April 15, 2009

H-1B: Foreign companies hiring foreign nationals

Filed under: Uncategorized

I’m a big believer in international competition and in Have brains, will travel. So I’ve never been able to find a comfortable position on the H-1B visa controversy. Do American companies need foreign talent so badly that they must import specialized workers to fill critical positions? Or are they using H-1B to lower costs by paying below-industry rates for foreign workers?

When I thrash around over these questions, trying to figure it out, I’m inclined to give the benefit of the doubt. If American companies need foreign talent, let them justify their needs and let’s get to it.

Keep in mind that this is all about ensuring American companies have a competitive edge. It’s about making sure they have the talent they need to keep American business strong. Even if some American workers don’t like it.

But H-1B should have nothing do with creating opportunities for foreign nationals in the U.S. Sorry, but I’ve traveled to progressive countries where getting an entry visa means signing a statement that you will not work in that country. You will not take a job from a local. It makes sense for a nation to protect its jobs and to absolutely favor its own citizens — including the U.S. Likewise, once a foreign national is allowed into the country to work, that individual should be extended many of the same rights and courtesies (and obligations) its own workers have. Otherwise, why let them in?

So here’s where this all gets dicey. Why does the H-1B program — which ostensibly protects the interests of American companies — give an edge to foreign companies by letting them bring foreign workers into the U.S.?

When a reader recently sent me a rundown on H-1B Visas, I slapped my head, rubbed my eyes and looked at the numbers again. The top 4 employers on the H-1B list are Indian companies. (If you already knew this and I’ve been asleep at the wheel, slap me. The controversy that’s been emphasized in the media is about how H-1B screws American workers. Turns out it screws American companies even more.)

Why is the U.S. helping foreign companies import foreign labor?

According to an Informationweek analysis reported in Fierce CIO, these 4 foreign companies were granted over 12% of the 85,000 H-1B Visas issued in 2008.

INFOSYS TECHNOLOGIES LIMITED: 4,559
WIPRO LIMITED: 2,678
SATYAM COMPUTER SERVICES LIMITED: 1,917
TATA CONSULTANCY SERVICES LIMITED: 1,539

How does this protect the competitive interests of American companies?

10,693 H-1B Visas were granted to just 4 foreign companies. Microsoft is #5 with 1,037. The 4 Indian companies at the top of the recipient list received more H-1B’s than the next 50 American companies received as a group.

Guess I’ve been a dope. The H-1B program is a U.S. government subsidy for foreign companies operating in the U.S. No wonder Microsoft campaigns for more H-1B visas — it’s competing for a U.S. subsidy with India. The U.S. government ensures foreign companies operating in the U.S. can hire foreign nationals.

22 Comments on “H-1B: Foreign companies hiring foreign nationals”
By Dennis Gorelik
April 17, 2009 at 7:09 pm

Nick,
Discriminating people by their country of birth is as bad as racial or gender discrimination.
It’s not good that you are promoting discrimination.

By Nick Corcodilos
April 18, 2009 at 12:23 am

Dennis,

Why do countries charge import tarriffs? Why do nations require visas for entry and exit? Why do countries around the world bar foreign workers from entry?

It’s a simple matter of competition and protection of national economies. The U.S. is not unique. The problem is, the U.S. is more lax than many countries. The reason is purely political.

I don’t pretend this is a simple issue. But when foreign companies operating in the U.S. are given special rights to import their native labor into the U.S. rather than hire U.S. labor, there is something wrong with our governance.

If you wish to invoke discrimination, slice this the other way. Are those Indian companies not discriminating against American workers? There are few jobs that cannot be done with some training and with a reasonable learning curve. Why don’t those companies forego H-1B visas and hire American workers instead?

U.S. companies (and our economy) have been enriched by talented people from around the world who have come here to work. They do it through a normal visa process. Discrimination kicks in very powerfully when a special visa provision like H-1B is used in what appears to be a very stilted way to benefit foreign companies operating in the U.S. That’s discrimination.

If there’s a good explanation, I have not heard it.

By Alphonse
April 18, 2009 at 11:22 am

Nick Wrote:
“It makes sense for a nation to protect its jobs and to absolutely favor its own citizens”

Nick, while I strongly agree with, and have benefited greatly from your insights on job-hunting, I must disagree here. “Nations” do not give out jobs. At least, they do not give out PRIVATE sector jobs. Those are CREATED and given out by private companies, owned by specific individuals.

