As Job Losses Grow, So Do The Calls To Trim Visas, Outsourcing

As the recession deepens and job losses set records, the finger of blame, which has up to now been pointed at the bankers and Wall Street brokers — and, of course, the politicians — is inevitably turning to include outsourcing and U.S. immigration policies.

Within hours of BusinessWeek posting the story about the loss of 533,000 jobs in November, posters were complaining about the number of H-1B visas and other work permits the government is issuing. The Huffington Post’s special recession site has a give and take on the subject with the dishers outnumbering the defenders of temporary workers.

The criticism of U.S. foreign worker policy ebbs and flows with the economy, but it never entirely goes away. Witness the furor a year ago over the illegal immigration bill debated in Congress and eventually killed in the House of Representatives, despite the support of President Bush.

In 2005, in the midst of the national recovery that was especially strong in the IT sector, the USA president of the IEEE (Institute of Electrical and Electronics Engineers) warned, “The drop in computer programmers and rise in managers reflects the trend toward offshoring of programming jobs and the resulting need for professionals to manage outsourced projects.” Gerard A. Alphonse added, “…offshoring not only contributes significantly to U.S. high-tech unemployment, but also suppresses wages.”

The issue even came up early in the presidential election when both Hillary Clinton and Barack Obama signaled they weren’t sold on outsourcing and might end tax breaks for companies that offshore.

And the debate about outsourcing and what it is doing to the U.S. continues; pro and con. The challenge however, is that there is no reliable source of data on how many jobs are in question. Plunkett Research offers some guidance concerning the size of the market economically, while two Canadian researchers found a small, but positive impact on the U.S. from service sector offshoring.

Only when it comes to temporary workers are there any reliable numbers. In the report for fiscal 2007, the Office of Immigration Statistics said 1.1 million temporary workers were admitted to the country. That number is merely the number of times individuals with some form of work visa passed through customs. It excludes those with green cards (permanent resident status), but includes all other form of work permits. However, the report shows that the number of admissions has been growing steadily, with the largest increase coming in two areas: seasonal agricultural workers and H-1B holders.

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U.S. Citizenship and Immigration Services approved just over 126,000 H-1B visa petitions in fiscal 2007 (which ended Sept. 30) despite a supposed cap of 65,000 plus 20,000 supplemental for persons with advanced degrees from U.S. schools.

Companies like Microsoft, Cisco, Oracle, and Infosys are among the biggest users of the H-1B visa process.

The process for 2009 visas is already underway and there is no reason to believe the quota won’t be filled as early as it was last year. Nor is it likely that the cap will be reduced, despite President-elect Obama’s avowed desire to overhaul the immigration process.

Speaking to an Indian newspaper following a conference of the Federation of Indian Chambers of Commerce and Industry, the U.S. consul general in Chennai, Andrew T. Simkin, said a change in the visa numbers was “Not likely.” “It is a serious thing requiring legal amendments and I do not think this could be a priority,” he was quoted as saying.

John Zappe is the editor of TLNT.com and a contributing editor of ERE.net. John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.

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11 Comments on “As Job Losses Grow, So Do The Calls To Trim Visas, Outsourcing

  1. IT folks in my company are being laidoff but the company is still applying for work visa for Indian workers. Any legal suggestion about it?

  2. The H-1B visa program needs to be terminated permanently; hundreds of thousands of US citizens continue to be terminated while their NON-immigrant H-1B replacements enjoy a far brighter future at our expense.

    The so-called “skill shortage” is a ruse to fool politicians. It doesn’t fool the public. The body shop industry of India calls this “knowledge transfer.” Americans are forced to train their replacements prior to being fired.

    According to Business Week, CitiBank just transferred 3.9 Billion USD bailout money to Ratan Tata to pay for replacement workers from India – then Citibank fired 53,000. This is billions of our tax dollars going straight to India, to Ratan Tata. Executives of Citibank are squandering the balance of the bailout money on lavish parties and perks. This is just one example of the leeching of the H1-B visa and its offshoring counterpart.

    Terminated the H-1B visa program – not US citizens.

  3. Does this really surprise anyone? I really don’t expect much change in outsourcing/offshoring if-and-until substantial numbers of manager-, director-, VP-, and C-level people are outsourced/offshored.

    Also, it’s not just the somewhat lower compensation/low-nonexistent benefits that factor in- if you have a substantial number of capable and docile potential replacement workers available, it tends to keep your existing workforce in line. Remember this the next time someone brings up the supposedly picky and demanding Gen Y, Millennials, or Whoevers….

