With the technology industry constantly complaining about a talent shortage, making it harder to hire foreign workers doesn’t seem like an obvious solution.
Oddly enough, though, President Donald Trump’s proposed changes to the H-1B visa program could help companies such as Microsoft and Google bring in the foreign talent they need.
In his “Buy American, Hire American” executive order, Trump told four Cabinet agencies to propose new procedures for granting H-1B visas, including a possible replacement for the current lottery system.
'We're going to defend our workers, protect our jobs and finally put America first/'
In this year’s lottery, the government got 199,000 applications in less than a week for 85,000 available visas. The applications were down a bit from last year, which can be read as a sign that outsourcing firms — the biggest users of the H-1B program — are worried about a Trump crackdown.
And that’s a good thing. The outsourcing firms, mostly Indian companies such as Wipro and Infosys, often pay their foreign workers less than typical technology-industry wages to maintain websites and perform other routine back-office tasks. Critics say their business model harms American workers.
Industry observers also believe the outsourcers flood the government with H-1B applications to improve their odds. If they stop playing that game because of Trump’s vow to police abuses, the odds should tilt in favor of companies such as Amazon and Intel.
Administration officials suggest that Trump wants to move away from the lottery and toward a system that would reward higher-paying employers. They also suggest that he may raise the application fee and set a higher minimum salary for H-1B workers.
All of those moves would make the program less hospitable to outsourcers and more useful for Silicon Valley firms looking for truly high-end skills. “You solve a supply-demand problem by either increasing supply or raising the price,” says Rob Atkinson, president of the Information Technology & Innovation Foundation. “President Trump essentially is raising the price.”
The outsourcing firms, of course, will adapt to the changes. “One effect is they will just do more work in India,” Atkinson says. “The other possibility is that it becomes harder for these companies to make their model work.”
Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics, thinks the Indian firms will have to pay more — and hire more U.S. citizens — if they want to keep their American clients.
“These firms are under serious margin pressure anyway,” Kirkegaard says. “They need to move up the food chain, do more than basic bug-finding and back-office optimization. … To do that, to become more of a high-value-added provider, they’re going to have to hire more American workers.”
Trump’s executive order eventually may transform H-1B from a lottery into something like an auction, where the visas go to the firms willing to pay the most. Firms such as Google — or in other industries, Monsanto or Goldman Sachs — would be able to hire the world’s best talent and find specialized skills that are in short supply.
That, after all, is what the H-1B program was designed for. And, those U.S. companies tend to try to keep the workers they bring in. “They pay workers well, and they sponsor them for green cards,” Kirkegaard points out. “It’s a different use of the program than the outsourcing firms do.”
Ideally, the U.S. should combine an auction process with a way to issue more visas when companies need more workers. Trump, having run on an anti-immigration platform, isn’t likely to go that far, so employers will have to settle for a more efficient allocation of the current quota.