H1B visa overhaul could benefit big tech companies

Alphabet's Google told some of its workers not to worry about the changes

The new way foreign worker visas are doled out in the US is poised to benefit some of the biggest technology companies, like Alphabet, Microsoft and Facebook, while punishing outsourcing firms that developed a disproportionate dependence on the programme.

The administration is increasing scrutiny on H1B visa applications for low-level computer programmers, focusing enforcement on the heaviest users of the programme, and warning applicants not to discriminate against American workers. The size and scope of the program remains unchanged for now. 

There are 85,000 H1B visas distributed through a random lottery each year, and applicants rush to file by the start of the process, this year on April 3. Outsourcing firms often recruit lower-skilled workers through the programme, so they may not get as many visas under the new rules. That means more for everyone else, including US tech giants. What some see as a crackdown may actually be a boon for these companies, according to Rod Bourgeois, head of research at DeepDive Equity Research. “If Indian firms have a harder time getting basic programming jobs approved for the visa process, then the firms truly hiring people with high skills and specialised knowledge will benefit,” he said. 

Alphabet’s Google told some of its workers on Monday not to worry about the changes, saying its software engineering roles don’t fall into the job categories included in the administration’s new guidance. Other big US technology companies didn’t say anything publicly. That’s tantamount to a round of applause compared with the industry’s reaction to Trump’s executive orders restricting immigration from a handful of Muslim-majority countries. Dozens of companies supported lawsuits against the orders. When the first one was issued in late January, Google told some staff to return to the US in case they couldn’t get back in later, and thousands of employees protested.

Carl Shusterman, a former attorney for the US Immigration and Naturalisation Service, called the H-1B changes “a subtle threat” against outsourcing companies.  

Seven companies had more than 1,000 visa applications for the lowest-level computer programmers certified by the Department of Labor in 2015, the last year for which numbers are available. All of them provide outsourcing services, such as IT, HR, payroll and accounting, for other companies. One of them — HCL America — is headquartered in the US, with most of the rest based in India. 

“The top 15 job shops are all pretty much all from India. They get 85 per cent of the H1Bs. If they cut that number, then the American firms will get the bigger slice of the pie,” Shusterman said. “A lot of the Apples or Googles are paying over $100,000 a year. They’re going after top talent. This memo is really going after the lowest paid people.”

The American technology industry is happy to go along with the framing of H1B reform as a matter of cutting down on bad actors. “If you’re taking that out of the system you’re able to take the programme back to its true stated purpose,” said Michael Hayes, government affairs manager for the Consumer Technology Association, in February. “Removing the abuse lets you see what the future needs of the system are.” He declined to comment on the recent changes.

Silicon Valley companies say they use H1B visas differently than outsourcing firms. Their common refrain is that its bad policy to let foreign students earn advanced degrees from the best US universities, then send them away to work in other countries. But that’s not the main use of the programme. Ron Hira, who studies immigration policy at Howard University, shared analysis with Congress last year that looked at the H1B programme from 2005 to 2012. Only two of the top twenty H1B recipients over that time used more than 10 per cent of their visas to employ people who held PhDs. About one-third of Intel’s H1B workers held doctorate degrees, while Google was second with 12 per cent. A majority of H1B workers employed by Apple, Microsoft and IBM didn’t hold higher than a bachelor’s degree. 

The administration or Congress may yet find a way to make more sweeping changes to the H-1B program that would disrupt how the largest US technology companies use the program. There are a handful of members of Congress vying to alter the H-1B programme. But because the visas are handed out once a year through the lottery system, the time for such action has passed in 2017.

Like the big US tech companies, most industry policy experts kept quiet on this week’s changes. They’re keeping their powder dry ahead of any bigger changes before the visa rush next spring. 

--With assistance from Kartikay Mehrotra