New H1B Visa Policy Labelled a “Lose-lose, Brain-dead Strategy”

New changes to the H1B visa policy enacted just days before the application process began have caused uproar in the Indian IT services industry.

h1b visa

New measures were introduced by the Trump administration this month to “further deter and detect H1B visa fraud and abuse”, causing a stir among large Indian IT services firms just days before the application lottery was due to begin.

The new policy, issued by the department of U.S. Citizenship and Immigration Services (USCIS) and effective immediately, requires companies to prove that software development roles require enough advanced knowledge and experience to justify an H1B application.

Vivek Wadhwa: “The U.S. Government is doing the same stupid thing as they did with the Muslim ban.”

“I don’t think they’ve thought it out,” said Vikek Wadhwa, Carnegie Mellon Silicon Valley Distinguished Fellow, during an interview with Bloomberg Technology. “The U.S. Government is doing the same stupid thing as they did with the Muslim ban, and now they’re haphazardly, last-second applying it to the H1B visa.”

Wadhwa, who has also appeared as a speaker at our annual Nexus event a few years ago, continued by explaining that if the government is locking out computer programmers, then students at Carnegie Mellon University and Stanford can no longer get jobs in the U.S. “Why do we want to lose these brilliant kids?” he said. “They’re going to go back to their home countries and it’s going to hurt us while benefiting the rest of the world.”

Correctly Crunching the Numbers

In 2016, there were more than 13,000 visa requests for jobs that pay an average salary of $72,000. The tech industry made up 13% of applicants, 41% of which were in line for the lowest wage level positions.

Mohandas Pai: “It’s a self-defeating policy that the Trump administration has enacted.”

Even so, Mohandas Pai, Chairman of Manipal Global Education Services and Aarin Capital, and previous Head of Infrastructure at Infosys noted that the amount of software-focused H1B applicants in the last two years actually dropped and that people are still referring to 2014 data, which is misleading everyone.

“It’s a self-defeating policy that the Trump administration has enacted, and things have changed in the last three years,” said Pai. “Around 85% of engineers go for single projects that last 15-18 months; very few of them stay for 3 years continuously. Around 25% go back within 6 months, 10% within a month, and 50% within 18 months. This is all based on the latest data, which is not being placed in front of the U.S. authorities. Instead, this whole scenario is being based on flawed perception, anecdotal evidence, and old data.”

Wadwha is also seeing big-picture deficits in the country’s global positioning for innovation and IT. “Fifteen to twenty years ago, all the unicorn tech companies were in the U.S., whereas today you have around one hundred in India and China, but eighty of ninety in the U.S., so the country is losing its advantage,” he said. “This [new policy] is a lose-lose; it’s a brain-dead strategy, frankly.”Nexus 2017 Banner 4

Huge Talent Deficit

Everyone we interviewed agrees that the reality of the situation in the US is that the country is not producing talent.

Anna Frazzetto
Anna Frazzetto: “Companies are already predicting a rise in interest in outsourcing.”

Anna Frazzetto, Global IT Solutions & Outsourcing Strategist for Harvey Nash feels that this lack of talent is going to push more outsourcing and offshoring initiatives. “There is, in fact, a rise in interest in outsourcing because companies are already predicting this,” she said.

Sign up for our Nearshore Americas newsletter:

Pai is of the same opinion: “What will happen next is that more work will flow offshore, there will be more automation, and the number of people in the U.S. will come down. The jobs aren’t going to come back to the US because there are no people to take the jobs. There are around 600,000 vacancies in IT that aren’t being filled. Costs will shoot up, because the $125-$150k jobs will go to “Main Street” America, not Silicon Valley. This will happen in the next year or two.”

Applying Actionable Fixes

The problem with the current H1B visa, according to Wadhwa, is not the influx of applicants that apply for it, but the fact that it is tethered to the hiring company. Instead of adding more restrictions to the visa, he suggests allowing H1B visa holders to accept higher-paid jobs in other companies, reducing the amount of cheap labor.

Pai also sees a mixed future now that the policy has changed: “When the dust settles in a few months, the amount of people using the H1B visa will come down, there won’t be more jobs created in the United States because of the lack of American talent, costs will shoot up, and when more processes become automated, the jobs will cease to exist.”

Despite the potential to cause major shake-ups for business, Indian IT services companies are running scared. Nearshore Americas reached out to Infosys in India, but the company refused to answer our questions because it “would not benefit business”, even requesting that we don’t even mention their name in any coverage.

