I believe the author is simply mistaken that H1-Bs are the problem. H1-Bs are limited enough that they can't be responsible for the volume of outsourcing. They also carry salary parity requirements, and while H1-B holders rarely actually make market salary, the savings still aren't enough to prompt a wave of outsourcing. There was a problem at one time with H1-Bs, but the H1-B lottery has become so competitive that it's not a reliable option for companies to base a business model around anymore. The majority of H1-B recipients these days are foreign nationals who attended American universities, often with masters degrees. Those are the kinds of foreign nationals we want participating in the US economy.
The problem today are the L-1 visas, which are relatively unregulated. L-1 visas are for foreign nationals in a management capacity whose companies wish to transfer them to the US. These visas only require that the employer pay the employee's living expenses, and the employee receives the normal salary they would make in their home country (!).
All of this is fine until you start to stretch the definition of "management". Which many consulting companies (Tata, Infosys, Cognizant, etc) have started to do -- they can take a person from India who is paid ~$25,000/yr (a good engineer's salary in India), fly him to the US on an L-1 visa, and charge him out to the client at $100/hr. An equivalent US-based contractor rate for the same position would be $125/hr and have margins around 10-15%. But the offshoring firms can undercut US-based contractors by 25%, eat all the travel/housing expenses, and STILL make well over 100% margins.
L-1s are actually the problem. There's no salary parity requirement, there's no requirement to look for US-based candidates of equivalent positions, just a requirement that the person is "acting in a management capacity" and has worked for the company for at least 1 year. It's hard to prove that someone is not "acting in a management capacity" -- many of the companies outright lie on the visa applications. What's worse, this type of dishonesty is considered fair game when dealing with corrupt bureaucracies in India or China. But L-1s are fueling the latest wave of offshoring: they allow companies to bring people to the US at offshore prices.
> The majority of H1-B recipients these days are foreign nationals who attended American universities, often with masters degrees. Those are the kinds of foreign nationals we want participating in the US economy.
most smart companies that use the H1-B visa program only hire those with masters degrees. This does 2 things:
- They can first bring them on as "interns" under the F1 visa, which can be extended quite a bit. They are paid peanuts while the firms weed out the absolute duds.
- This avoids the requirements on firms for extra reporting if a certain percentage of their staff are H1-B don't have masters degrees.
This creates a nice little loophole where smaller colleges have massive massive STEM programs with an insane majority being foreign students. The students get their foot in the door to play the game and the colleges get paid.
The CS Masters program is bigger than the CS undergrad program, only 4% of graduating CS undergrads are international, where as 93% of FT CS Masters students are international. That should be odd to anyone.
> This creates a nice little loophole where smaller colleges have massive massive STEM programs with an insane majority being foreign students. The students get their foot in the door to play the game and the colleges get paid.
And these foreign students usually take education loans(around $35k on average) back in their countries. So when they fail to get a job after completing MS degree, they go to the same outsourcing firms and work on F1 visa as contractors for substentially lower salaries again with getting their foot in the door mentality. Outsourcing firms know and exploit the strong tendency of these students to avoid having to go back to their countries where salaries would be insufficient to pay back their student loans fast enough.
Just want to share my perspective as an Indian who was in US for 6 years until I came back to India a couple of months back. I am not sure why you think companies can bring folks from other countries (India in your example) at a meagre salary of $25K per year and that too in a managerial capacity. You are directly questioning the work that folks at USCIS do. I was in US on L1B initially, which is different from L1A that you are referring to, and then converted to H1B and I believe I was paid a fair market wage all along. I know there could be exceptions but don't think this can happen at a scale at which you are projecting. Also, I agree that the definition of management can be stretched but don't think the wage parity can escape the authorities.
It absolutely does happen at the scale I'm describing because part of my job is trying to place guys from India on L-1 visas :) I try to be ethical about it (i.e. only bringing the actual team leaders who are acting at least somewhat in a management capacity) but I see some of my less-ethical competitors abusing the L-1 process to an astonishing degree for grunt-level QA and development resources. Also, you only need to prove the "managerial capacity" thing when the visa is initially issued; they're usually good for a few years and they don't check up on what you're doing after the first time.
