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4/15/2013
01:48 PM
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H-1B: Ripe For Reform

20% of H-1B petitions granted last year went to just four firms, all outsourcers. That's just one of several proofs that the controversial visa program is hurting U.S. tech.

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What to do about the H-1B? It's either abuse of immigrants not seen since The Jungle or it's the only thing keeping our innovation economy from falling apart.

That's how people seemed to react to the H-1B visa program hitting its cap a mere week after petitions were opened.

The H-1B lets U.S companies bring in immigrants with special skills, and should serve as a leading indicator that U.S. companies want to lift all their boats. But in a time of anemic job growth, people question whether we need immigrants with special skills.

[ Is the U.S. talent pool really that dangerously shallow? Read IT Talent Shortage Or Purple Squirrel Hunt? ]

John Miano, who founded the Programmers Guild and now is a fellow at the Center for Immigration Studies, wrote me in an email that "the economy is in the toilet. Job creation sucks. Yet the H-1B cap gets hit." Miano's not against talented immigrants coming to the U.S., but thinks they can cost talented Americans their jobs. Although the tech industry is the most aggressive lobby in favor of the H-1B, Miano documented that in 2011 we hit the H-1B cap despite substantial net job losses in the computer science, engineering and scientific fields.

Besides evidence of unemployed American tech workers who might be losing out to this program, there's also evidence that the typical H-1B recipient isn't particularly talented. Other numbers show wages as a share of U.S. gross domestic product are at the lowest they've been since the Great Depression, as is the percentage of Americans working, despite record corporate profits.

Those are ugly economic numbers. We humans expect they'll continue, a phenomenon called recency bias, which makes them extra scary. Fear drives a lot of the heat around the H-1B.

That heat will almost certainly forge a new H-1B system in the current push for immigration reform on Capitol Hill.

How many jobs are we talking about? There are only 85,000 H-1B visas issued each year. Of those, 20,000 go to newly minted holders of advanced degrees from U.S. universities, presumably the best and brightest of immigrants. We want these 20,000 people here, although they should get green cards, not H-1Bs.

Of the other 65,000, more than half the jobs given to H-1B workers go to not-so-high-tech jobs, such as pharmacist, architect and nurse. So let's say on average 45% of H-1Bs go to high-tech workers. That's 29,250 a year. An H-1B holder can stay in the U.S. for three years, plus up to three more if extensions are requested and granted. If every high-tech H-1B visa holder stayed for six years, that'd be a rolling average of 175,500 jobs a year.

One hundred and seventy-five thousand jobs doesn't even make a good monthly jobs report.

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Sara_A_T
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Sara_A_T,
User Rank: Apprentice
5/18/2013 | 5:04:26 PM
re: H-1B: Ripe For Reform
Dear Mr.Fitzgerald,

Reading your article makes me angry and frustrated as there are several statements that are not true. My name is Sara and I'm a 24-yearold University of Cambridge graduate from Sweden. I have both my degrees in engineering and have been awarded multiple awards for excellent achievements in physics and math. I was recruited by a Silicon Valley company, with an entry level salary higher than my Cambridge friend who was hired by Apple at 100k a year. Both of our H1b visas were recently denied due to the 65k cap.

Firstly, you cannot get an H1b visa for a profession such as nursing. In order to get the visa, you have to be recruited into a job that requires and cannot be done without a Master's degree (as BSc degrees in Europe are only 3 years - why it does not count as equivalent to a US BSc degree is another interesting discussion). Additionally, there has to be a demand for that specific job-type in the US. Even getting an H1b for a job in marketing, finance or HR is very difficult.

Secondly, why would the 20k people with a US master's degree be better than students from outside the US? Many international students with American degrees, have their degrees from schools where the tuition fees are low and within their budget. Why would you value someone with a degree from a lowly ranked American university higher than someone with a degree from a prestigious university in Europe? Should getting a cheap degree in the US be the road to a green card?

Thirdly, there are several restrictions about salary in order to get an H1b visa. The salary needs to be equivalent or higher to what the wage of what a similar job in the area would be. H1b workers are NOT cheaper than American workers.

Further, of course an H1b visa can be transferred to a different employer. It is incorrect to say that an H1b worker is tied to her employer.

