Ending H-1B indentured servitude

As noted in a previous blog, the quota of H-1B visas was filled within a single day, leading to a situation where the visas will be allocated based on a lottery system - hardly a sensible means by which to distribute such things. What many articles discussing the situation didn't answer, however, was what caused the limit to last so long in 2006 (two months).

As noted in a previous blog, the quota of H-1B visas was filled within a single day, leading to a situation where the visas will be allocated based on a lottery system - hardly a sensible means by which to distribute such things. What many articles discussing the situation didn't answer, however, was what caused the limit to last so long in 2006 (two months). What was different about 2007?

The answer, it would appear, is that outsourcers have awakened to the value of the H-1B visa and the need to have a local representative to create effective lines of communications between development teams in India and customers. They now account for 8 of the 10 largest applicants for H-1B visas, a shift from 4 in 10 the previous year. From an article in the International Herald Tribune:

As Indian outsourcing companies have become the leading consumers of the visa, they have used it to further their primary mission, which is to gain the expertise necessary to take on critical tasks performed by Western companies, and perform them in India at a fraction of the cost. Thousands of H-1B visas every year are being won by individuals acting as outsourcing ambassadors. Highly skilled and easily meeting the objective standards for excellence that the law requires, the employees interact with U.S. companies like Morgan Stanley and Boeing, gathering an outsourcing mandate and lubricating the flow of tasks to an Indian back office.

As I view outsourcing as a complement to the development process, I am not fundamentally opposed to Indian outsourcing firms finding ways to do their jobs more effectively. I also want American firms to get the best workers they can wherever they can find them, because that makes the companies I work for better. On the other hand, I am also an American, and have an interest in making the American economy as competitive as possible. That's why I am not so happy about the fact that outsourcing firms have little interest in making their H-1B "ambassadors" long term residents, an interest they can enforce through the artificial powers we grant them as part of the H-1B system.

Consider the deployment of Atul Pevekar, a 29-year-old Indian engineer for Tata Consultancy Services, an outsourcing vendor. A year ago, and five years out of college, he was sent to Minnesota on an H-1B. His assignment: to work with a U.S. retailer to relay its information technology needs back to TCS's Indian staff, to which the retailer has outsourced scores of jobs.

"I am a link between the people who are doing coding in India and the client," Pevekar said by telephone.

He earns $60,000 a year, five times his pay in India. But he must leave the country within a year or two. Like many Indian vendors, TCS does not seek permanent residency for most employees, even though the H-1B lets companies do so.

I noted in passing in a previous blog that H-1B holders should not be locked to the hiring company the way they are now. I want to make that fact more explicit.

Raise the H-1B quota so that companies can hire the best and brightest, but in so doing, change the system so that any H-1B holder has the right to market their services to any other company he or she wants immediately after arriving in the United States. This would force hiring companies to pay foreign hires well (if they want to prevent job surfing), and remove the incentive to underpay those foreign hires (which does happen, in spite of the rules, something which is made possible by the limitations of the H-1B visa).

Furthermore, though the initial application fee should be borne by the company hiring the foreign worker, the renewal process should be initiated (and paid for) by the individual, giving them the choice of whether to stay for a longer period of time in the United States, and removing a company's ability to use renewal as leverage to pay less money.

Indian outsourcers would still apply for large numbers of H-1B visas, but they would lose the leverage to bring those workers back to India. That's not a bad thing for America, and by itself might provide more breathing room for foreigners with valuable advanced Harvard degrees, many of whom are having a hard time getting H-1Bs due to the outsourcer driven shortage (though as I said, I still favor a quota increase).

If you have to pay an imported programmer just as much as you do a local worker, local workers have a competitive advantage. The situation is no different than if I want to take a job in New York or Chicago (I live in Los Angeles). Most companies can't be bothered with the complexity of bringing an American citizen to another city in the United States. Most will be even less bothered with bringing a worker from halfway around the globe.

The exception, of course, would be if that imported worker is a "rock star." That's a good thing, though, in that we should want companies to bring foreign technology "rock stars" to American shores. With reform of the H-1B program to reduce the "indentured servitude" aspects of the visa, we make it more likely that those "rock stars" will want to stay. Many will surely want to do so, as America is a very appealing place to live.

Bringing smart workers to the United States, and getting them to stay here, is good for America. Our H-1B program should be structured to encourage that.

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