Saturday, May 07, 2005

H1B Visa: Threat or Benefit to America?

I'm not going to get too deep into this because there has already been plenty of other discussion and most of the IT guys out there already have an opinion that I'm not likely to change. But I've worked with several H1B employees in the last five years, and I'll share my thoughts.

The corporate line is that they helped fill a gap in labor skills. This is probably somewhat true from an IT perspective. Corporate America doesn't like to spend money to develop employees internally. To a ruthless businessman, that makes some sense. But a smart businessman, a patriot, an intellectual, an economist, or a sociologist might have a valid argument if they said that philosophy was short-sighted. I could fill fifty more blogs on that topic, so I'll get back to my H1B experiences.

I didn't see so many of them in the early 1990's when I was a full-timer in the EDS army. But as we moved to the mid-1990's we did pick up a few contractors and some were H1Bs here under the mantle of some consulting firm. When I broke away and went contracting myself in 1997-1997, I started seeing a lot more. By 1999, it seemed like 40% of every IT department I worked with was Indian!

In my 1998-2000 stint with PG&E (nutty company, but boy the folks there do take good care of their people and I will always respect them for that), my office mate and I, both frequent HBO watchers, saw a parallel between HBO's OZ and our IT department's diversity. OZ featured several factions, often aligned by race: the Hispanics, the Blacks, the Italians, and a few straggling misfits. My office mate would say our group was like that: we had the Chinese, the Vietnamese, the Caucasians, the Indians, the Mexicans, and the Visual Basic guys.

Anyway, I digress. Was this proliferation of H1B workers good or bad? If you were an unemployed IT worker in the last five years or so, you'd understandably want to say it was bad. But let's take a closer look at the situation.

First of all, was it really cheaper for Corporate America to hire the H1B workers? I used to think so, but now I'm not so sure. I spoke with many of the H1B holders, and they told me that they were being screwed by their middlemen just as American contractors could be if working for an unscrupulous company. Several of the H1B workers I knew were getting paid annual salaries of 60 to 80K. That's a darn nice salary, particularly if you were sending a chunk of it back to Bombay every month! Knowing what we know about sleazy middlemen companies, they're not going to put their employees to work without a profit, so they were charging the American company perhaps $50-$80/hr in contract rates. Folks, that might be a little lower than what companies had to pay for an American contractor in the late 1990's (perhaps between $70-$90/hr with a those lucky SAP bastards making over $100/hr) but I wouldn't call it cheap. $50/hr is still going to be higher than the base salary of most full-time IT workers.

It seemed that many of the H1B workers were getting screwed by the middleman company. They might have gotten some modicum of benefits and tax coverage, but I know how these "consulting" firms work: they like to bill you out at double what they're paying you. I know, because I got royally screwed by the American counterparts of the Indian firms when I was contracting. There's a future rant to be had on the whole contracting business. But we're talking about H1B workers, and I really don't think they were that much cheaper for Corporate America, based on my experiences. I theorize that the issue is not only cheapness, but also impatience. Corporate America didn't want to wait for employees to be trained, it wanted to get going right away.

Oh, there are economic benefits, to be sure. Corporations liked the idea that the H1B guys were contractors, didn't need benefits, and could be released at will. Because there were so many available at the time, it was a natural matter of statistics that many H1B workers would pick up the contract work. But where I worked, lots of American contractors got work too. I really didn't see this as primarily an issue of economics, but again, that's just my experience.

Not that there aren't economic affects of the heavy H1B availability. The simple laws of supply and demand state that with so many of tech workers available, the rates they'd have to be paid would drop. And clearly in that regard having a lot of H1Bs around didn't help the indigenous population of IT developers, especially contractors. But I just don't see the pointy-haired ones as having planned this fallout, as so many disgruntled IT workers claim on bulletin boards and blog comments. Some of the corporate heads are soulless and selfish enough, certainly, but I'm just not convinced such a machination was nationally coordinated and executed by them and with such economic forethought.

I'd like to see the American worker get that job, and still see a steady but regulated stream of immigrant workers. But if we had to choose beween using H1B workers or outsourcing, I'd pick H1B. The H1B worker may be sending money out of the country, but as long as it's not for terrorism, then that's his or her right. What I like in the H1B option is what's happening to that other half of their paycheck. They're getting taxes withheld just like everyone else, but they're not going to be claiming any of that money unless they become citizens, and many did not have that goal (is it fair that they would pay taxes for benefits they can't claim? Yes, because they ARE claiming some of the benefits the government provides, like law enforcement, transporation facilities, and other infrastructure services, not to mention insignificant details like THE JOB). They also had to pay rent, buy gas, food, and pay travel fees. With outsourcing, all of that goes away. In this regard, the H1B program could be called a benefit for America, or more accurately perhaps, the lesser of two evils. It's certainly a labor practice that has more benefits than total outsourcing.

In any event, I'm not against immigration, because if you truly love and know America you know that immigration is what America is all about. Everybody here came from somewhere else, except the Native Americans, and who knows for certain that they didn't hop over from some other geographical plate during an ancient earthquake?

The problem isn't H1B workers or immigration. Those things are what help keep the world's best and the brightest coming to America (though the H1B limits can probably be adjusted to encourage Corporate America to develop existing employees). The problem is a self-absorbed and impatient America that thinks in terms of quarterly profit reports and not about the long term effects of treating human beings like cat shit.

You know who treats their people well? The Indians. How did they suddenly show up in the 90's with all these technical skills? They have a strong emphasis on education, and I found out from some of them that an education there is very affordable. In America, taking a class in a new language might be $3000, a bit high for a salaried IT person responsible for a family of four. But in India, you can take that class and more for the price of a lunch. And they can get cheap versions of our technical books too for about a buck. These books are legal...made by the same publishers that sell us the exact same text on slightly nicer paper for $55.

I've got nothing against the Indians that are taking advantage of what's been put in front of them. But if our IT pundits, company heads, politicians, and universities are going to complain about the lack of skilled American IT workers, maybe they should also consider leveling the playing field. That means addressing the rising cost of tuitions, investing in employees, analyzing H1B limits, and reconsidering the tax breaks and protections offered to companies that outsource.

Oops, I wasn't supposed to go too deep on this...and come to think of it, I didn't...I've only barely scratched the surface.

1 comment:

Wallflower said...

One of the best analysis I have read to date on the H1B conundrum. I am an H1B myself and found your article to be extremely insightful. The corporates end up paying almost the same if not more for us H1Bs. Its the middle men who splice away a chunk of it.