by Stephanie Overby

How to Save U.S. IT Jobs

Sep 01, 2010
CareersGovernmentH-1B Visas

Most of the government activity related to creating or securing U.S. IT jobs, curbing offshore outsourcing, restoring America's IT competitiveness, and limiting temporary visas for foreign tech workers has been more grandstanding than grand plans. Here, 10 outsourcing experts offer their proposals for restoring America's IT labor force.

While popular in the halls of Congress, the additional H-1 B visa fees tacked on to the most recent immigration appropriations bill drew mostly criticism outside of Washington. Some critics say it went too far; others say it didn’t go far enough. Most agreed that the move would do little to protect or create U.S. IT jobs.

Meanwhile, the more substantial H-1B and L-1 Visa Reform Act of 2009, introduced by Senators Richard Durbin and Chuck Grassley, has been in committee since April 2009and is expected to stay put through the remainder of the year.

Phil Fersht, founder of outsourcing analyst firm Horses for Sources, views Congress’s recent efforts to curb offshore outsourcing as “merely political grandstanding from the protectionist lobby that will only encourage further offshoring.”

As Americans prepare to celebrate Labor Day, asked some leading minds—academics and analysts, outsourcing consultants and IT services executives—what the federal government ought to do to help create IT jobs and maintain U.S. competitiveness in the global technology market. Here are their proposals.

Make the Domestic Workforce Priority One

“While the U.S. benefits from foreign workers, it’s stretching the evidence to argue that H- 1Bs are somehow an unusually productive asset to U.S. owned companies. The domestic workforce should be our first priority; it is our competitive advantage. So if we want to help IT, we should reduce business taxes, cultivate the available domestic workforce first, and use H-1B as the program was designed to be used: as a temporary fix to cyclical shortages, not a long term supply of preferred workers who are tied to their employer.”

—B. Lindsay Lowell, director of policy studies for Georgetown University’s Institute for the Study of International Migration

“I propose a two-pronged approach, focused on a long-term solution, not some overnight tax penalty that makes government officials feel good. First, use federal funds to address the supply side of the problem and get more U.S. college students graduating in the STEM (Science, Technology, Engineering & Math) areas. By educating our own workforce we will decrease our reliance on importing new workers.

“Second, given federal government’s purchasing power as the largest customer of IT services in the country, they should require their suppliers to meet certain onshore U.S.-citizen hiring requirements. This shouldn’t target [just] Indian outsourcing companies. These measures must include the large American IT providers as well. They receive enormous government contracts and execute much of this work outside the U.S. State government IT spending could also increase demand for onshore technology jobs by instituting similar requirements.”

—Monty P. Hamilton, CEO of Rural Sourcing Inc.

Maintain America’s Free Market System

“The current [free market] system [in the U.S.] should be sustained—and built upon—to improve the competitiveness of American business as well as America itself. It allows U.S. enterprises the ability to strengthen their IT competitiveness by combining the skills from the best and brightest from the U.S. and around the world. The federal government should invest heavily in math and science education, especially at the elementary through secondary school levels, to expand the skills sets needed to run the IT operations of tomorrow. It also needs to put in place programs that continue to attract the world’s smartest people to America and keep them here.”

—Naresh Lakhanpal, president of Patni Americas, the North American business unit of Mumbai-based outsourcer Patni

Give Businesses Incentives to Hire Americans

“Businesses will create U.S. jobs if it is their best option. We can make that so by creating a strong partnership across all stakeholders—business, government, schools and the public. The ‘centralized software factory’ model can be developed in the U.S. to reduce the [cost] gap between offshore and domestic delivery. The government needs to provide support for such models in the form of incentives. Education policy should align skills development with business requirements, providing training incentives to IT services businesses. Immigration policy should focus on attracting top skilled talent while the rest of the talent pool is developed locally. Global services companies should be required to hire Americans for U.S. positions.”

—Neeraj Gupta, CEO of Ann Arbor, Mich.-based IT services company Systems in Motion

“There are other options [besides protectionist legislation] that the U.S. government could consider if it wants to stop Indian IT services firms from bringing temporary IT staff over to the U.S. and create an environment that fosters onshore technology employment and innovation:

  • Give Indian services firms tax-incentives that would sufficiently motivate them to hire and train U.S. IT employees. Many leading Indian firms have proved extremely good at training, developing and motivating young IT talent, so why not get us a piece of the action?
  • Give U.S. enterprises tax incentives for creating new onshore IT jobs. This won’t be any harder to administer than that call center tariff.
  • Establish an oversight committee that will devise an immigration strategy to lure top talent into the country and encourage them to stay, and make sure those policies are focused and not open to abuse.
  • Create more dynamic partnerships between academic institutions and businesses. Some firms, such as Systems In Motion, are pushing the agenda, but they need a lot more investment to get anything like the scale and execution capability to be effective in the global marketplace.”

—Phil Fersht, founder of outsourcing analyst firm Horses for Sources

“The U.S .and India must resist protectionist practices and work together to put the right policies in place. One of the few bright spots in the overall economic recovery has been the employment and investment commitments made by some of the global companies targeted by this [addtional H-1B fee].These companies are increasing their long-term investment commitments in the U.S. and have established data centers, sales offices, R&D hubs and manufacturing facilities throughout the country that employ thousands of U.S. workers.

“Since 2008, Wipro has been able to create over 800 IT jobs in the U.S. by investing in our strategic delivery center in Atlanta. We would encourage the U.S. government to become a partner in creating jobs by offering incentives and tax breaks similar to those that were offered to us by the state of Georgia. They welcomed us with open arms.”

