Impact of H-1B Visa Reform on Tech Sector

Read Time: 2 minutes, 17 seconds

Since the latest presidential race began, immigration has become a hot topic.

Much of the commentary has centered on illegal immigration, but another important aspect of immigration, H-1B visas, has also come to light. It has resulted in several newly proposed bills now making their way through congressional committees.

The Protect and Grow American Jobs Act (H.R. 170) and the High Skilled Integrity and Fairness Act (H.R. 670) could bring what is considered much needed reform to the existing H-1B program which currently allows high-skilled foreign workers to live in the U.S. on a temporary work visa for up to six years.

But what is the impact of these proposed changes on the technology industry?

There is growing concern among large IT offshore companies that changes to the H-1B visa program will result in fewer visas and increased costs. Many of the top offshore firms have already begun cutting staff.

Wage Increases for H-1B Employees

Salary inflation could cause increased rates and costs of doing business for organizations using offshore resources—costs which affect everyone’s bottom line.

Between the two bills, the minimum salary required for H-1B employees could rise by $25,000 to $55,000 annually per employee assuming a current salary base of $75,000.

Based on the average number of H-1B employees per top company (1,466 employees) and the minimum $25,000 wage increase, companies could be required to spend at least $36.7 million more per year in salaries for existing H-1B employees.

Visa Eligibility Reform

Every year, 65,000 new H-1B visas are allocated by lottery. Most visas go to some of the largest offshore companies due to the sheer volume of applications they submit to legally game the lottery system.

Those companies submitting fewer applications on an as need basis have almost no chance of getting a visa approved since the quota is typically exceeded within a matter of 48 hours.

The top 20 offshore firms, which includes a mix of outsourcing and technology firms, accounted for 46% of all the computer-occupation H-1B visas allocated in 2015.

The bills propose, along with the H-1B and L-1 Visa Reform Act of 2017 (S. 180) and Visa Overstay Enforcement Act of 2017 (H.R. 643):

A Proactive Response

With policy reform signaling significant changes in H-1B visa legislation, mitigation strategies are being formulated by both offshore companies and the U.S. companies that are heavily invested in their use.

At the same time, domestic sourcing providers like 8th Day Software are gaining favorability in a marketplace where concerns about rising offshore rates and immigration policies are making offshore organizations less attractive.

Consider 8th Day Software! We have significant experience providing full life cycle development services across a variety of domains and our unique domestic sourcing model allows us to produce high quality, cost effective solutions in a collaborative and transparent way.

8th Day’s disciplined team of proven technology professionals offer specialized software skills at affordable rates without issues related to time zones, communication, or visa/immigration policy changes. Our teams are built to work alongside your organization’s teams to support your most pressing software needs.

For more information or to request a meeting, email Greg Poston at greg@8thdaysoftware.com.

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