by Stephanie Overby

Halts in H-1B Visa Hiring?

Apr 09, 20094 mins
IT LeadershipOutsourcing

Are U.S. companies cutting back on H-1B hiring in response to a growing backlash against the foreign worker visa program?

A recent article in the Washington Post alleges that some American companies may be reducing their H-1B visa hiring in response to a growing backlash against the program that allows them to hire foreign professionals in the U.S. The article states that “Analysts say it is part of a wave of mounting anger in the United States over work visas, especially at a time when more than half a million Americans are being laid off every month.”

But it’s unlikely that any company has discontinued hiring new H-1B visa recipients solely as a public relations move, says Eugene Kublanov, CEO of offshore outsourcing consultancy neoIT. The U.S. companies that have traditionally employed the most H-1B professionals—Microsoft, Accenture, and Cisco topped the list last year—may be making an extra effort to keep a lid on their work visa usage, but they were never likely to be trumpeting such news in the first place.

Any shortage in H-1B jobs this year may mirror the overall slowdown in hiring that’s hitting American and foreign workers. “I don’t doubt that companies are cutting back on H-1B applications but it certainly isn’t because of fears of a backlash,” says Rob Sanchez, senior writing fellow for the anti-immigration group Californians for Population Stabilization and publisher of the e-mailed Job Destruction Newsletter. “If they are pulling back it’s because they aren’t hiring. And if they aren’t hiring H-1Bs they aren’t hiring anybody else either.”

As of April 8, the U.S. Citizenship and Immigration Services (USCIS) said that it had received less than half the number of petitions to reach the 65,000 cap during the initial filing period for H-1B applications. The USCIS also indicated that it received close to the number needed to fill the 20,000 exemption for those who have earned a U.S. master’s degree or higher.

While the number of initial applications may diminish due to the economy, according to a March 2009 report by the non-profit, non-partisan research group National Foundation for American Policy (NFAP), the demand built up by the inability of employers to hire professionals on new H-1B visas for over the past year and the low quota on H-1Bs relative to the size of the U.S. labor force will contribute to employers likely reaching the annual cap for next year. Last year, the U.S. Citizenship and Immigration Services received 150,000 H-1B visa applications in two days.

The biggest users of H-1B visas in 2008 were Infosys Technologies, Wipro, Satyam Computer Services, and Tata Computer Services, although NFAP found that the 12,180 new H-1B visa holders hired by all Indian companies in 2008 represented just 11.9 percent of the 2008 new H-1B petitions issued.

A few U.S. financial services companies may have to rethink their H-1B hiring policies. President Barack Obama’s stimulus package requires that U.S. companies that receive funds from the Troubled Assets Relief Program (TARP) refrain from hiring H-1B visa holders for two years if they have laid off American workers in the previous six months. But those companies have used just a fraction of the overall H-1B visas available in recent years. JP Morgan Chase hired 236 new H-1B visa holders in 2007, Goldman Sachs employed 227, and Citigroup used 185.

Any suspended hiring of foreign professionals by banks and investment houses should have little effect on overall H-1B usage. But for the financial services firms themselves, it will mean increased costs. “Indian and other offshore and nearshore vendors are already staffing up in the U.S. to be able to service their clients who are operating under new restrictions,” says neoIT’s Kublanov. “But these services will be at a much different price point than leveraging talent in Bangalore, Budapest or Buenos Aires.”