The Stupidity Of The H1B Quota System

Whether it has been for the import of Japanese cars or Indian programmers, import quotas have always been bad for the players in the US domestic industry, here is why.

Just one day after the new quota of 65,000 new H1B visas was opened, it was exhausted. Does it mean that there are 65,000 new jobs? Does it mean that the US economy has revived? Does it mean that there is a shortage of programmers in the USA? Certainly not.

In September 2004, Computer world, announced that times remain tough for IT workers looking for jobs across the U.S. According to the Center for Urban Economic Development at the University of Illinois in Chicago, the IT job market remains tight in the U.S., with more workers than available jobs in many parts of the country. 

The University of Illinois study comes on the heels of an IT employment report released last week by the Arlington, Va.-based vendor group, the Information Technology Association of America. The ITAA report concurred that while there was a slight (2%) increase in IT employment early this year, IT job growth is expect to slow for the remainder of 2004.

If the USCIS, reveals who sponsored whom, it would reveal enough facts whether to continue with the present H1B quota system or not.

To understand H1B visas one has to recognize a contract industry in the US IT industry that is run predominantly by Indian consulting firms who are sponsors but not the actual users of skills.

This layer of Indian consulting firms recruits, retains and relocates Indian professionals from India and then benches them in the US until they find a project. 

This layer hires in anticipation of demand. This speculative hiring was what happened from April 1, 2004 to October 2,2004. 2 Types of Hiring happened. One was by large consulting companies who fearing tighter L1 laws thought that all their employees working on US projects must hold an H1B visa. The other was by small consulting firms who are betting that the US economy may revive next year, after the holidays and elections and with outsourcing projects being discouraged. 

Sponsorships apart, actual hiring by end-user would be in the order where US citizens would be given the first preference, then Green Card Holders, then H1B consultants on the bench and as a last resort, H1B consultants waiting in India. Who constitutes this contingent foreign workforce? Other than the consultants who are hired by large Indian IT firms, many consultants sponsored are not the best and brightest as the H-1B visas were envisaged to hire. Many of the programmers sponsored have actually paid for the H1B visa sponsorship, on terms that they will be reimbursed after being deployed on a contract for a minimum number of hours. (The new trend of consultants paying for themselves shows their commitment to a sponsor who is wary of one of the provisions of the H1B law, which allows a consultant to have multiple sponsorships.)

The truth is that the best and the brightest have not been sponsored in the deal. Good consultants are used to being pursued and persuaded. Imagine them paying a small unknown consulting firm in the US who is hiring in anticipation that the consultant may be placed, come 2005 and a desperate US employer.

So what does the 65,000 hurried hiring buy the USA – a lot of confusion, anxiety and a lot of wasted and wrongly allocated resources.

In order to bring in sanity in the process, the USCIS must:

  • Increase the number to 200,000 so there is no longer a speculative element. (See the 10 Implications of the H1B Quota Increase).
  • Stop allowing hiring 6 months before the Start Date
  • Have a Quota for the month spread over 12 months
  • Regulate Sponsors and have minimum criteria to become an H1B Visa sponsor

Unless the H1B quota is regulated, the best and the brightest of Indian IT professionals will continue to remain in India where the demand is fast outpacing supply. And for those sponsored, it will be a case of being dress up and ready but nowhere to go.


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