Furthermore, neither Tata Consultancy Services (TCS) nor Wipro have responded to our request for comments.

Lottery Results

The lottery for H1B visas took place last week, opening on Monday and maxing out by Friday–the limit of 65,000 applicants, plus the additional 20,000 visas reserved for those with master’s degrees, was reached in just five days.

All that stands in between these applicants and their new jobs now are the “targeted site visits to employers” that the USCIS will conduct and the new tests designed to prove the skills of engineers, something which Pai is not concerned about.

“Indian engineers who go to the U.S. are more skilled than software programmers; they are of the caliber of senior analysts who have worked on projects for three to five years,” he said. “They are highly-skilled, have been extremely well-trained, and are on par with the rest of the world. Yes, sometimes the English communications can be poor compared to native speakers, but that shouldn’t detract from their immense skill. India graduates 1 million engineers a year, and these people come from the top 10-15%. They are very smart people and they will all pass any tests thrown at them.”

Tags

JOIN THE CONVERSATION

Leave a Reply to Athreya Cancel Reply

22 comments

  1.    Reply

    And now for the rest of the story:

    US jury slaps $940 million fine on TCS, Tata America International Corp

    U.S. to Hit Infosys With Record Immigration Fine
    Indian Outsourcing Firm Expected to Pay About $35 Million for Illegal Use of Visas

    MillerCoors seeks $100M in damages from IT contractor. MillerCoors is suing IT services firm HCL in federal court over what began as an approximately $53 million software deployment.

    Walt Disney World and two outsourcing contractors have won dismissal of lawsuits filed by former IT workers. According to the court record, however, HCL stated that none its own employees would be adversely affected.
    In the judge’s dismissal of the cases, he states that HCL’s statements weren’t false, and would only have been false if HCL’s own workers were adversely affected by the Visa program.

  2.    Reply

    As an Indian American senior software engineer my take on the subject :
    There is exploitation of visas, Companies want cheap labor, so they want more supply to reduce demand and suppress wages, Most of the Information Technology jobs are given to contracting consulting Companies by the corporates because they want to reduce cost and risk, These consulting companies take upto 30% margin and give some of the contracting jobs to sub-vendors, and most of their employees they import from India, most of the employees of Indian based consulting companies like wipro, Infosys, HCL, TCS, Cognizant give only average salary of 65,000 while American working for the same job they have to pay double, on top of that to get residential status Indian employees willing to work overtime whereas most Americans stick to 8 hour job, as a senior software engineer and an American citizen I find it very difficult to get a full time job, there are a lot of contracting jobs available with less pay.

    Since most beginner level Information Technology jobs are sent to offshore, Companies require 8+ years experience in most jobs with salary around 80k, most Americans quit looking for software jobs and work somewhere else, America shouldn’t surrender to the corporate interests but need to look for the well being of its citizens. When 60% of Americans have family income less than 50,000/year, it is absurd to let corporates abuse visa. I saw one lady saying immigrants created lot of jobs, that is true but H1b has dual intend but they can’t be entrepreneurs, their visa is employer dependent visa, so please stop confusing people to take away American jobs.

    My take is to stop abuse,all companies should post their Software/Information Technology jobs in a centralized government website, all Americans and legal immigrants should be allowed to apply, Government should monitor if Companies are falsely advertising just to cheat Uscis, then rest of the Information Technology jobs that they can’t find Natives should be given for bidding for H1b, bidding salary of H1b should be more than the maximum salary of an American doing the same job in same location, Companies that bids for more salary should get H1b, say example many Indian companies are master cheaters, theyll make secret agreement with their employees that we will pay you more salary but you have to give us back this amount every month, so those abusing companies shouldn’t be allowed to do business in Usa again

  3.    Reply

    The US talent deficit will self correct over time if the domestic market is allowed to function without foreign interference and distortion. If there is not enough domestic talent, US firms will pay much higher wages. This in turn will education pipeline and over time the market will balance. Using imported labot shortcuts that process and also denies those with the foresight and wherewithal to be early entrants to lucrative labot markets. The H1B is all about maximizing corporate profits… it is unpatriotic.

  4.    Reply

    Vivek is speaking falsehoods. It wasn’t a Muslim ban. If the Trump administration intended to ban Muslims from the US, they did a very poor job. The countries affected are Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen, representing approximately only 12% of the world’s Muslim population. Trump would have been more successful in restricting travel from Indonesia, India, and Pakistan (33%).