I am a firm believer in property rights, as a matter of PRINCIPLE. Who are you, or the government, or anyone else to come in and stop the owners of a private company from freely associating with whomever it is they wish to associate with? That would clearly be a violation of their property rights, as well as their freedom of association.

As for the rest of us who live in this country, despite the fact that politicians like to dream up all sorts of “rights” for us, we do not have such a thing as the “right to a job” that someone else has to create. (What would that make HIM?) All we have is the right to pursue that job; that is, to the right to compete for it on the free and open market.

One last thing: just because some countries still like to practice the discredited theories of mercantilism and protectionism doesn’t mean we have to do the same. As you yourself mention, this country grew wealthy the way it is not by imitating other nations, but by doing precisely the opposite and welcoming talent and productivity regardless of origin.

By Nick Corcodilos
April 18, 2009 at 12:01 pm

Alphonse,

I am a capitalist through and through. But commerce and government are not the same.

I did not say that U.S. companies should not be able to hire foreign nationals.

**”Nations” do not give out jobs. At least, they do not give out PRIVATE sector jobs. Those are CREATED and given out by private companies, owned by specific individuals.**

You are correct. But private companies do not issue entry and exit visas. Government does.

Don’t mistake my comments about the responsibilities of government for protectionism. The very fact that nations exist distinct from one another, with boundaries, is something that capitalism must grapple with. I’m not talking about commerce. I’m talking about government. The U.S. government has obligations to its citizens similar to the obligations other nations have to theirs. Please don’t suggest that the U.S. is unique in restricting work visas — you know better.

Name one nation that freely permits foreign nationals to enter and work without restriction. Every nation discriminates in that regard, but discrimination is not a pejorative — it’s also an honored sign of judicious national and personal policy.

Sorry if I’m confusing the routine agenda on Ask The Headhunter — business — with government. Sometimes those factors intersect, as they do in this case. I think this is an interesting issue. Don’t ask me who I am to regulate private companies — ask, What regulation is reasonable? Because there is government regulation in every nation. For example, companies are not free to “associate with” offshore banks so they can hide taxable revenues.

And please consider your own confusion: **we do not have such a thing as the “right to a job” that someone else has to create.**

What is H-1B but a U.S. government program that “creates” jobs for foreign nationals in the U.S.? The program itself creates a right. That’s what government does. And I’m suggesting that in this case, the U.S. government is wrong to issue more H-1B visas to foreign-based companies than to U.S.-based companies.

If you wish to argue there should be no government regulation of commerce in the U.S., then come out and say it and justify the position. But I don’t see that as a viable policy. As long as we have government policies regulating hiring, they probably need to be tweaked. And I’m trying to tweak.

By Alphonse
April 18, 2009 at 1:16 pm

“The U.S. government has obligations to its citizens similar to the obligations other nations have to theirs.”

[The one and only proper obligation the US government has to its citizens is the protection of their legitimate rights to life, liberty and property, as mandated by the founding documents of the nation. Just because the government has stepped out of its bounds does not change this fact. The concept of “rights” pertains only to freedom of choice and action, and not to objects and things. And rights are not guarantees that one will attain the things one pursues. All they do is protect our freedom to act to achieve our goals. That’s why the Declaration refers specifically to the PURSUIT of happiness, and not its attainment. That was not a random choice of words. So I hope you understand why I say that there is no such a thing as the “right to a job” created by someone else – just as there is no such thing as the “right” to a car owned by someone else.]

“Please don’t suggest that the U.S. is unique in restricting work visas — you know better.”

[My apologies if that’s what my previous reply seemed to suggest, but I meant no such thing and I certainly know better. What I’m saying is that just because other nations do it does not mean we too need to engage in the competition in self-sabotage and the violation of basic human rights – specifically here, the freedom of association.]

“Don’t ask me who I am to regulate private companies — ask, What regulation is reasonable? Because there is government regulation in every nation. For example, companies are not free to “associate with” offshore banks so they can hide taxable revenues.”

