Trump's new visa fees spur offshoring talks, hiring turmoil
reuters.com
reuters.com
It’s no coincidence that Amazon has more than double the number of H1Bs in corporate tech roles than the next biggest user. They’re not exactly broadly known for being a great place to work in tech. However, with H1Bs Amazon has a lot more power over making tech workers tolerate stupid stuff that makes these jobs much less attractive to top-tier US tech talent with more mobility.
This is why the offshoring boom happened since COVID - remote-first proved that async works well enough, which made offshoring more enticing.
Now that sponsoring 10 H1B visas is guaranteed to cost $1M, I may as well spend that much to open an office abroad, get 7 figure tax credits per employee, and pay a lower salary.
The difference is, that $100k on top of the 30-40% premium on top of base salary means a $150k employee went from costing $210k to $310k almost overnight.
The math for sponsoring someone on any work visa was already growing tenuous against offshoring, but this rule change sealed the deal by giving FP&A a number it can use to justify that it is much cheaper to offshore.
Median teacher salaries in the US are around $63k/yr. If you were to hire one at that rate on an H1B visa for 6 years, the $100k visa cost would be nearly a quarter of the total cost of their hire. (Assuming, of course, that the declaration that it only needs to be paid once per visa remains true, and that Trump doesn't change it on a whim later on, which are absolutely not safe assumptions.)
> Median teacher salaries in the US are around $63k/yr
Also the average salary for Bay Area teachers in the good school districts in my experience. Educators are severely underpaid in California.
Are h1b distributed evenly by state? Think about it for a minute or just go check the data if you have the high skill needed to do so.
If you want to induce a behaviour in thousands you change the law, wagging your finger at them isn't going to work.
Because the person in Brazil would be able to steal your IP and you'd have no financial, legal, or emotional recourse since they're across an international border. Big tech is continuing to find this out the hard way when countries like China and India somehow clone their products in record time.
By hiring in the same country you reside in, you have access to your legal system to protect you and your business interests. And it can also protect your own ego as well (if you have one).
And for the USA specifically, it is also really about the people here. Tech is a surprisingly human industry, and Americans have the humanity and grit to pull it off.
> pay a lower salary
Nothing is stopping tech from doing this right now to American workers. Remember that those higher paying firms do false positive hiring - they reject way more people than they pull in. If you do the reverse and adjust your operations to account for more workers that "aren't good but aren't bad either", you'd probably perform even better than offshoring.
So higher costs on importing workers might prompt a bit more offshoring, but not much, because if those companies thought those jobs could be done offshore, they'd already be there.
Async development at scale (and especially for revenue generating IP) was still not proven until COVID.
Additonally, the reverse brain drain in much of China, CEE, Israel, and India only kicked off in the late 2010s, and the COVID layoffs and subsequent rehiring made it easier to open an office abroad.
> because if those companies thought those jobs could be done offshore, they'd already be there
Every job that would have gone to someone who requires some kind of work sponsorship can now be justified with a hiring abroad.
I'd recommend reading tfa, and as someone who is on a couple boards, trust me when I am saying that offshoring is now going to go in hyperdrive.
Foreign students pay large sums of money for advanced American STEM degrees and then flood the market for the same jobs American tech workers are trying to get. Americans in debt from undergrad degrees that foreign nationals were able to obtain a lot cheaper.
The ratios I’m seeing are insane, like 90% OPT candidates. You can’t discriminate against them, have advanced degrees and accept lower salaries and out number domestic applicants - so we reluctantly hire them. Even though their technical communication and English skills are abysmal.
Also you got to think HR has incentive to let it slide to get those cheap workers. It’s sad hearing them talk salary expectations of terrible candidates knowing they’re going to be hired because they want 20k less or whatever.
I’m just sorry for the people the candidate will be working with and the company itself because it’s a net negative for them.
I don’t think you’re making a very strong argument.
Full disclosure, I read a lot in English but almost never spoke it. 6 years ago I started working internationally and my spoken English has improved enormously.
I have observed the same with my colleagues. The man who recruited me, an older German, could barely make himself understood in English.
A couple of years later, he sounds American.
He’s spent a lot of time in English speaking countries(years), including Australia and the US… very minor accent. I doubt many would be able to place him, unless they saw how he looked first.
In addition to L1, O1 is also often gamed. $100K for H1B is mostly "posturing" at this point, as voters don't know about other options.
The only way abuse of both visas can stop is if they are not tied to an employer, allowing free movement of labor. Thus, if someone is talented and at TCS then they can either demand a salary equal to their skill or go to an employer who can offer that salary.
Additonally, federal, state, and local governments need to start playing the subsidy game that Poland, Romania, Czechia, India, Israel, and other companies play to attract offshore offices.
> H1B is mostly "posturing" at this point, as voters don't know about other options
I disagree. This was clearly timed to distract and overshadow the Gold and Platinum card announcement.
Do you mean US government must dramatically reduce cost of living by offering subsidized housing, investing in education, healthcare etc? When I hire, I never consider USA and nobody pays me to find skilled labor in Eastern or Central Europe. You can pay one half of American salary there and people will be put in upper middle class with such income, being able to afford a lot and living comfortable life.
https://www.uscis.gov/working-in-the-united-states/temporary...
Changing or Leaving Your H-1B Employer
Q. What is “porting”?
A. There are two kinds of job portability, or “porting,” available based on two different kinds of employer petitions:
H-1B petition portability: Eligible H-1B nonimmigrants may begin working for a new employer as soon as the employer properly files a new H-1B petition (Form I-129) requesting to amend or extend H-1B status with USCIS, without waiting for the petition to be approved. More information about H-1B portability can be found on our H-1B Specialty Occupations page.