  5.    Reply

    Corruption Example 1 : There are some companies which has almost 90% of the employees are on H-1Bs. Not all the H-1B can find a project. In average 25% of the company sits on the bench. Well…There is a TRICK here. Where do they sit ? In California ? No. They sit in India. Why they sit in India ? That way company does not run payroll, Costs…These people can fly to USA in 24 hours. This is totally ILLEGAL.When the company files H-1Bs they get fake SOWs (Statement of Work). In SOW they say that H-1Bs will work at that location bla bla bla between these dates bla bla bla. Company A gets SOW from company B. company B is part of ponzi scheme as well. All FAKE. If you learn what these companies are doing , you will puke. I sometimes find it disgusting…As a human being.

  6.    Reply

    Anyone who has read about Vivek Wadhwa and his “whichever way the wind blows” stance on the H-1B will have a laugh that he is used as a source in this article.

    While lobbying Congress for more H-1B visas, industry claims H-1B workers are the “best and brightest”. Come payday, however, they’re entry-level workers.

    The GAO put out a report on the H-1B visa that discusses at some length the fact that the vast majority of H-1B workers are hired into entry-level positions. In fact, most are at “Level I”, which is officially defined by the Dept. of Labor as those who have a “basic understanding of duties and perform routine tasks requiring limited judgment”. Moreover, the GAO found that a mere 6% of H-1B workers are at “Level IV”, which is officially defined by the US Dept. of Labor as those who are “fully competent”[1]. This belies the industry lobbyists’ claims that H-1B workers are hired because they’re experts that can’t be found among the U.S. workforce.

    So this means one of two things: either companies are looking for entry-level workers (in which case, their rhetoric about needing “the best and brightest” is meaningless), or they’re looking for more experienced workers but only paying them at the Level I, entry-level pay scale. In my opinion, companies are using the H-1B visa to engage in legalized age discrimination, as the vast majority of H-1B workers are under the age of 35 [2], especially those at the Level I and Level II categories.

    Any way you slice it, it amounts to H-1B visa abuse, all facilitated and with the blessings of the US government.
    The National Association of Colleges and Employers (NACE) has never shown a sharp upward trend of Computer Science graduate starting salaries, which would indicate a labor shortage (remember – the vast majority of H-1B visas are granted for computer-related positions). In fact, according to their survey for Fall 2015, starting salaries for CS grads went down by 4% from the prior year. This is particularly interesting in that salaries overall rose 5.2% [3][4].

    References:
    [1] GAO-11-26: H-1B VISA PROGRAM – Reforms Are Needed to Minimize the Risks and Costs of Current Program
    [2] Characteristics of H-1B Specialty Occupation Workers Fiscal Year 2014 Annual Report to Congress October 1, 2013 – September 30, 2014
    [3] NACE Fall 2015 Salary Survey
    [4] NACE Salary Survey – September 2014 Executive Summary

  7.    Reply

    THere is nothing wrong with students at Carnegie-Mellon returning and building up their own economies. In fact is is the right thing for them to do.

  8.    Reply

    Immigration Agent – CyberCoolie Business Model is now having difficulties, please try to create more good jobs in Mother India.

  9.    Reply

    It’s all a sham!
    Oil companies didn’t allow to build cross country rail network because they would have lost billions if gasoline was not used in cars and flights
    Pharma companies don’t want to allow free healthcare because they will lose billions on free medicine
    Now IT companies will outsource OR use H1Bs to keep their profits
    America is ruled by corporates and Trump is one of them. Do you really think he will let go of this for 4 years of presidency? No!
    He just poked you all at the right place where it hurts the most. And people thought a change is coming! 🙂 It’s politics !
    When a businessman becomes a politician, it’s even more dangerous!

  10.    Reply

    Equating H1B reform with the travel ban on 7 Muslim country for 120 days has got to be the most dumbest thing I have heard someone say. I wonder who has Vikek Wadhwa over a barrel this very moment?

  11.    Reply

    Great speakers… They really predicted future… If this administration is not open for Globalization… They will kill them self in isolation.
    They should remember that this whole country is made by immigrants. Whoever does not respect for their history, they definitely spoiling their future.
    Better go & study History & try to get some moral values whoever comments against any country.
    If you are self sufficient they don’t buy stuff produced by other country.

  12.    Reply

    “They are very smart people…” Why dont these smart people stay put in their own country and develop it?

    1.    Reply

      True.. The H1B program has been grossly misused by these large IT services companies.. its v well known.

