, and if companies use or plan to use labor outsourcers.
For now, though, there’s little agreement about what’s wrong and what will fix it.
Those in favor of expanding the current annual cap of 85,000 new visas for foreigners allowed to work in the United States argue that an increase is due because of economic growth, a booming job market and widening skills gap.
Critics want more restrictions in place to stop abuses, which they say include so-called “body shops” that exploit foreign information technology workers, largely from India, brought here by deep-pocketed outsourcers that can afford to flood the system with visa applications.
They also point to recent cases of companies laying off highly compensated veteran employees and replacing them with cheaper foreign guest workers, which stricter controls and better oversight could right.
Since Jan. 1, Congress has introduced a bill to address H-1B program reforms, and the Senate Judiciary Committee has held a hearing on the issue. However, it’s unclear whether substantive changes to the H-1B program will come this year or next given a fractured legislature that until now has been focused on other areas of immigration reform.
Nonetheless, HR departments should be on standby, as any potential change could affect hiring practices. It’s especially relevant for companies that use outsourcers for contract IT workers as well as businesses that have either held off applying for H-1B visas because of the competitive system or tried and failed to get the visas.
Visa Applications Skyrocket
Arguing the merits of the skilled worker program bubbles up this time of year because it coincides with the H-1B lottery, which is held the first week of April.
As the program operates today, the Department of Homeland Security’s U.S. Citizenship and Immigration Services agency grants 85,000 new H-1B visas annually for the right to work in the country for three years. The total includes 65,000 general category visas and 20,000 for highly skilled workers and foreign graduate students who get a master’s degree or Ph.D. at a U.S. university. USCIS also grants renewal visas that H-1B workers can use to extend their stay another three years, and other visas that give foreign-born postdocs extra time in the country to look for technology jobs.
Will we finally see immigration reform in the United States? And if so, what reform will be the most helpful to the workforce?
One of the next work frontiers is true global talent mobility. None of the current immigration systems are built for this.
Maybe, but not by any executive action when those who walked through the bureaucratic minefield to obtain citizenship and became legal see this Obama course of action. No doubt we need real immigration reform by an expedient process and more H-1B visas.
If USCIS receives more applications for new H-1B visas than the allotted spots during the week-long filing period, the agency holds a lottery to determine which applications are approved. Lotteries have taken place for the past three years as the economy improved and applications skyrocketed. In April, USCIS received a record 233,000 applications for new H-1B visas for fiscal 2016, a 35 percent increase from the previous year. The agency held a lottery on April 13 to randomly select companies whose H-1B visa applications would be approved; the agency has not announced when names of winners would be released.
Part of the increase comes from the lack of U.S. workers with the science, technology, engineering and math, or STEM, skills that tech industry employers are seeking.
“If you gave me 20 qualified tech candidates today, I’d put 20 tech candidates to work. It’s a very simple supply and demand issue,” said Shane Lamb, president at CyberCoders, an Irvine, California-based IT recruiting firm that fills jobs for companies including Apple Inc., Google Inc., Microsoft Corp. and Northrop Grumman Corp. “The demand for these skills sets is greater than the domestically available candidates.”
Changing the Status Quo
Companies that can’t fill positions with U.S. workers and don’t get the H-1B visas they’re counting on have limited options. One is contracting with large outsourcers that in recent years have managed to accrue thousands of H-1B visas through the lottery. Companies also can retain a recruiter to help them cast a wider net, or try hiring H-1B workers away from their current employers.
“We have a candidate who’s on an H-1B at one client and another client may offer a different opportunity or pay rate, or the project they’re on is coming to an end,” Lamb said. In those situations, the company holding the H-1B visa transfers it to the worker’s new employer.
Easing H-4 Visa Restrictions
President Barack Obama is making good on a promise to use his executive authority to jump-start employment-related immigration reform.
In February, the U.S. Citizenship and Immigration Services reversed a long-standing rule barring spouses of H-1B workers from working in the United States. Under the new order, beginning in May, foreigners in the United States on H-4 visas can apply for work if their spouses have H-1B visas and have begun the process of obtaining a green card for permanent residency. The change could affect approximately 97,000 people in the first year of the rule change, according to the USCIS.
Proponents of the change believe it’s needed because of lengthy waits for green cards created by current regulations stipulating that no single country receive more than 7 percent of employment-basedvisas in a given year. Foreigners from countries such as India and China with an abundance of engineers and science, technology, engineering and mathematics workers wanting permanent U.S. residence can wait as long as 10 to 14 years for green cards, according to Richard Green, an immigration attorney who’s a partner at the law firm Carothers DiSante & Freudenberger in Orange County, California.
Allowing H-4 residents to work while their spouses wait for green cards provides added incentive for people with highly sought-after skills to come to the United States rather than take jobs elsewhere. “It makes us more competitive,” Green said. “You could do this in a year in Canada, or less than Australia. When the [green card] line got really long, I had some clients ask me to” move to Canada, he said.
—Michelle V. Rafter
Some companies move IT positions elsewhere. Microsoft plans to open a training and development center in Vancouver, British Columbia, this year that will add 400 jobs and double its workforce there, according to news reports. Speaking at a conference last year, William Kamela, Microsoft’s workforce readiness and immigration issues policy lead, linked the Vancouver office’s expansion to the H-1B visa cap. Kamela said Microsoft could continue expanding its workforce in places such as Vancouver and Hong Kong if the company can’t get more H-1B visas.