And I'm not questioning the work that CIS does; I'm just saying that it's very, very difficult to say someone is not working in a managerial capacity based on false documentation. There's no way they can tell false documentation from real documentation. But for L-1 visas there is no salary parity requirement, only a requirement that the company cover all expenses for the employee while they are in the US. So the IT body shops take advantage of this, and it leads to entire divisions of large companies being laid off and replaced by cheap labor.
This is easily gamed by creating "new" positions with trivially different responsibilities than the old positions you want to get rid of. Now you don't have an established salary history to work with. That's on top of having H1B's by the shorthairs because its so difficult for them to switch jobs, thus the 60+ workweek the domestic workers rightfully balked at is achievable by cost-cutting managers.
That's on top of what Disney did, which was just outsource an entire department to a provider, which side-steps all the paltry protections in the H1B program.
>The majority of H1-B recipients these days are foreign nationals who attended American universities, often with masters degrees. Those are the kinds of foreign nationals we want participating in the US economy.
Frankly, in IT/CS a lot of higher degrees are little more than adult daycare. If you can't figure out how to code via a 4 year degree then another 2 ain't helping you. Even if Disney got MS holders because their workforce needed MS's for some weird reason, which sounds highly questionable to me, some nerds straight out of school aren't going to do a good job running operations with zero professional experience and 10 hours of training from the previous guy. Its clear they did this not for better outcomes but for cost savings.
Its likely an H1B has an undergrad degree for a foreign university that's little more than a diploma mill anyway.
Its hilarious that we bemoan the lack of people, especially women, in STEM, when many STEM jobs can be eliminated with the blessing of the federal government via whats essentially bought and paid-for legislation by large companies looking to cut IT costs. No wonder law school enrollments and finance higher ed degrees have been so high. The smart guys, and women in general apparently, know tech is a ripoff precisely because of shit like H1B's stealing their jobs. Lets stop excusing the H1B program. Its designed to take American jobs from Americans and everyone knows it.
> Its likely an H1B has an undergrad degree for a foreign university that's little more than a diploma mill anyway.
Yeah, this is unfortunately the case. There are only a few internationally reputable universities in India, so if they were unable to get into one of the top schools in the country, they usually have to follow up with a masters from a reputable US university if they ever want to work outside India. I just view someone with an undergrad degree from India and a masters in some technical discipline from a US school as being about the same as someone with an undergrad degree from a US school.
I've seen some firms make org charts that showed that a person on an L-1 visa was "managing" someone when in fact they were an independent contributor.
Yeah, that's what I mean by lie; I've seen these types of documents used in L-1s as well. But at least in India, there's no cultural taboo against lying to someone you don't know to get what you want (the assumption being that they are also lying to stonewall you in exchange for a bribe).
Your problem is opportunity hungry people in developing nations who will do anything for whatever salary offered.
Every thing else is a side effect of this. Do you think cutting down on L1 visas will change anything at all? In an era of communication being super cheap, and means of collaboration getting better and better, you can regulate as much visas as you want, those jobs will continue to be outsourced. The cost benefit is simply too enormous.
The problem today are the L-1 visas, which are relatively unregulated. L-1 visas are for foreign nationals in a management capacity whose companies wish to transfer them to the US. These visas only require that the employer pay the employee's living expenses, and the employee receives the normal salary they would make in their home country (!).
All of this is fine until you start to stretch the definition of "management". Which many consulting companies (Tata, Infosys, Cognizant, etc) have started to do -- they can take a person from India who is paid ~$25,000/yr (a good engineer's salary in India), fly him to the US on an L-1 visa, and charge him out to the client at $100/hr. An equivalent US-based contractor rate for the same position would be $125/hr and have margins around 10-15%. But the offshoring firms can undercut US-based contractors by 25%, eat all the travel/housing expenses, and STILL make well over 100% margins.
L-1s are actually the problem. There's no salary parity requirement, there's no requirement to look for US-based candidates of equivalent positions, just a requirement that the person is "acting in a management capacity" and has worked for the company for at least 1 year. It's hard to prove that someone is not "acting in a management capacity" -- many of the companies outright lie on the visa applications. What's worse, this type of dishonesty is considered fair game when dealing with corrupt bureaucracies in India or China. But L-1s are fueling the latest wave of offshoring: they allow companies to bring people to the US at offshore prices.