Tech Companies Dealt H-1B Visa Blow; Will They Outsource To India?

Companies looking to bring in foreign software engineers and other IT specialists got dealt another uppercut by the Trump Administration this week. It’s a “no soup for you” moment for companies accustomed to bringing in mostly Indian tech workers to fill the hiring gaps they have been blaming on the lack of domestic STEM talent, for at least the past decade.

“Today I’m signing an executive order to ensure that the federal government lives by a very simple rule: hire American,” Trump said yesterday. 

Nearly two-thirds of all H-1B visa hires are from India. Most of them end of working for the Indian multinational IT firms — Infosys and Tata Consultancy Services here in the U.S. But companies like Amazon AMZN , Facebook, Deloitte and IBM IBM also bring in foreign tech workers.

Vice President Mike Pence said “We are going to reverse course on plans to use H-1B visa workers to replace hard working Americans.”

The Executive Order was signed yesterday.

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Within 45 days of the date of the order, the Secretaries of Labor and Homeland Security are required to take action within the confines of the law to protect local tech workers from any adverse effects on wages and hours-worked caused by the employment of H-1B visa holders at job sites, including measures to ensure that all employers of H-1B visa holders, including secondary employers, adhere to the requirements of the EO.

One of the major benefits of the outsourced workers coming from abroad is that they are not mobile. Rival companies cannot easily scoop them up, offering them more money. They are stuck. Other benefits include longer hours, as they are often working for a second party — like Infosys — which is then contracting out to local companies — like a CVS for example. The H-1B worker works alongside the staff workers, but often does not work the same hours as the staff employee.

Some companies have threatened to send some tech work offshore, mainly to India, if they cannot bring in Indian workers to do the work.

Critics of the H-1B visa program allege that it pressures U.S. IT workers to transfer job-specific skills so the work can eventually be done offshore.  In a sense, the visa program, created to help tech firms attract the best and brightest at the outset, but then used as a way to lock people at their desks with job insecurity. It is one of the best ways to weaken high tech labor markets, and create what is akin to a global pay scale. A global pay scale would work if the cost of living was the same in Bangalore as it was in the Bay Area of San Francisco.

Canada, UK, and Australia design their tech worker immigration policies very differently, with the goal of strengthening domestic industries and building social cohesion. 

But U.S. tech companies have been complaining consistently that they can never find enough domestic workers. In 2017, when Trump was elected, many tech firms used Trump’s border wall immigration policy as a stepping stone to attack the immigration policy that matters most to them — which is that of the high skilled tech worker. They took to writing op-eds in The New York Times NYT to signal their disdain for Trump’s immigration stance, but it wasn’t the border crosser they were worried about; it was the H-1B software engineer and international college student with advanced degrees.

Trump has said that he wants more high skilled labor in the U.S., but the recent order was designed to protect tech workers recently laid off because of the pandemic.

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