Changes are coming for the H1B program & it will leave a mark on this space

One of Donald Trump’s campaign platforms was that he would either change or eliminate, if necessary, the H1B Visa Program in order to end real or perceived abuses that have seen tens of thousands of US jobs being filled by employees brought in from other countries, sometimes at a salary lower than would be required by a comparably skilled US-based employee.

Though the program, first launched in 1990, was implemented to ensure the US had adequate supplies of highly skilled resources in the sciences, technologies, engineering and mathematics (STEM) fields, today’s H1B visa applicants are more likely to be computer programmers or other IT workers, working under contract with large Indian-based outsourcing firms.  In fact, the fees paid by H1B visa holders to these outsourcing firms are reported to make up as much as 10% of India’s annual GDP.

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Since its inception, the program rules required that any H1B visa holder must be paid an salary equivalent to a similarly skilled US-based employee up to $60,000 year.  However, that cap has not been increased since then, meaning that a while a US citizen might make $120k/year as a DBA or senior programmer, a similarly skilled H1B resource could be paid only $60k for the same job.  Clearly, for a company looking to reduce costs, replacing an “expensive” US worker with a “cheap” H1B resource could prove advantageous…though under the law, that would be illegal.

While the “mainstream press” and the Democratic party have been generally hostile to most of President Trump’s policy positions, there is broad and growing support for changing the program in order to limit abuses and ensure US workers are not displaced or otherwise disadvantaged. For example the influential TV news magazine, 60 Minutes, ran a segment 2 weeks ago that focused on the plight of 300 IT workers at Disney who were told they were being outsourced…and were required to train their replacements – foreign workers holding H1B visas – for as long as 90 days if they wished to receive any severance or accrued bonuses.  Given that the workers have filed a federal lawsuit against Disney and consulting firms, HCL and Cognizant (through which the workers were brought in via an outsourcing agreement), this is a story that will linger for some time…

In January, legislation was introduced in the US House that would, among other things, increase the compensation limit from $60k/year to $130k, to better reflect current day salary levels of skilled positions and reduce possible abuse of the system by employers. Additionally, this week the Trump administration took a number of steps to crack down on large H1B employers including a temporary halt of the H1B “fast track” system that provided for quick approval of applications. He also ordered stepped-up rules enforcement, including site visits, by immigration officials. The Department of Justice also issued a statement that reminded employers that they cannot discriminate against US employees when hiring H1B visa holders.

For every US industry that relies on IT, including software vendors and consultants, the increased enforcement and proposed changes could be significant.  I’m not saying that any company is abusing the system, particularly any that I know in the CTRM space…nonetheless, these changes could make filling critical IT positions more difficult and costly.  Just looking down the list of the top twenty companies that employ H1B visa holders, either directly or as a provider of outsourcing services, tells you that the proposed changes will cut across many industries, including many of those involved in the ETRM/CTRM space:

  1. Infosys
  2. Tata Consultancy Services
  3. IBM
  4. Wipro
  5. Accenture
  6. Deloitte Consulting
  7. HCL America
  8. Tech Mahindra
  9. Microsoft
  10. Igate Technologies
  11. Ernst & Young
  12. Google
  13. Cognizant Technology Solutions
  14. Larsen & Toubro Infotech
  15. Ust Global
  16. Amazon
  17. Intel
  18. JP Morgan
  19. Cap Gemini Financial Services USA
  20. Qualcomm Technologies

If you are an employer that depends on H1B visa holders, and particularly those involved in an outsourcing arrangement, you do need to follow developments closely.  Given the broad support across both parties for changing the program, there is little doubt something is going to happen and it could significantly impact the cost and availability of critical IT resources.

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