    2.    Reply

      Typical racist anti immigrants comment with absolutely zero thought just like all the recent policies. America was built on imnegrant skills , the massive access to global brain power is what made this country great, the key factor in innovation leadership. Oh well you loose while others shall gain. Come back and comment in next 5 years.

    3.    Reply

      I felt the need to comment on this comment because I am another Indian who came to US for his Masters in computer science and working here right now. So I very well know why the so called “smart people” dont stay at their country. I can only comment about India and not other countries…so here is my say…

      1. Its not all about money…
      Its important to understand that the life style in India is nothing like at US, the amount of luxury that a common man in US has is far more than in India..The earning to expenditure ratio makes more sense in US than in India.

      2. The government restrictions, permissions and corruption…
      If you want to open a company in US the main concern is funding…but if you want to do the same in India,
      Your major concern is restrictions by govt, getting permissions, bribing people, slow work, not systematic work culture of the govt officials, which takes upto few years if you are not politically affluent and its not worth it.

      All i want to say is every country has its own problems and it can drive people to other countries for a better life.

  13.    Reply

    Lets get something very clear.

    The so called experts in this article are all greedy executives and Indian nationalists. Period. Id like to see these pathetic articles for once interview real American IT workers that are actually IN the industry. Then you will understand what H1b is really about.

    There are only two groups of people for H1bs. The first one is left wing liberals that dont and never will work in corporate america. These people are fools that have no clue how h1bs have destroyed the american tech industry. The second group is executives in the tech industry that want to replace americans with cheap foreign labor. In this context btw cheap means a 60-70k a year job not picking fruits for 50cents an hour. Its ABSURD that the left in this country want to regulate wallstreet but deregulate something like technology.

    There are no so called high skilled workers. Sorry. Its pure propaganda that has been conjured up so that these two groups above can destroy the american middle class. There is no innovation happening with 99% of h1bs. Sorry to burst your bubble. These people are low level tech workers that are taking instructions from corporate american citizenry on exactly what to do, when to do it, and how to do it. And what are they doing you may wonder? A combination of Googling for solutions and Basic IT programming that any american high school student could be taught to do over a summer internship. Thats the ugly FACT of h1bs. If you want to argue about h1bs dont talk about best of the best or innovators or entrepeneurs. You dont know what you are talking about. Period.

    American workers in this crucial industry of all stripes, white, black, hispanic, and asian are being systematically cut out of the global economy because of the left and corporate greed. It started with the factories and now its decent paying entry level office work that should go american college grads to be able start building a career in corporate america.

    Its a sad situation to walk into american offices and see no americans. None. And this will destroy our kids future and this country along with it.

    What Trump has done is a small but important step. More must come.

    1.    Reply

      Finally, someone (in AmericanIT) is voicing the real story. the H1B visa and other programs has decimated the American IT market. And it is not because more qualified, educated or experienced people from India are taking the jobs. It is due to pure greed. Indian workers are cheap. There I said it. Aside from having a low cost of living (due to deplorable conditions in India). The Indian IT worked offers no added benefit that an American IT worker does not already have as a basic skillset. Corporations have been allowed to exploit India and its workforce for years. And now that Trump is in office India is scared. Because they know that someone is in office who is not swayed by their lobbying.

      The market is heavily tilted in favor of the Indian worker and now the tables are being turned. And to speak of protectionism how many American IT workers are employed in India by Indian companies? Hardly any. So here you talk about globalization and free-trade to enter our American markets but you do not allow the same in reverse?

      America has its own people to take care of first. Once we have every able bodied person who wants to work at work, then we will give you the scraps of what is left over. For now concentrate on your own country and leave us alone.

    2.    Reply

      Agree with you AmericanIT.. ..well said

    3.    Reply

      Question to you sir: how do you define “real American IT workers”. Do you mean blue blooded white Americans?

      1.    Reply

        I define it as a person who has been born, raised and educated in America. A real American does not have a safety net of being able to go to another country and taking up a living when things get rough in America. A real American is dedicated heart, soul, and mind to the ideals of America. My definition does not take into account skin color, religion, sex or orientation. An American has no choice and is in it for the long haul.

      2.    Reply

        @VJ – you have more racist, rapist, thugs in your country
        Instead of shouting here, why don’t you fix your country – get rid of all forms of abuse in your country.

        And most importantly use more birth control and control your exploding population.

      3.    Reply

        Learn english.