Lastly, since H1b workers do get the same salary and conditions as American employees, it is very difficult for us to find jobs. We have "weird" accents and the employer may not recognize our previous employers or schools. We have to be much, much better than the American applicants for the company to agree to pay the visa fees, hire us 6 months before we can start working and then go through the same process again when our H1b expires after 3 years. Because of this, it is very difficult for most internationals looking for jobs in the US. I am sure most companies would prefer to hire Americans so they don't have to go through the hassle of the H1b. However, if they still are forced to look for talent internationally to be able to build their company and grow their business, why should it be so hard for them? Why can't Apple hire a star-engineer from University of Cambridge? If educated, bright, ambitious people want to help grow US companies and the companies can't find talent locally - why should we stop them? Why should we not increase the H1b cap or even remove it?

Thank you for your article, I enjoyed reading it. But please stick to facts next time you write an article.

Sara
jmdz
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jmdz,
User Rank: Apprentice
4/23/2013 | 4:08:55 PM
re: H-1B: Ripe For Reform
Instead of bringing more people to compete for jobs, government and private sector should focus on increasing skills in low cost areas already in the country. There are companies doing what's called "rural sourcing" (e.g. www.ruralogic.com), where they re-train people who had different careers and provide skills that are relevant. If both the government and private sector were more supportive of these initiatives, they would get the skills without having to bring more people, and at the same time create jobs in low cost/impoverished areas
dougee2fresh
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dougee2fresh,
User Rank: Apprentice
4/17/2013 | 10:00:05 PM
re: H-1B: Ripe For Reform
"However, it is also true that if I had to choose from the pool of only native-born individuals whenever I need a programmer or DBA it would be slim pickin's indeed."

Tired of hearing this argument. If you want better talent pay more! Isn't that what we are told why CEO's and people in finance make so much. I am a math teacher and used to be a programmer/software engineer. I encourage my students to have IT skills but move to finance or marketing or medicine. There is barely a long-term career in any STEM career. If you find someone with most of what you want and you like them, train them. Why spend all that time learning and studying when the schmoozers in finance can make more than you ?? There is no shortage of IT workers. There is a shortage of companies that want to pay for talented people!
Tony A
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Tony A,
User Rank: Strategist
4/17/2013 | 7:28:08 PM
re: H-1B: Ripe For Reform
One of the more intelligent articles I've seen on the H-1B issue. Unlike some of the more heated commentators who always come out of the woodwork on this issue (see wakjob2 and his long list of undocumented complaints, for example) your points are directed against the abuse of foreign nationals rather than against the workers themselves. You do make the point that the alleged special skills are not always that special, and that is true not only in the professions you mention but in IT. However, it is also true that if I had to choose from the pool of only native-born individuals whenever I need a programmer or DBA it would be slim pickin's indeed. The organization where I work does not sponsor H-1B's, so when we are recruiting for a full time position that option is out of the question. Nevertheless, a very large majority of the applicants are Green Card holders or naturalized citizens; and most (though certainly not all) of the time the most talented applicants are among them. So I have a difficult time believing that without some kind of program that brings in technical talent from abroad there would be plenty of highly qualified U.S.-born developers knocking on the door.

Another issue is English language skills. Not every programmer needs to be a Hemingway, but when I need someone in a leadership position who can write a piece of documentation, the Indian or Pakistani applicant is often (again, certainly not all the time) a better writer than the American-born programmer. Sad to say, but true - a fact I also know from teaching college courses to people who should not have passed middle school writing tests. (@z80man - your writing is not bad by comparison with a lot of what I see, but I noticed about half a dozen grammatical errors in your comments. Typos?)

One problem you didn't mention is that the head shops that exist for no other reason than to collect H-1B's and shop them around on consulting contracts keep their fingers around the throats of these workers even after they have their green cards, by means of so-called "non-compete" clauses. Often these firms are sub-contractors or even sub-sub-contractors to more respectable consulting firms, but they have pass-through clauses that prevent the consultants from taking full time jobs with the client or the direct contractor. And while the larger firms are used to having their consultants join the company, and in some ways benefit from it, the low-life sub-contracors sue if the consultant tries to get around the non-compete agreement. This also exerts downward pressure on wages.

On the other hand, when we hire consultants we are not privvy to the consutlant's arrangement with the vendor, so we have no direct interest in holding down a consultant's wages. In fact when we can we encourage the vendor to treat them well and compensate them well enough that they are not inclined to leave in the middle of a project. Most workers on H-1B's have their limits of what they will deal with, and though their options are restricted, they are far from being without options at all. So our interest is in keeping them motivated to continue.

