How H-1B changes will impact U.S. IT

For many companies, the H-1B visa program has been a valuable source for IT talent. The program, which awards 85,000 visas to foreign workers each spring based on a lottery system, has also been met with controversy, not just as a perceived means for replacing American workers but also for the administrative burden of its process, which has had a limiting effect on which companies apply.

As of April 1, the U.S. Citizenship and Immigration Services (USCIS) has enacted changes to the H-1B visa program aimed at streamlining the application process and tilting the selection process in favor of applicants with U.S. master’s degrees. Other proposed policy changes could do more harm than good, by limiting the job prospects for international students, barring spouses of H-1B visa holders from receiving work authorization in the U.S., and driving tech talent out of the U.S. to Canada.

Emphasizing advanced degrees, streamlining the process

Rather than splitting H-1B applications into two pools, with applicants with undergraduate degrees vying for 65,000 visas and those with advanced degrees vying for the 20,000 remaining, applicants will be combined into a single pool, from which 65,000 visas will be drawn by lottery, with the USCIS selecting 20,000 workers for the advanced degree exemption from the applications left over.

“This is great for companies who want to increase the percentage of people with advanced degrees, but not so great if you’re an InfoSys or a Cognizant or another giant IT firm like that who’s hiring mostly people with undergraduate degrees,” says Richard Burke, president and CEO of Envoy Global, a global talent acquisition firm.

Starting in April 2020, an electronic registration system with a shorter version of the H-1B visa application will also make it easier and faster for companies to fill out applications. Only if your application is selected in the lottery will you then be required to fill out registration information in full. This should help reduce the cost of applying, says Penni Bradshaw, partner with Constangy, Brooks, Smith & Prophete and board-certified specialist in immigration law, and potentially open the process to companies who may not have wanted to pay the roughly $2,460 to file an application for an H-1B visa, not to mention the costs to have a law firm help prepare the application on pure speculation of receiving one.

Increasing scrutiny

Other proposed formal changes, as well as less formal actions by the current administration toward foreign national talent, however, seem directly at odds with these efforts to improve and streamline the H-1B program.

For one thing, over the last two years, there’s been much greater scrutiny of companies that recruit and hire H-1B talent, says Burke, as well as a spike in the number of case denials. That’s sowing seeds of uncertainty and anxiety among workers and among companies that rely on this talent, especially in IT, he says.

“By government statistics, rejections have increased fourfold. It used to be you’d see about 6 percent of applications rejected, and now that’s up to 24 percent. There’s been a huge increase in requests for evidence (RFE), which is when the USCIS asks for additional information in processing your application,” he says. “That rate has also jumped — from about 20 percent to now upwards of 60 percent.”

There’s also been an increase in site visits, with USCIS visiting companies that use foreign national talent and looking for labor violations, he says.

While these actions are consistent with the administration’s stated policy of “hire American, buy American,” and with the extreme crackdown on legal and illegal immigration and asylum seekers at the southern border, it’s having a chilling effect on companies’ ability to hire the technical talent they need and could actually harm U.S. businesses, Burke says.

“This is now a far more difficult process than it used to be. This is a dramatic shift, and it’s increasing difficulty for these companies exactly at the same time other regulations are being loosened to benefit businesses. We have the demand, we need the talent, we know this brings in noteworthy and valuable diversity — so what’s going on isn’t logical,” Burke says.

Bradshaw, too, is seeing the effects of increased RFEs and rising denial rates. She says the processing time is longer than she’s ever seen in her thirty-five years of work in this area, but agrees that the policy changes, the increased site visits and the heightened scrutiny is having the desired effect.

“It’s a mess for employers right now; it’s really challenging. The administration obviously wanted to push this ‘buy American, hire American’ executive order, which didn’t end up passing, but they wanted to have a chilling effect on employers who hire foreign nationals, and that’s definitely working,” she says.

Brain drain

In addition to the increased denials and site visits, two recent and proposed legislative changes to the H-1B visa program could also negatively impact businesses, says Bradshaw.

The Optional Practical Training (OPT) program, which allows international students on F-1 study visas with STEM degrees from Student and Exchange Visitor Program (SEVP)-certified and accredited US colleges and universities to work for up to 36 months in the U.S. was reinterpreted by the USCIS in 2018 to require STEM graduates to work in-house at their employer’s facilities, not at third-party client sites.

This change, which troubled IT services companies and management consultancies, met industry pushback that had an effect in forcing clarification. Ultimately it has not impacted any F-1 visa holders or their employers.

The second proposed change to the H-4 work authorization program may also have negative consequences for employers. Started in 2015 under President Obama, the H-4 program allows spouses of H-1B visa holders to work in the U.S. A proposal to strip away this program is moving forward, says Burke, but there’s currently no final decision from USCIS.

If this change becomes law, it will have a significant effect on many companies’ ability to recruit and hire foreign national talent, Burke says. “If you have someone who otherwise wants to come here and work for you from, say, China or India, but they can’t afford to do so on one income, or if they need their spouse to work once they arrive and they can’t — what’s the incentive?” Burke says.

In fact, some of Burke’s clients are considering their options in Canada and in other countries, instead, given that Canada’s immigration policies are more hospitable and easier to navigate.

“In our 2019 Immigration Trends report, 65 percent of respondents to our survey say that Canadian immigration policies are easier and 35 percent of companies say they’re sending people to work in Canada. And with the growth of the IT industry in India and China, there are opportunities in those countries, as well,” Burke says.

While Canada, the UK and Australia are all becoming more welcoming to foreign national tech talent that would otherwise land in the U.S., Bradshaw says some companies are trying other creative solutions to hiring talent using different types of visas.

“Canada is really angling for these workers, sure. But we’re also seeing companies sending workers to the UK, to Australia and other places, keeping them in place for a year or so, and then using an L visa, which is for companies who want to transfer current employees to a different country, to transfer them to a U.S. location,” she says.

Tech companies are making clear that they cannot get enough U.S.-born STEM talent, and they need to access foreign nationals to fill vacant roles, increase competitive advantage and spur innovation. But the uncertainty and anxiety caused by the administration’s crackdown on H-1B visa applicants is having a chilling effect, Burke says.

“We need to be able to have rational conversations about these issues without the passion and the inflammatory rhetoric,” Burke says. “The uncertainty and the anxiety and fear caused by these policies is negatively impacting IT companies’ ability to hire, grow and innovate.”