[I’m not saying that every “association” is legitimate. Obviously my rights end where yours begin. Certainly, it is the legitimate function of government to assure the safety of its citizens and to defend them from foes both foreign and domestic. So for example, if an American company wanted to “associate” with a known terrorist organization, or enemy of the United States, obviously that would be unacceptable. But the fact that an American company wants to associate with an innocent foreign worker who’s simply out to improve his lot in life picks no one’s pocket nor break anyone’s leg. Besides, American companies have the right to negotiate for low wages where ever they may get them in the pursuit of competitiveness; if that comes at the expense of the American worker (it does not), then so be it. It would be their proper right to do so. Taxes are a whole other matter I think would be unwise to get into. :) ]

“What is H-1B but a U.S. government program that “creates” jobs for foreign nationals in the U.S.? The program itself creates a right. That’s what government does.”

[Government does not create rights. It can do two things however: either to protect existing rights or violate them. Think about it: if companies did not have jobs to offer in the first place, would issuing H1-B’s create them out of thin air? Sorry that I wasn’t clear the last time. My point is that this country should have a free immigration policy. The only people that should legitimately be turned down from coming here should be criminals and people/organizations that want to harm our national security. And yes, I am also saying that there should be no redundant laws regulating commerce, since the initiation of force and fraud are already banned by fundamental laws and can be prosecuted in the courts. There should be a separation of state and commerce for the same reason we have a separation of church and state…. Or you get the situation that we’re in right now!]

By Janet Chiu
April 18, 2009 at 3:23 pm

Nick,
I am surprised that you can say, “There are few jobs that cannot be done with some training and with a reasonable learning curve.” My husband, who is originally from Hong Kong, has been in academics since 1977, and we have seen American born graduate students gravitate to industry and foreign born students the primary competitors for academic research in medical sciences. By “some” training you cannot possibly mean a Ph.D. and rigorous post-doctoral training. You are either an incredible optimist or hopelessly naive. (I am, by the way, American born and of european descent.) You need to study the details of the employees who have H-1B: just how educated are they?

Love your essays, but I think you are out of your turf on this one.

By Nick Corcodilos
April 18, 2009 at 10:26 pm

Alphonse: I stand corrected. Government does not create rights. H-1B permits companies to hire foreign nationals. We disagree about the U.S. having a free immigration policy.

Janet: You are correct and I apologize if it seems I’m over-generalizing. That’s why the H-1B program exists and I do not oppose the program. Some hires are prudently made from outside the U.S. But you’re generalizing a bit yourself: “we have seen American born graduate students gravitate to industry and foreign born students the primary competitors for academic research in medical sciences.”

My point is not that H-1B hires should not be made. It’s that foreign-based companies should not be issued dramatically more H-1B’s than U.S. companies.

Isn’t it a bit odd that 4 Indian companies were issued the largest numbers of H-1B’s? Is it really possible that those 4 Indian companies require so many hires with unusual academic and technical qualifications? Is it possible that those companies are so far advanced in their hiring needs compared to Microsoft and IBM? That’s a stretch. It seems something odd is going on.

By scottthekyhrguy
April 22, 2009 at 9:27 am

Nick — I am on your side on this one. I think the nuance of your comment is getting lost because the root subject is very polarizing. I won’t get into immigration, immigration reform or protectionism because I don’t think that’s what you’re trying to address. I think what you’re trying to say is that there appear to be foreign national outfits that have figured out how to game the system. People scream about outsourcing, but this is effectively “in-sourcing” and it’s almost more insidious because it creates the illusion that knowledge-based jobs are being retained in this country. A law that was designed to help U.S. businesses recruit talent from outside the borders of the country when local talent didn’t make itself available (or wasn’t able to meet the minimum requirements for the job) and/or allow talent from outside the U.S. to take the first steps toward a career in the states is being used by these companies to gain a competitive advantage over U.S. based companies that must jump through the often significant hurdles one must clear in order to use the system as designed. Full disclosure — I have five Indian Nationals, two Chinese Nationals, a Norwegian National, a Canadian National, a Trinidadian and a Briton who are all in involved in various stages of obtaining their H1-b, TN or permanent residence visa within my own company. I also have a group working on a project in Italy, a group in Spain, a group in Chile and a handful of people in Malaysia. I can tell from experience that the U.S. is much less restrictive on the limits we place on visiting workers than any of those countries are. Especially with respect to taxation and limits on scopes of services and duration of stay.