Tech employers including LinkedIn Corp., Microsoft and Twitter Inc. partnered with approximately 500 other U.S. companies and local governments in 2010 to form a lobbying group called Partnership for a New American Economy that supports legislation to expand the current H-1B cap.
The group supports a bipartisan bill reintroduced in the Senate in January that would increase new visas to up to 195,000 a year, depending on demand. The Immigration Innovation Act of 2015 duplicates legislation introduced in 2013 that passed in the Senate but wasn’t considered in the House. The new bill, nicknamed “I-Squared,” would also create a 60-day grace period for H-1B workers who lose their job voluntarily or involuntarily to stay in the country while looking for other employment.
Jeremy Robbins, the executive director of the Partnership for a New American Economy, scoffs at expansion opponents who maintain the short supply of talent in the STEM,fields is a tech-industry exaggeration and best dealt with by putting more resources into training U.S. workers. He agrees creating a bigger U.S. pipeline of STEM workers is a long-term goal. “Meanwhile, we should fill those jobs with people who we train here” in U.S. grad schools instead of letting them leave for jobs in other countries, he said.
Displacing U.S. Employees
Other camps look at H-1B visas and see different problems.
One is the predominately low wages many foreign workers make. Under current U.S. Labor Department rules, the minimum wages U.S. companies must pay H-1B workers are divided into four categories — entry to senior level — with amounts based on geography and U.S. Bureau of Labor Statistics job codes. Minimum wage for entry-level H-1B workers is paid at the 17th percentile, which is significantly below market wages, according to Ron Hira, a professor of public policy at Howard University who is also a research associate on immigration issues with the Economic Policy Institute.
“Because you’ve got the opportunity to pay those below-market wages, there are certain firms that take advantage of that,” Hira said.
After Southern California Edison cut about 500 longtime IT employees through layoffs and voluntary departures in February, the company filled the positions with H-1B contract workers making less money. Laid-off workers said they felt “betrayed,” and claimed they had to train replacements brought to the country on the H-1B visas by U.S. divisions of Indian outsourcers Infosys and Tata Consultancy Services, according to news reports. The outsourcers’ median wage is approximately $65,500 compared with a $90,376 annual median wage for computer systems analysts in the Los Angeles area where Southern California Edison is headquartered, according to Hira.
In a written statement, Southern California Edison said it does not take lightly actions that were part of an effort to “act as cost effectively and prudently as possible” to provide affordable power to customers, and offered a variety of assistance to laid-off workers.
Edison also stated that its contracts with Infosys and Tata require the outsourcers to comply with applicable laws, and that public records show both to be conforming to Labor Department requirements. “If a specific instance of misconduct is identified, SCE, like any contracting party, reserves all rights and remedies under its contracts to deal with such wrongdoing,” the company said in the statement.
In the past few years, IT outsourcers, including Infosys and Tata, have been among the biggest H-1B lottery winners, filing tens of thousands of applications and scoring thousands of visas, according to data from the USCIS and other outlets. In the federal government’s fiscal 2013, the latest data available, Infosys received 6,298 H-1B visas, more than any other employer. Tata was No. 2, with 6,258, followed by Cognizant Technology Solutions (5,186), Accenture (3,346) and Wipro Technologies (2,644).
In the federal government’s fiscal 2015, 9 out of 10 companies filing the most H-1B visa applications were IT outsourcers or consultants. The list includes U.S. firm Deloitte Consulting, which is No. 1 with 17,261 applications, and U.S. divisions of India-based outsourcers Cognizant (9,325), Wipro (8,120) and Infosys (4,874)
Critics complain that current regulations don’t preclude companies charged with violating program requirements from continuing to apply for and receive new visas. In 2013, for example, Infosys paid $34 million to settle allegations that it circumvented H-1B visa program requirements. The company is involved in other lawsuits over its foreign worker practices but has continued to apply for new H-1B visas.
In addition to displacing U.S. workers, critics maintain that outsourcers use the spots they win to bring low-paid Indian IT workers into the aforementioned “body shops,” which use intimidation and other tactics to create an “ecosystem of fear,” according to an October 2014 report from the Center for Investigative Reporting and NBC News. In some instances, Indian workers pay these organizations under the table to bring them into the country for H-1B jobs. Once they’re here, they stay in crowded company-owned apartments, where they could be “on the bench” waiting for a job to open up, breaking H-1B rules that visa holders must enter the country for specific jobs, according to the report.
A 2011 U.S. Government Accountability Office report found oversight of the H-1B program by the Homeland Security and Labor departments to be “fragmented and restricted,” according to Sen. Charles “Chuck” Grassley, R-Iowa, chairman of the Senate Judiciary Committee, speaking at a March 17 hearing on the guest worker program.
Tough Sell on Immigration
Any attempts to pass legislation raising H-1B visa caps have to win the unlikely approval of Grassley and Sen. Jeff Sessions, R-Alabama, head of the Judiciary Committee’s immigration subcommittee. Both are longtime opponents of expanding foreign worker visas.
At the March 17 Senate Judiciary Committee hearing, Grassley shared a laundry list of problems as reason for not increasing the current cap “without adding more protections for American workers.” Increasing the supply of H-1B visas alone “won’t help smaller U.S. companies already shut out of the program because the big corporations take thousands of visas each year,” he said.
In a January memorandum on immigration reform circulated to Republican lawmakers, Sessions called Silicon Valley’s STEM crisis a “hoax” perpetrated in the tech industry’s “desire for cheap, young and immobile labor.”
Hira said Grassley and Sessions could pressure the Obama administration into doing additional investigations. “That’s sort of a wild card,” he said, “but I believe that will shed some light on things.”