—Martha Bejar, president of global sales and operations for Wipro

Stop Regulating Businesses

“Place a moratorium on legislation and regulations impacting businesses. Multi-national companies feel like they have a target on their back while trying to compete around the globe. In times of uncertainty, they stop hiring employees and hire more lawyers and consultants to protect themselves from what may or may not come. They have choices on where to headquarter and hire, and they will move away from countries that don’t support their profitability and sustainability goals.

“The government should provide tax incentives—federal, state and local—to providers who establish service centers in the U.S., with added incentives based on the unemployment levels of the area. I’d like to see a ‘Partnership for America’ plan that subsidizes IT training centers in these unemployment hubs and provides increased bandwidth and more robust infrastructure in rural areas to attract IT delivery centers and create jobs there.”

—Lee Ann Moore, chief marketing officer for outsourcing consultancy EquaTerra

Fix Broken Immigration and Visa Policies

“The best long-term solution would be to enact the Durbin-Grassley bill, but there are a number of executive actions the Obama administration could take immediately to help solve the problems.

“The H-1B visa is centrally about cheap labor, obtained legally through loopholes involving the definition of prevailing wage. The government should auction off the visas to the highest bidders—those employers who pay the highest premium above prevailing wage. Since the employers claim the foreign workers are ‘the best and the brightest,’ they should be willing to pay a premium wage, just as they would for high-quality Americans.

“The current administration should also reverse the previous administration’s extension from 12 to 29 months of Optional Practical Training, which allows a new foreign graduate from a U.S. university carte blanche access to the U.S. job market.

“Fixing the employer-sponsored Green Card fiasco is equally important. The labor certification process, which ostensibly requires employers to seek qualified Americans before resorting to hiring a foreign worker, is full of loopholes. Under the current system, an employer can first sponsor a foreign worker for an H-1B visa with no requirement that it seek out American workers first. That visa holder works for the employer for a while and is then sponsored for a Green Card on the grounds that no American has the on-the-job experience to fill the position. The Department of Labor should disallow employers from using experience in the position as a criterion. They also should require employers who wish to sponsor a foreign worker for a Green Card to advertise the position on a Website maintained by the DOL [Department of Labor].”

—Dr. Norm Matloff, a professor of computer science at the University of California, Davis

Multi-Pronged Approaches

“There’s only so much the federal government can do to create or ‘save’ IT jobs. But if I had to suggest some options, I would say invest in improving the U.S. education system, especially in urban areas; provide incentives to expand broadband nationally so homesourcing can thrive in the hinterlands; focus on incentives to spur the growth of IT businesses; provide training on the application of a broad range of occupations, rather than just churning out more software developers or database administrators; expand immigration of foreign IT workers, which recognizes the importance of having the most skilled people to perform work; tax trial lawyer revenues to fund high-tech centers in low cost U.S. markets; and invest in efforts to improve network and data security. Or we can just annex Brazil or India or Vietnam so the U.S. can take credit for all the jobs being created there.”

—Stan Lepeak, managing director of research for outsourcing consultancy EquaTerra

“It’s simple. Give a visa to anyone who starts a company that employs American workers; upgrade the skills of the U.S. workforce and teach them to start companies; open source university research so entrepreneurs can commercialize it; and direct tax breaks to small businesses and entrepreneurs—after all, they are the ones who create the jobs.”

—Vivek Wadhwa, visiting scholar at the University of California, Berkeley

“To improve the American IT job market:

  • Institute “Buy American” provisions in government IT procurement. China makes no bones about their indigenous innovation programs that steer government projects to Chinese firms. This is smart policy that we should adopt.
  • Fix the H-1B and L-1 visa programs, which are riddled with loopholes, undercutting American workers’ wages, and speeding up the offshoring of jobs. We need to mend, not end, these programs. Passing S.887 [The H-1B and L-1 Visa Reform Act of 2009] would address the problems.
  • Realign the interests of companies with workers. Major changes are needed in corporate governance to ensure that companies take a stakeholder, rather than a purely shareholder, approach to managing companies. CEOs are rational; they work towards incentives. So the government needs to adopt policies that ensure that the company’s interest is aligned with the country’s interests.
  • Invest in U.S. IT workers. Employers have cut back on their funding of continuing education at the same time that technological obsolescence cycles are shortening. The government needs to adopt policies that support not just K-16 education but K through “gray” education.
  • Improve labor market signals that will give workers, educators and students real-time views of what’s in demand and what’s not. For all the whining that employers do in Washington and in the press about the lack of skilled workers, you’d imagine someone would ask them for data. The government should track the offshoring of jobs, as well. Right now we’re just guessing at which jobs are geographically sticky and which will be rendered obsolete by offshoring. The absence of data is inexcusable, especially from an administration that claims to care about offshoring.
  • Ensure that the downstream benefits of R&D investments are captured by U.S. workers. American workers need to move into occupations that can’t be moved offshore, or they must provide more value than their overseas counterparts (in the case of IT, ten times more value than their Indian counterparts). To do that, you need access to better tools and technologies. The government subsidizes a huge amount of R&D, and the purpose is not just to create R&D jobs. The hope is that downstream design, development and production jobs will stay in the U.S. But given the global nature of these firms, my guess is that much of that downstream benefit is going offshore.”

—Dr. Ron Hira, associate professor of public policy at the Rochester Institute of Technology

Editor’s Note: This story was updated on September 7, 2010 to include the quote on page two from Wipro’s Martha Bejar.