Lastly, the most important point you made, I think, is that people who genuinely have technical skills that we need should be given green cards in short order, especially if they have obtained an advanced degree from a U.S. university. That eliminates the argument that foreign workers, being dependent on H-1B sponsorship, are willing to provide cheap labor. You don't hear this proposal from the various loudmouthed opponents who rail against "foreign worker" programs - so let's see what they say, these grandchildren of Irish, Italian, Dutch, German, Scandinavian, eastern European and other immigrants, when the only objection left is that the competition is from India and China.
iosax
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iosax,
User Rank: Apprentice
4/17/2013 | 6:50:03 PM
re: H-1B: Ripe For Reform
of course, the endless stream of indians on h1-b are just a fifth column, designed to get rid of the expensive IT specialists still working in this country
Wakjob2
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Wakjob2,
User Rank: Apprentice
4/17/2013 | 12:15:59 AM
re: H-1B: Ripe For Reform
Infosys senior level meetings : "We will dump 6 million Indians in US and capture their entire IT market and no American will ever come to know about this. We will throw these Americans out of their own country. They don't know what we are doing over here."
Wakjob2
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Wakjob2,
User Rank: Apprentice
4/17/2013 | 12:15:49 AM
re: H-1B: Ripe For Reform
Companies ruined or almost ruined by imported Indian labor

Adaptec - Indian CEO Subramanian Sundaresh fired.
AIG (signed outsourcing deal in 2007 in Europe with Accenture Indian frauds, collapsed in 2009)
AirBus (Qantas plane plunged 650 feet injuring passengers when its computer system written by India disengaged the auto-pilot).
Apple - R&D CLOSED in India in 2006.
Australia's National Australia Bank (Outsourced jobs to India in 2007, nationwide ATM and account failure in late 2010).
Bell Labs (Arun Netravalli took over, closed, turned into a shopping mall)
Boeing Dreamliner ES software (written by HCL, banned by FAA)
Bristol-Myers-Squibb (Trade Secrets and documents stolen in U.S. by Indian national guest worker)
Caymas - Startup run by Indian CEO, French director of dev, Chinese tech lead. Closed after 5 years of sucking VC out of America.
Caterpillar misses earnings a mere 4 months after outsourcing to India, Inc.
Circuit City - Outsourced all IT to Indian-run IBM and went bankrupt shortly thereafter.
ComAir crew system run by 100% Indian IT workers caused the 12/25/05 U.S. airport shutdown when they used a short int instead of a long int
Computer Associates - Former CEO Sanjay Kumar, an Indian national, sentenced to 12 years in federal prison for accounting fraud.
Deloitte - 2010 - this Indian-packed consulting company is being sued under RICO fraud charges by Marin Country, California for a failed solution.
Dell - call center (closed in India)
Delta call centers (closed in India)
Fannie Mae - Hired large numbers of Indians, had to be bailed out. Indian logic bomb creator found guilty and sent to prison.
GM - Was booming in 2006, signed $300 million outsourcing deal with Wipro that same year, went bankrupt 3 years later
HP - Got out of the PC hardware business in 2011 and can't compete with Apple's tablets. HP was taken over by Indians and Chinese in 2001. So much for 'Asian' talent!
HSBC ATMs (software taken over by Indians, failed in 2006)
Intel Whitefield processor project (cancelled, Indian staff canned)
JetStar Airways computer failure brings down Christchurch airport on 9/17/11. JetStar is owned by Quantas - which is know to have outsourced to India, Inc.
Lehman (Spectramind software bought by Wipro, ruined, trashed by Indian programmers)
Medicare - Defrauded by Indian national doctor Arun Sharma & wife in the U.S.
Microsoft - Employs over 35,000 H-1Bs. Stock used to be $100. Today it's lucky to be over $25. Not to mention that Vista thing.
MIT Media Lab Asia (canceled)
MyNines - A startup founded and run by Indian national Apar Kothari went belly up after throwing millions of America's VC $ down the drain.
PeopleSoft (Taken over by Indians in 2000, collapsed).
PepsiCo - Slides from #1 to #3 during Indian CEO Indra Nooyi' watch.
Polycom - Former senior executive Sunil Bhalla charged with insider trading.
Qantas - See AirBus above
Quark (Alukah Kamar CEO, fired, lost 60% of its customers to Adobe because Indian-written QuarkExpress 6 was a failure)
Rolls Royce (Sent aircraft engine work to India in 2006, engines delayed for Boeing 787, and failed on at least 2 Quantas planes in 2010, cost Rolls $500m).
SAP - Same as Deloitte above in 2010.
Singapore airlines (IT functions taken over in 2009 by TCS, website trashed in August, 2011)
Skype (Madhu Yarlagadda fired)
State of Indiana $867 million FAILED IBM project, IBM being sued
State of Texas failed IBM project.
Sun Micro (Taken over by Indian and Chinese workers in 2001, collapsed, had to be sold off to Oracle).
UK's NHS outsourced numerous jobs including health records to India in mid-2000 resulting in $26 billion over budget.
Union Bank of California - Cancelled Finacle project run by India's InfoSys in 2011.
United - call center (closed in India)
Victorian Order of Nurses, Canada (Payroll system screwed up by SAP/IBM in mid-2011)
Virgin Atlantic (software written in India caused cloud IT failure)
World Bank (Indian fraudsters BANNED for 3 years because they stole data).