    Cheers,

    Keith keithsrj@sbcglobal.net 415.586.8265

  4. Like anything else, the process gets abused. Originally, the H1-B visa was designed to fill positions that were hard to fill or lacking. With anything else, the meaning got warped so that employers could use H1-B’s as lower cost resources over higher cost, etc. It was supposed to be a mechanism of last resort, which grew into entire staffing agencies dealing in H1B visa placements etc. Lately, figures pointing to outsourcing not being as cost effective or strategically enhancing as thought exist.

    The thing that really rankles me however isn’t the issue of H1-B imports, it is the fact of U.S. exports. India has such restrictive policies on U.S. business market entry that it is nearly impossible for American workers or companies to set up. The infrastructure, education, and services need in India is so tremendous, that companies like AT&T or colleges can really make an impact.

    I believe the U.S. should work harder to ensure that there are open boundaries with emerging countries so that our workers can gain employment and opportunity offshore as equally as foreign firms and workers can gain here.

  5. In a tangential area: I know this Bay Area contingency recruiter- high-tailed it to “the Far East.” He set up shop in a “developing economy” and is still serving the American Market. He tells me he charges a LITTLE less than the going rate, but his costs are so low that he makes vastly more profits.

    What’re your thoughts?

  6. I am writing this message as a response to one of the initial comments made to this article(The H-1B visa program needs to be terminated permanently).

    H-1B program does not need to be terminated “at all”; especially based on the reasons and variables you have provided while writing your response. H1-B nominated “non-resident aliens” do pay tax, social security , medicare just like the US citizens. Yet, an H1-B worker needs to leave the country once the visa expires after 6 years unless this person can get a permanent residency. This means a non-citizen person ends up paying social security that he or she will never get back. The “US Citizens” get this back. Yes?

    At the same time, obtaining an H1-B visa typically costs about $5000 or more including application and attorney fees. The money that is paid to the legal practices get back to this country as tax and obviously, the application fees are a source of revenue stream to Immigration. Having said all this, H1-B process and the H1-B workers actually support the economy. Also, in many cases, H1-B nominated employees do perform to or beyond expectations since they are given a chance to do so. More so, they have to go above and beyond in which they typically do since they have to stand out by “skillset, performance, results and loyalty”.

    I find your response quite impulsive. It is lacking “logical” supporting data, therefore it is discriminative.

    Regards,

  7. To Atil,

    You have to admit that today’s H1-B visa program has been abused. I don’t think you can justify the program just because of some of the application fee they paid. We only need to issue H1 visa if the skill can’t be found from US citizen. A stable sociaty is much more important than the 5000 dollar application fee.

  8. John,
    This is certainly true and I never said or pushed “$5000” makes up for the damage that is claimed to be taking place. If any, the damage is citizens who are left without jobs. I mentioned the social sec, taxes and the fees to proove that H1-B nominated individuals are not earning their positions at US citizens’ expense. H1-B visa program might have been abused for certain positions, this I have to agree. Yet, this does not mean that the program has to be terminated. Also, are we all realizing here that it is the US based “for profit” and “non profit” organizations who sponsor individuals for H1-B? Why would they bear the cost of sponsoring non-resident aliens? Not to make them work for less. As a matter of fact, DOL regulates the minimum wages that has be paid with the position that is being sponsored accordingly. I mean…It is not like a foreign empire is taking over rights here. FInally, as for your desire for a stable society…We, including the H1-B workers,I am sure, all desire to live in a stable society. I strongly believe that the stability of our society is under threat because of the existance of the H1-B function. It is under threat because of the non-realistic growth that took place with financial resources (credit, loans, “unearned money” ) that does not have back-up. This is the root of the problem, not the H1-B workers. There is a very serious and drastic shaking going on in the economy and there is no reason to point fingers at people who come here and work hard.

  9. Correction;
    I strongly believe that the stability of our society is NOT under threat because of the existance of the H1-B function

  10. To Atil,

    One thing we both agree with is that the program should not be terminated but has been abused. We only need to issue H1 visa if the skill can’t be found from US citizen. I believe that is original goal for this program too. No one blamed those who came here and worked hard for the crisis we faced. The problem is in our system. The abused H1 visa program is just one of them. That is my point.

  11. John,

    We are on the same page. 🙂
    I am NOT on the same page with the very first comment made to this article. I see your point and agree with it.
    Have a great weekend

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