H-1B demand this year will be fast, furious

WASHINGTON - The U.S. begins accepting new H-1B visa petitions on Monday, April 1, and fast demand is expected. This is going to be followed by much fury.

Industry proponents of the H-1B visa will argue -- at megaphone strength -- that high demand is evidence of both an improving economy and need for skilled workers.

Opponents will counter that H-1B visa employees are displacing U.S. workers, and will point in particular to H-1B visa demand by offshore outsourcing companies.

Immigration experts believe that visa demand this year will be high enough to cause the U.S. Citizenship and Immigration Service to hold a lottery to decide who gets a visa and who does not. The last time this happened was in 2008.

This is how it works: The U.S. will likely treat the first five days of April as essentially one day. If, at the end of this period, the government gets more visas than can be met under the two caps, the 65,000-cap and the 20,000-cap for advanced degree holders from U.S., universities, it will use a lottery to distribute them. In 2008, the U.S. received 163,000 petition visas between the two caps.

The lottery will cause some to scream. In 2008, Google complained loudly that 90 of its 300 H-1B applications were rejected in the lottery.

The Senate's work on a comprehensive immigration reform bill will likely turn the visa lottery into a marquee exhibit for reform. Opponents are already making their case by pointing to some recently released U.S. Department of Labor (DOL) data.

H-1B opponents cite a wide range of problems with the visa, including wage pressure since most visa workers are hired at entry level. Age discrimination is an issue, as H-1B workers are generally younger. H-1B visa use by offshore outsourcers gets attention because of their increasing reliance on them. The visa has also emerged as a competitive issue for some domestic IT services firms.

Offshore outsourcing firms, not companies such as Google and even Microsoft, which is a large user, are the major users of H-1B visas. USCIS H-1B data analyzed by Computerworld makes this clear, but that finding is also backed by the DOL data that reports on Labor Condition Applications.

The IEEE-USA, which has been arguing for green cards instead of more H-1B visas, points to new Labor Department data that shows 10 organizations, all offshore outsourcing firms, applied for 112,739 positions in the first quarter of the federal fiscal year, which began Oct. 1, or about 64% of the applications. H-1B-using firms file Labor Condition Application (LCA) with the DOL, which reports the region an employee will be working in and the wage. H-1B workers are required to be paid prevailing wages.

In a statement, IEEE-USA president Marc Apter said, "Proponents of an H-1B visa increase will bemoan the fact that the H-1B cap is already used up, but it was outsourcing companies -- businesses who use the visas to take American jobs -- who used nearly two-thirds of them."

The LCA numbers are higher than actual H-1B applications because companies can file more applications than they may need and may never use them. This leads to some interesting results.

One company, Syntel, a Troy, Mich.-based services firm, was listed as the top employer by the DOL with about 55,000 LCAs, even though the company only employs about 21,000 people globally. About 81% of Syntel's billable workforce is in India, according to its most recent annual report.

Asked about the applications, Syntel, said in a statement: "The number of slots in LCAs that Syntel has filed is not indicative of the number of actual workers placed at a given location, nor does it accurately reflect our future hiring plans."

Syntel said that the DOL allows a company to file an LCA for an unlimited number of workers per application. "It takes the same amount of time and effort on an employer's part to file [and for the government to approve] an LCA for 100 slots as it does for a single slot," the firm said. Based on that, it decided that "filing LCAs for up to 100 potential workers per application instead of a single application" saved the government and the company paperwork.

Ron Hira, a public policy professor at the Rochester Institute of Technology and researcher on H-1B issues, said, "It is plainly obvious that the LCA process has so many loopholes to render it a joke. Heavy users of the H-1B program should be making good faith efforts to recruit American workers but exploit loopholes that enable them to bypass American workers."

Hira added: "And the wage floors are so low that the LCA process invite firms to use the H-1B program for cheaper labor."

Among the immigration attorneys expecting a high number of H-1B petitions next week is Ian Macdonald, co-chair of Littler Mendelson's Global Mobility and Immigration practice, who believes a lottery may be implemented this year and will result in some casualties, companies which don't get the workers they need.

"The demand for H-1Bs is a strong indicator that the economy is improving," said Macdonald.

The bad news, said Macdonald, is that in many of the areas where the economy is improving highly skilled workers are needed, "and the H-1B category is used to obtain highly skilled workers in areas where there is no U.S. workers or a limited amount of U.S. workers," he said.

Macdonald said H-1B use by outsourcing companies means the work is being conducted in the U.S., even if it is done by foreign firms. The U.S. gains tax revenue from it, otherwise that work can be fully outsource overseas, he said.

Former Rep. Bruce Morrison (D-Conn.), who was the author of the 1990 immigration legislation that created the H-1B visa, recently testified in Congress about the H-1B issues in support the IEEE-USA's position. He believes that a better path for the U.S. to address skills needs will be by making permanent residency available to STEM graduates of U.S. universities.

Morrison said he agrees that more skilled workers are needed, but that the U.S. should meet this need by keeping the foreign U.S. university graduates here.

"By getting green cards right away, there is no financial incentive not to hire Americans if they are qualified," said Morrison. Employers also lose their power over foreign workers on H-1B visas if they have to shift from temporary to permanent workers.

"All those disadvantages to American workers go away if you use green cards," said Morrison.

Hira wants changes to the H-1B program. "The principal problem with the H-1B visa program is not the cap," he said. "Instead, the problem is that the majority of H-1Bs are being used to substitute for American workers. The data show this quite clearly -- most H-1Bs are being used for cheaper indentured labor and also for offshoring jobs."

Hira points to legislation recently introduced by Senators Charles Grassley (R-Iowa) and Sherrod Brown (D-Ohio), bill S.600, which is modeled after similar bills that Grassley had previously introduced. It would raise wages for H-1B workers, give U.S. workers an opportunity for open jobs, and limit the visa's use by IT services firms.

Patrick Thibodeau covers cloud computing and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed. His e-mail address is pthibodeau@computerworld.com.

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