I could post the whole list here but I don't want to crash any servers.
_
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_,
User Rank: Apprentice
4/16/2013 | 9:20:58 PM
re: H-1B: Ripe For Reform
the ironic thing, is that H1b's aren't even cheap, but as the article intimates, they've been "hijacked" by "consulting" and contracting companies. H1b's are actually more expensive, in terms of productivity and the quality of what gets done, on direct account of the no/low skill of the visa holder. However, outsourcing and onshoring companies are in love with the H1b, because it allows them to acquire a serf worker that can be heavily marked up - so it's really all about big profits for middle-men companies, this is the truth. H1b is ALL about depressing wages for American workers and passing on the true economic costs to the rest of American society. Don't believe any of the corporate shill b/s about their desire for "immigration reform" and other loft high-sounding concepts, they could care less about any of that, and if it wasn't for the H1b gravy train they've been riding - up to now - they would never even bring up the "immigration reform" facade. H1b/L1/B1, all toxic to our economy, our profession and our society in their present form, they are not being used for their original purpose, rather they've all been misappropriated by companies that are looking to depress wages and kick Americans directly out of their jobs...
Jed Davis
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Jed Davis,
User Rank: Apprentice
4/16/2013 | 8:19:58 PM
re: H-1B: Ripe For Reform
Not to pick nits, but the net loss of jobs you reference here occurred in 2010. IT unemployment nationally is below 4.3%, and has been so for the past 2 years. I can tell you that, as the owner of an IT recruiting firm, we are finding the search for qualified IT talent to be at almost late 1990's level difficulty. Of course, that does play right into your "Purple Squirrel" theory, with which I wholeheartedly agree.
z80man
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z80man,
User Rank: Apprentice
4/16/2013 | 6:46:13 PM
re: H-1B: Ripe For Reform
Those are ugly economic numbers. We humans expect they'll continue, a phenomenon called recency bias, which makes them extra scary.

I call it remembering the recent past and learning from a lifetime of experience. Things continue down the same path until events happens that change the path. Doing the same thing over and over does not change the path.

Companies know that things will change over time but how they will change and when the change will happen is the questions. This leads to many decisions being made to serve short term goals, in the corporate world that often means a quarter or maybe a year at best. Reducing labor either via layoffs or cheaper labor is always the solution when a quarter does not look so good because the company did not plan for the future.

Companies like to say they cannot find enough talent in the US to fill position, however companies like IBM have offered US employees the oppurtunity to move to a foreign country with wages that match the countries rates or the opportunity of finding another job.

I have worked with a lot of people from India over the years and many of them were very talented and well worth their wages. On the other hand I have work with many of them that had poor english skills and very narrow technical skills. In most cases they were not hired because they had unique or proven skills but because they were college graduates that were hired in bulk to fill a project with people who were talented enough as a whole to get the job done.

India learned that an educated population was the key out of poverty for their people and they work very hard to make it happen. While the US prices education out of reach of many and allows education scams to widely prevail. Many of the training programs offered claim to help students get jobs but the reality is that the programs put the students in debt and helps students get jobs with only marginally better pay that they could get before the training. Only by getting a real college education do these students have a shot at getting jobs with good pay.

If you learn quickly, persisantly persue opportunies, and can make it through the ruff times you can still make a decient living. The problem is you can also expect that your job may end with little warning due to layoffs, buyouts, or company financial failures. You may end up with debt you cannot pay off that hurts your credit, hurts the economy, and may lock you out of some employement opportunies.

As long as the favored solutions continue as follows how can you expect things to change for the better?

- Layoffs are the solution to bad quarters
- Buyouts followed by gutting the labor is the solution to innovation
- Government allowing large companies to violate rules but killing small companies off with excessive overhead trying not to run affoul of the rules.
- Ignoring that sending money out of the economy your customers live in means you customers have less money to spend on your goods and services.
- Thinking that you can continue to pollute without ever having to pay the price for doing it by shifting the burden to someone else.

Some countries have learned these lessons through failure, can we learn them through observation of their failures?
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