I think an interesting question would be to understand how the ratio of U.S. citizens to Indian nationals compares within say a Google, MicroSoft or Accenture vs. INFOSYS, Wipro, Satyam, or TATA. I’m not saying they shouldn’t have a higher percentage of Indian nationals on board. Siemens has more Germans in leadership roles in the U.S. than does a company like GE. I get that. My understanding is the opportunity within the four companies you’ve liste for employees and candidates who are not “in-pats” is somewhat limited though. And I agree wholeheartedly with you that that’s just plain wrong.

By freyr
April 28, 2009 at 1:38 am

Nick is not promoting anything other than sound business practices and competitive advantage for US companies and workers. He is suggesting that the United States operate on the same labour laws as Switzerland, Denmark, Germany, and other countries. I agree with him.

The intent should match the best practice to have the best workers for the job …pricing has been a motivating factor, not the lack of skilled US citizens …it doesn’t add up — especially in the tech sector.

We have over 2m out of work and H1-Bs being used for administrator and developers where US workers have not been able to find or afford to work for the same prices as individuals offshore. The kicker is that not only are the companies asking for H1Bs unnecessarily, the H1Bs are displacing US workers, many of the large companies are awarding “gatekeeper roles in the hiring process to the 4 companies mentioned and many agencies so that US workers are competing and being made to bid on work, often times at a third, half or less of market rate for the United States.

There are other issues as well (such as sensitive data floating around offshore at the request of US companies which hire intermediaries to drive down salaries and gather information which cannot, legally, be requested from the candidate).

Likewise, I agree with the fact that a high demand, low supply position once legally filled by an H1B should afford them similar work circumstances as a US worker …not endless, thankless hours and “second citizen” treatment. I know too many H1Bs who have found themselves in these situations. As a manager, I have been directed to make demands to H1Bs after a fashion in which I was not comfortable …which I would not work with my US employees.

Nick is right on this …

By Daniel
May 5, 2009 at 10:02 am

Nick,

I’ve always enjoyed your articles, except for this one, definetely.

Daniel B.

By Harish
May 8, 2009 at 2:19 am

@Nick,

Most of the companies that you listed do create jobs for americans but they are more towards administration and very few techie ones.

I would be dishonest if i don’t accept that many companies abuse this program for body shopping.

From what I understand from your blog is that your are not against the H1B program but against Foreign companies hiring foreign nationals and working in US, which i do agree !

By Tajana
May 12, 2009 at 12:24 pm

Nick

I enjoy reading your column and have learned a lot from your many comments over the years.

From my read of “H-1B: Foreign companies hiring foreign nationals” and the reactions of your readers, I can see how the issue of H-1B work visas can be viewed differently depending on the constituency reading it. Although I do appreciate both sides of the issue, I have a rather strong opinion on this government policy of issuing H-1Bs to foreign nationals who will be working for foreign-owned MNCs in the United States.

Regardless of which looking glass is used to examine the issue, there is a larger issue at stake – distribution of profits and government’s hand in this. If the laissez faire rule remains a tenant in our capitalist system, and if the true intent of our government was to issue H-1Bs to an applying company to temporarily employ the skills of individuals who “can’t be found amongst the U.S. worker pool”, then why are so many of the highly-skilled and university-educated U.S. workers losing their highly-paid jobs whereas the company is applying for H-1Bs and/or outsourcing their jobs to India and China? It seems to me that the government is directly aiding the companies with help of corporate lawyers without regards for the U.S. worker.

What is the future for our kids and their kids? I am not sure.

Another question to ponder remains: as the U.S-based MNCs started outsourcing to India and China and encouraging a steep growth of inflow of H-1Bs into the US, how come that we hear of huge corporate profit losses and layoffs more and more?

One day soon, the U.S. worker will find himself working for the same people he helped bring up to speed on technology and welcomed under H-1B rules.

