Trump eyes end to an H-1B system that favors largest outsourcers

The top 10 H-1B list explains why Trump wants to change the visa lottery

H-1B visa american flag
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The outcome of the annual H-1B visa lottery is immigration's Groundhog Day. It's the same result year after year, as the large outsourcing firms continue to lead all others in getting H-1B visas.

But this year may be different, because of President Donald Trump.

The H-1B lottery favors large firms. In the 2015 fiscal year, for instance, the top 10 firms received 38% of all the H-1B visas in computer occupations alone. All these firms, except for Amazon and to a partial extent IBM, are outsourcers. These large companies have the resources to submit enough visa applications to help ensure they receive a bare minimum of approvals.

The top 20 firms in 2015, which included more of a mix of outsourcing and technology firms, accounted for 46% of all the computer-occupation visas. This is according to data recently received by Computerworld from a Freedom of Information Act request to the U.S. Citizenship and Immigration Services. (See full chart, at the end of the story.)

The U.S. received a total of 172,500 applications for H-1B visas in the first week of April 2014,when the U.S. accepted new petitions for the 2015 fiscal year that began October 1. The government held a random lottery and then rejected about 87,500 visa petitions because they exceeded the 85,000 H-1B visa cap.

Who didn't get a visa? The companies most hurt by the random H-1B distribution system are those that submit only a few applications. Many are smaller firms. There were approximately 9,100 entities that received H-1B visas for computer-related jobs in fiscal year 2015. Of that number, more than 5,000 had just one H-1B visa approved.

Now, however, the Trump administration wants to improve the ability of U.S. tech companies to secure a visa. It hasn't detailed its plans, but has broadly said it wants a system aimed at the "best and brightest."

Trump's position on the H-1B visas has deep roots in his administration.

Trump's just-confirmed attorney general, former Sen. Jeff Sessions (R-Ala.), held several hearings over the last two years on the H-1B visa's impact on IT workers, and he helped Trump develop his immigration platform.

Sessions was the first U.S. senator to endorse Trump for president, and a former aide of Sessions, Stephen Miller, is now a top domestic policy adviser in the Trump White House.

Sessions drew attention to offshoring at Disney, Southern California Edison and Northeast Utilities (now Eversource), among others. The hearings organized by Sessions gathered data and testimony that the Trump administration may now use to argue for H-1B reform.

The tech industry wants the 85,000 H-1B visa cap raised. That's how industry groups would fix the problem. But that's not the Trump administration's approach.

Instead, the Trump administration is hinting at changes that may end the random lottery distribution and replace it with a merit system. It could distribute visas based on wages or whether a visa holder was educated in the U.S. It could favor non-dependent H-1B companies -- a legal definition for firms that have less than 15% of their staff on the visa -- over dependent firms, which includes all the all the large offshore firms.

These changes are worrisome to large offshore outsourcing firms, but to those in India in particular. NASSCOM, India's large IT industry group, is trying to meet this month with Trump administration to make its case.

R. Chandrasekhar, NASSCOM president, says he doesn't have a problem with the administration trying to protect employment opportunities for U.S. workers, provided that whatever changes are made "are applied uniformly."

A split on the visas that favored non-dependent firms over H-1B dependent firms would be, says Chandrasekhar, "highly discriminatory."

"We are fully aware of the skills shortage that exist in the U.S.," said Chandrasekhar, "so we don't think that the employment opportunities for qualified Americans are being affected."

But Trump's new attorney general has repeatedly argued that there is no skills shortage.

"The sad reality is that not only is there not a shortage of exceptionally qualified U.S. workers, but across the country thousands of U.S. workers are being replaced by foreign labor," said Sessions, one year ago this month.

The offshore firms are trying to adjust. Cognizant Technology Solutions told financial analysts on a recent earnings call that is boosting its U.S. hiring, and said it hired 4,000 citizens and permanent residents last year. But it was not clear how many the company now employs in the U.S.

Some of the people hired by Cognizant are "rebadged," or transferred from their original employer. IT workers at Cengage Learning in Mason, Ohio were shifted to Cognizant in 2015 and have been training workers in India. Some are now worried they are getting laid off, said one worker who spoke on the condition of anonymity.

"People are upset" about "what's happening to our country and our jobs," said this IT worker. "I hope he [Trump] can do something about these visas because this is where the middle class is losing their jobs."

It remains to be seen whether changes to the H-1B program will fundamentally impact offshore outsourcing.

David Rutchik, executive managing director of business transformation and outsourcing at advisory firm Pace Harmon, believes that additional restrictions on H-1B visa use will have a "measured" impact on the industry.

Restrictions may prompt more U.S. hiring by outsourcing firms, but that "is something we think makes sense for their businesses anyway and should make them more competitive," he said. It "would be a direct, positive impact of the revised visa provisions," said Rutchik.

Conversely, the providers may also push more work offshore and try to eliminate U.S. jobs altogether. The offshore firms may rely more on robotic processes and artificial intelligence, he explained.

"Yes, they would likely hire more U.S. nationals, push more offshore, and accelerate automation efforts, but those would all be incremental modifications in the grand scheme of things," Rutchik said.

Top companies with new H-1B visas in FY 2015

In addition to the general Computerworld social media pages listed below, you can comment specifically about H-1B and other IT outsourcing issues at our H-1B and Outsourcing Facebook group, tweet to Patrick @dcgov and Sharon @sharon000 or email them at pthibodeau@computerworld and smachlis@computerworld.com.

This story, "Trump eyes end to an H-1B system that favors largest outsourcers" was originally published by Computerworld.

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