The Truth Behind the H-1B Visa

May 19

The H-1B visa changes have been looming large since January. Now that the bill has passed, it’s imperative to understand how this policy change will affect you and your business. Because the ripples extend well beyond the technology industry.

The most obvious repercussion of the H-1B visa limitations means any foreign specialists you have working for – in your IT department – or with you – e.g. as a contract firm developing custom software or mobile applications – will likely need to be replaced.

The instinctive solution to the H-1B quagmire involves turning outsourcing firms with high-caliber technology reputations. Specifically where web development, web design, mobile application development, and custom software solutions are concerned. And, while augmenting your IT department with overseas specialists can certainly be a smart move. It is a path rife with potential pitfalls, because no industry will be more affected by the H-1B visa shakeup than offshore outsourcing firms.

To understand why not all outsourcing outfits are created equal where the H1-B block is concerned, we must first take a step back for a bit of background perspective:

The H-1B visa came into existence nearly 30 years ago to supplement US corporations with foreign workers with a proven track record of expertise in areas that require highly-trained specialists when there are not enough qualified US workers to fill the positions. Most often, the technology industry. Each year, 85,000 H-1B visas are available through a lottery in April. Each H-1B visa is good for three years of sponsorship by the hiring company.

However, outsourcing companies – domestic and, primarily, abroad are exploiting the H-1B visa system to circumvent US taxes and wage standards. And make a pretty penny doing it. Outsourcing companies inundated the H-B1 visa lottery with employee applications on behalf of major American corporations like Microsoft, Google, Apple, and even Disney. This flood of lottery submissions statistically result in a higher number of visas granted to American companies through outsourcing firms. And the outsourcing firm gets paid for each H-1B visa granted through the lottery. While H-1B visas stipulate a salary floor of $60,000. They are still often paid less than their equally-qualified American-born colleagues, results in lower overhead expenditure for corporations to the tune of fewer employment opportunities for US workers as they are replaced with lower-cost overseas counterparts.

This means the corporations benefiting from the US’s H-1B visas aren’t even all American. In fact, most are Indian outsourcing companies. To give you an idea of just how pervasive this tactic is, 70% of 2016’s 85,000 H-1B visas went to Indian nationals via Indian outsourcing firms and make up nearly 10% of the country’s GDP! The next highest percentage of H-1B visas have historically been granted to China’s outsourcing outfits at just shy of 10% each year.

Much of the outsourcing leads to offshoring, as companies bring H-1B visa holders to the US to train. Then rotate them back to the outsourcing firm’s country of origin – again, most often India or China – where the cost of living and salary standards are lower.

Approval Rate of H-1B Visas

All this is to say companies, industries, and countries will each be affected by H-1B changes in proportion to the number of these visas they are used to being granted annually. India outsourcing companies will be scrambling to replace or find a way to get the American companies they work with to rehire their displaced, former H-1B visa holders. Roughly 59,500 Indian nationals per year. China, too, with 8,500 expected visas lost each year.

The H-1B visa shakeup creates an opportunity for technology companies. And also corporations requiring technological services ranging from mobile application development and custom software solutions to web design to supplement their teams with talented contractors. Whether your outsourced work is entrusted to developers in America or abroad, be sure the company employing them not only has a reputation for excellence. But is sufficiently staffed and has the capacity and infrastructure to deliver impeccable results for you, independent of visas. A company, for example, like KitelyTech. Get in touch today and tell us how we can help you design a better website, create custom software to meet your goals. Or develop a mobile app to keep your customer base engaged with your brand on the go.

Phone: (800) 274 2908

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