By Looking on
June 23, 2009 at 9:51 am

You’re about ten years late with this issue: it started about a decade ago. The reality of it is Slave Labor Light, meaning an official way to import unfree, and therefore cheaper (in many ways), labor. H1B’ers are attached to their “sponsor” and can’t quit and move around, they’re effectively indentured. You can understand that such worker would be more amenable to lower pay and other thing that an entirely unattached local wouldn’t even consider. Notice that the masses of puprotedly rare, irreplaceable talent tend to come from the Third World, an unlikely source for something superior, you’d think. That is, of course, that’s where there are masses of poor people who are willing to work for less as long as it’s in the US or another Western country. How many H1B workers come from France? :-) Yet officially, this slave-labor importation program is intended to enable the best and the brightest from all over the world to work in the US when needed. Then, amazingly, the best and brightest all come from India, get chained to their chair, and work long hours for little money.

By Lin_TheITProfessional
June 28, 2009 at 8:09 pm

Nick,

I so agree with you on this one. I know so many IT professionals who shall we say are past the age of 40, who are being told to retire or forced to because they make more than an H-1B.

Of course, they are not told that, but I’ve worked with the PO’s and I have seen the difference in billing hours and know why companies no longer want American workers.

The problem is coming though. The Indians working in this country are beginning to get wise to salary differences. They see salary charts on the internet and are starting to ask questions. Someday soon they are going to demand the same wages. Then what will be the advantage?

By Soum
June 29, 2009 at 4:54 pm

Just want to ask: who are Americans? I believe, Americans are the talented people from all over the world who came here for a better living, bright future. Some day most of the Americans came through some kind of Visa and finally became resident and citizen.

Now these H-1b visa holders also come here with a dream of better future. They embrace the culture, contribute to the society and help America to become a competitive workplace.

May I ask, with respect, why there is so much dissatisfaction about it. People come here because America have projects itself as a dominating/powerful nation. Who doesn’t want dollar?

Now if someone wants repel these migrants (H1B or other) America needs to project itself as less bright spot, like some South African nations. Have you ever thought why someone don’t’ go to middle east/Africa for Asylum/work. There are plenty I believe.

Comments welcome.

By Bob
July 2, 2009 at 2:38 pm

Hi Soum,

I agree with what you have said. I do hire H1B for contracting jobs, because I do not get that talent in the market.

Nick, right now I have an urgent requirement for 14 resources with a 4 years degree preferrbly in Science/computers and with atleast 7 years of experience in Oracle Applications with very good technical skills as well. Project will be for 4 months only.

Any Americans around???

By Rafael
December 15, 2009 at 2:52 pm

Any Americans? No!
But a foreign, here he is!

By Verline Echternach
April 13, 2010 at 11:02 am

Greetings :). Do any 1 find out how can i get Offshore Companies Laws and regulations of United states in pdf file format?

By Magda Clower
April 13, 2010 at 11:20 am

Hi :). Do someone know where can i download Offshore Companies Procedures of New zealand in file format?

By amanda
January 14, 2011 at 1:55 pm

Nick:
maybe the “skill” anyone can do,but the different “cultrue””background””diversity”
“knowledge” employees from different country brings to an organization is something make it stronger and better, and by hire Americans only can not bring.And what make America as a country strongest in many ways in the world today?
this is my personal opinion.

By Kathy
February 19, 2011 at 3:00 am

As an employee of a huge U.S. Corporation that abuses the H1-B visas, I am 100% opposed to allowing ANY foreigners into this country to steal our jobs and opportunities. There are absolutely financial incentives from the government and/or kickbacks from these foreign labor firms, like Infosys, and probably the rest. For the last 2 years, there have been NO opportunities in our IT department. Every position that would have come up was filled with Infosys contractors from India or China. These contracting firms charge the SAME as U.S. contracting firms, so there is no $ saved. The contractors do not have the same knowledge, experience, work ethic, and COMMUNICATION skills, but no one cares if they do almost nothing. I finally had it confirmed to me that the corporation I work for has QUOTAS of how many Infosys contractors they must hire. Huh!?? WTF is going on? So they have a reorg in IT and dump several of the high performing analysts and developers into a new group, which are basically HELP DESK people! Excuse me for being LIVID about this blatant discrimination of Americans!!! They are obviously trying to force out these highly skilled, hard-working Americans and most people, especially in IT, are disgusted by this – as they should be.
Oh, and the Americans are not allowed any cross-training, but the contractors are! This is absolutely treasonous and must STOP!

By vincenzo
August 21, 2011 at 6:42 pm

I am italiano ..who are the true american?? the true american are INDIANS they are the true american were all decedents of immigrants its that piece of paper that tell us were americans ..

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