One of the top hot button issues facing the country today is immigration, both illegal and legal. The Trump administration has made cracking down on illegal immigration a priority while also stating their intent to rework legal immigration programs such as the popular H-1B temporary visa program. The H-1B program brings thousands of foreign workers to the U.S. each year to fill gaps in specialty fields such as technology, engineering, and mathematics for three-year terms. [more] President Trump recently backed a bill that would change the H-1B visa program, and the proposed changes have far-reaching implications for the technology sector. It calls in to question how companies will fill roles in highly sought after technology positions, posing both a challenge and an opportunity for IT staffing firms.
The Current H-1B Program
The H-1B category was created in the early 90s to address the shortage of specialized skills not readily available in the U.S. The H-1B is a temporary visa category that allows U.S. employers to petition for highly educated foreign professionals to work in “specialty occupations” that require at least a bachelor’s degree or equivalent work experience – software developers, engineers, doctors, etc. Visa holders are admitted to the U.S. for three years, with an option to extend for an additional three. To start the H-1B process, the employer must have a labor condition application (LCA) certified through the Department of Labor that assures that the foreign worker will be paid the prevailing wage for that area of employment, and also are responsible for notifying existing workers in that area of the open position.
New H-1B applications are selected via a lottery system with an annual cap of 85,000 per year – 65,000 normal applications, and an extra 20,000 for foreign professionals with an advanced degree of Master’s or above. The demand for H-1Bs are high, and in recent years has far outstripped supply. In 2016 alone, 236,000 applications were submitted – three times as many applications as there were spots available. H-1B filing starts on April 3rd, 2017.
Pros and Cons of the H-1B Program
The H-1B program is somewhat controversial, with some calling for an increase to meet industry demands and some denouncing the program as detrimental to U.S. workers. Critics of the program often say that the $60,000 per year salary threshold for H-1B dependent employers is too low, and companies take advantage of this to “game the system” and hire low cost foreign workers. Another issue often cited is that the vast majority of H-1B visas go to consulting and IT outsourcing firms based in India with US subsidiaries. Companies such as Tata Consultancy, Wipro and Infosys have the resources to submit many applications and snatch up the available spots to hire IT contractors and consultants and tend to pay them less than giant tech companies like Microsoft or Google.
Proponents of this program cite the shortage of tech jobs and the growing demand. Tech industry advocates from Silicon Valley have been lobbying for years to increase the number of visas to meet the growing demand, which some are predicting will almost double from 3.9 million today to 6.1 million by 2020. Proponents say that foreign workers fill a critical need in STEM fields, and skilled immigrants’ contributions to the U.S. economy help create new jobs and new opportunities for economic expansion. According to the American Immigration Council, H-1B workers positively impact our economy and an increase in H-1B visas could create an estimated 1.3 million new jobs and add around $158 billion to Gross Domestic Product in the United States by 2045. They go on to say further that the U.S. has missed opportunities to create new jobs by limiting the number of new visas to 85,000 per year.
The White House could issue an executive order on H-1B visas, further restricting visas for STEM workers. On the campaign trail, Trump publicly criticized the program, which he claims does not fall in line with the “America First” agenda of the current administration. One move the White House has made so far is to temporarily suspend expedited processing of H-1B visas, eliminating the option of shorter wait times for the program that helps highly skilled foreigners work at US companies, causing disruption to many tech companies who will experience delay in the processing of their visa applications. The suspension is effective April 3, and could last up to six months, according to USCIS. Another aspect of the program that could change quickly is an end to the 2014 provision under Barack Obama that allowed spouses of certain H-1B visa holders, who have been offered permanent jobs in the United States and are waiting in line to become permanent residents, to work in the U.S. Donald Trump has also recently backed a bill proposed by Congressman Darrell Issa that would raise the H-1B salary threshold to $100K from the current $60K for H-1B dependent companies. The intention of the higher salary threshold is to discourage companies from turning to H-1Bs for cheap labor, rather than going with American labor. “A graduate with a STEM degree from a US university is not going to take a job with a $60,000 salary. And that’s the reality,” said Congressman Issa.
The Impact on IT Staffing
IT staffing is a fast growing field, and shows no signs of slowing down. According to a Staffing Industry Analysts report, US IT temporary staffing is projected to grow 6% in 2017 and reach $30.6 billion. Over the last 15 years, IT employment in the US has increased more than 36%, compared to 7.5% for total employment. Many companies that provide temporary IT services and support rely on highly skilled tech workers that are foreign citizens working in the U.S. under some type of visa, such as the H-1B. Foreign nationals are a critical source of talent in this sector, according to a survey report from immigration services provider Envoy. The report found that 63 percent of U.S. employers describe foreign nationals as extremely important or very important to their company’s talent acquisition strategy, and 59 percent of respondents said they expect their demand for employees from outside the U.S. to increase.
However, some in the recruiting industry are concerned about filling positions if the temporary visa program and other immigration programs are reworked by the current administration. “It’s not enough to say we have created more jobs if we haven’t created the people to do those jobs,” says Steven J. Lindner, Ph.D., executive partner and officer of The WorkPlace Group, a recruiting firm based in Florham Park, N.J.. In light of uncertainty over legal immigration, companies might have to rethink and revise their talent acquisition strategies. This might mean hiring more employees to work overseas, moving or expanding offices outside the U.S., or shifting tasks to firms and individuals outside the U.S. On the flip side, if temporary IT staffing firms can find U.S. workers to fill in the gaps that H-1B workers might otherwise fill, there is tremendous opportunity for growth for savvy firms.
Uncertainty can mean opportunity if you have the tools to grow. If you anticipate major growth for your IT staffing firm in the near future, contact us today. We have the resources to position your firm for success and allow you to take on new business knowing that you are able to meet payroll and other overhead expenses. We have helped IT staffing firms grow, and can do the same for you.