Foreign entrepreneurs and startups with designs on the US took a hit recently with Trump’s postponement of Obama’s International Entrepreneur Rule, which was set to go into effect on July 17, 2017.
Now, with the rule’s effective date set back until March 14, 2018, and noise about rescinding the rule entirely, the impact on entrepreneurs is one of uncertainty, as they deliberate over whether or not to enter the US and how to do it.
On the other hand, according to Gabriela Smith, a corporate attorney in Texas with numerous Nearshore clients, Nearshore businesses that already have presence on US soil are reporting business as usual, save for a few adjustments in local hiring practices.
Nearshore Americas: Following Trump’s support of measures to cut legal US immigration by half, what implications do you see for foreign entrepreneurs looking to establish new startups in the US?
Gabriela Smith: This has created a wave of doubt among the foreign entrepreneurs. Any entrepreneur that is coming to the US, even before Trump, are stressed and concerned about the uncertainty surrounding visas, especially first timers. Post-Trump, that nervousness has been exacerbated.
People are questioning whether or not they should go ahead with their move to the US. Even so, I haven’t had one client who has decided not to pursue their US ventures, but I have received more phone calls asking my opinion about it, so the uncertainty is still there. Real entrepreneurs will take risks, which could involve applying for visas and not getting them.
Speaking with my colleagues in immigration law, the L1 visa, which is commonly used by nearshore companies, was already hitting its cap before Trump, and the government was already strict about it. At that time, if companies could get away from the L-category visas and get a different one, companies had a better chance of getting it approved. I met numerous clients pre-Trump who were also rejected, usually because the cap was already met.
With DACA, I don’t think the president will leave that hanging, and there will likely be a solution to that. It’s a hot topic and a moral issue and I want to believe that the government will do the right thing. If they don’t there will be a lot of protests about it, so I’m confident it will be addressed.
Nearshore Americas: What ripple effects might new regulations have on established, foreign-owned companies that want to bolster their presence in the US?
Gabriela Smith: The only way this has changed things that I can see are that Nearshore companies with US presence have more doubts about bringing in a project manager from Argentina, for example, instead of just hiring one in the US. In that sense, the Trump policy has a positive effect on the US economy.
In the past, a nearshore company may bring its top salesman or account manager in from Latin America, for example, and they would be brought in with some kind of visa. Now, we are seeing a shift toward more Nearshore companies hiring local talent – I’m certainly having more conversations about that, so the message Trump puts across in the media seems to be working.
There is still a gap in the country’s unemployment statistics, so hiring an American salesperson versus a foreigner can be helpful to the economy, particularly when hiring for the executive and managerial roles.
There have been investigations by Homeland Security, where a couple of prominent nearshore companies had to pay fines because they were bringing in workers from abroad to work in client offices without the right visas. This has made them think again about hiring local talent to avoid the same issues.
At the end of the day, the largest portion of nearshore outsourcing is the developers and programmers and agents who are already abroad, who are doing most of the legwork. The guys who are doing the work in the US are the project managers, VPs, and executives who are running the business and meeting with the clients.
Nearshore Americas: What are the main client concerns you hear from Nearshore firms?
Gabriela Smith: Surprisingly not immigration; it’s more about being compliant with local law and having solid clients that are paying their bills. Immigration really hasn’t really come up that much recently, compared to when Trump was first elected – the initial concern and reaction lasted a very short period of time. Once Trump settled in, everyone went back to normal.
I don’t think that nearshore companies need to be worried about immigration. While we have a nationalistic administration with its pros and cons, nearshore companies still have a strong future to do business in the US thanks to the great local talent that suits management positions.
Nearshore Americas: What advice would you give companies about the measures they should take in order to prepare for any negative fallout of new regulations and policies?
Gabriela Smith: If there is no visa to meet their needs, they have to face the reality of hiring local. Or they’d have to do it by circumventing the law, which I would never recommend of course.
The L visa is very strict, the E visa has limitations too, so if they are not available, the other option is to buy a company to expand to the US. I’ve seen a few acquisitions from Nearshore companies that want to expand to the US this way rather than coming in with a visa process. These acquisitions are triggered by the fact that nearshore companies still believe they can do business here, and want to do business here, and are willing to invest in companies to get access to new clients. I think this is a great thing.
When Trump first got elected and everyone freaked out, my clients in the nearshore community continued to make the push they were making. I don’t feel like people changed their strategies or business models. The community is here to stay and they have a strong foothold in the marketplace. Nearshore companies are not scared, and the bigger ones are reporting business as usual.