How much are companies expecting to save by going this route? Is it dramatic?
The abuse happens through contractors.
Companies hiring full time H1B employees directly will not save money because there is no incentive to and they have to pay the government additional fees simply for the H1B visa, and they have to almost certainly have an immigration team, or at a bar minimum a lawyer on retainer to keep up with the immigration stuff.
My company applied for an employee I manager’s permanent residency (she is on an H1B visa which has a limit of 6 years unless you apply for a permanent residency). The application process costs the company 30k on a one time basis, including fees to the government, lawyer fees, and associated expenses.
Its not in salary that you see the money. The savings are in training and legal costs.
The average tenure of an HB1 is much longer than a US citizen. Turnover is lower for obvious reasons.
Threats of litigation , etc are much lower too. I havent seen a single HB1 sue their employer. Similarly, i have seen multiple US citizens sue employers, and almost always without merit (often it was to stave off termination, retaliate, etc).
There is alson some risk in a US worker. There is a lot of entitlement even at the high end. I have seen many native engineers and even PMs hit bars every other afternoon...on a 3pm weekday. These were people close to 200k year.
The HB1 is a shield against that risk (or poor hiring), and thats savings too
There are companies who found the absolute best in the world that they have to have. So they need that H1-B to get the job done and hire the best person.
Then there are companies who just want to contract out super cheap labor, so they do thousands of H1-B applications hoping a few hundred make it through, then the they charge a local rate, but pay the employee a fraction and reap the profits.
I’m flooding this thread a bit, but I’ve always been a little confused by the consultancy firms. Is there a clear difference between off shoring and H1B? Or is it mostly the same thing for these companies, with different margins for each.
So the H-1Bs are loss leaders with actual money being made in offshoring instead.
But the client often has their own employees on H-1B visas as well. This is unrelated to either offshoring/consulting.
Eg. Take a company like Apple. Apple hires employees on H-1B visas and pays them well.
But also Apple uses consulting firms (both US-based and offshored) for specific projects/functions. These workers are not Apple employees. They are employees of the consulting company -- or in some cases, there is a chain of contracts where they are employed by one company, which contracts them out to a consulting firm, which then contracts them out to end client (Apple).