...
Q. How do I leave my current employer to start working for a new employer while remaining in H-1B status?
A. Under H-1B portability provisions, you may begin working for a new employer as soon as they properly file a non-frivolous H-1B petition on your behalf, or as of the requested start date on the petition, whichever is later. You are not required to wait for the new employer’s H-1B petition to be approved before beginning to work for the new employer, assuming certain conditions are met. For more details about H-1B portability, see our H-1B Specialty Occupations page, under “Changing Employers or Employment Terms with the Same Employer (Portability).”
Someone on a H-1B visa can change jobs as soon as the other employer files a form I-129 to hire them.
Many employers simply won’t do that paperwork by policy and treat that process as no different than sponsorship.
It also means that you're much, much less likely to find another employer willing to fill out the paperwork to hire you—especially if they also have to pay the $100k fee (yes, I know, the announcement doesn't say they have to—wanna take bets on whether Trump would say they do if he learned that it's possible?).
It's possible that someone intended the knock-on effects I describe, but I would say it's just as likely that it's pure coincidence that they support the right's desire to hurt labor as a whole.
> "We probably have to reduce the number of H-1B visa workers we can hire," said Sam Liang, co-founder and CEO of popular artificial intelligence transcription start-up Otter. "Some companies may have to outsource some of their workforce. Hire maybe in India or other countries just to walk around this H-1B problem."
If having to file for 10 H1B visas now costs the same as the amount of FDI needed to get $10-20k per head of tax subsidies and credits across CEE and India, the math to open an office abroad just became justified for every business.
The smallest companies that don't have visibility in the market maybe could try and do it (dangerous risk) but the larger companies that have a lot to lose from headline risk will be at significant risk.
Like the executive who only thinks in short term budget will go ahead and do this -- the executives who think maybe 2-4 years down the road will realize its a trap.
Google [0], Microsoft [1], and Amazon [2] have continued to make headline making investments abroad despite Trump being in office.
And these size of companies are large enough that they can eat the litigation cost, becuase it is significantly cheaper to completely offshore.
And in all honesty, the Trump glare isn't severe. You become part of the media zeitgeist for a couple of days, and then everyone moves on to some other controversy. Look at how this now overshadows the US-Korea snafu, which itself overshadowed the Russian oil snafu, which itself overshadowed ....
[0] - https://blog.google/intl/en-in/company-news/welcome-to-anant...
[1] - https://news.microsoft.com/en-in/microsoft-announces-us-3bn-...
[2] - https://www.aboutamazon.in/news/aws/aws-invests-8-billion-in...
Post-pandemic most single men in Silicon Valley have realized that the region is terrible for anything but settling down with a family.
It was for a few specific ML research roles that I was interested in, of which there were very few in NYC and during the interview process I was told that they would go to internal candidates
Without the H1B hand cuffs, retention/productivity in India will be doubly chaotic.
As messy as this is, some US companies may consider to make the effort to attempt to hire more in the US.
EDIT: added retention
In most cases, we have those people manage relations with offshore teams in India.
So, just like how Chinese Americans became overrepresented in hardware and supply chain management roles in order to help manage a company's "China" story, the same thing is happening for "white collar" industries.
It won’t be a matter of “outsource to India or hire locally”, it will be “what is the ROI of the bribe compared to having to hire locally when the labor market gets tighter?”
For a while the US outsourced a lot of call centers India, but that quickly became a stereotype for terrible cost cutting measures. The customer experience was horrible. Most of these have now been onshored or placed in locations with better performance for the American market, like Ireland, Canada, Costa Rica, or a lot of WFH folks in the US.
As such, an O-1 is now being used the way an L-1 should have been, an L-1 is being used the way an H1B should have been, and an H1B is used the way an OPT should have been.
Most academics, nurses, PhD students turned ML Researchers, etc will be filed on an H1B or (in the latter case OPT to H1B).
Not that I agree with tariffs, but there are import taxes on physical goods and parts and so on, even when they are produced by the same company, so why not on services?
Literal backbone cybersecurity software used by the Congress IT team is developed in Tel Aviv, let alone by every single F1000.
And we ourselves export services abroad. What's to stop the EU from passing a Digital Services Tax as a result?
But also, it’s logistically difficult to tax services because they don’t enter into the same ports of entry (eg. airports, seaports), but rather over phone or the internet. There’s no CBP agent listening in on every international phone call, identifying which type of service is being performed across the international phone system.
US Customs interdiction on those ssh/https-transported "git clone" sessions you use as an importer, then. "Please first fill out CBP Form 5106 to identify yourself as an Importer and get in that line over there to get your git license."
The AI thing aside, I wonder why people are not demanding actual fix on the issues, i.e. right to change employer. Sure, companies wouldn't want that but aren't the SV engineers highly paid individuals? Wouldn't they be able to collect considerable resources to lobby the politicians into it?
Reality is this rule only incentivizes offshoring (maybe India, maybe Canada, maybe LatAm, etc) instead of hiring domestically.
In trying to get a headline saying "we can hire 100% American" now companies are considering offshoring, which means 0 Americans are hired.
There are smart ways to crack down on H1B abuse, and the headline policy wasn't it.
It’s yet another case of what economists call “concentrated benefits, diffuse costs”.
The companies that use H1-Bs have strong lobbying power. The average US citizen doesn’t know much about H1-B or the common criticisms. Some grievance-based US voters want to cut most/all work visas, especially H1-B. Crucially, H1-B recipients don’t vote in US elections, so the people most affected have no influence in fixing it.
The underlying problem is that Congress is defective. It used to fix problems that helped America. Now it’s only useful for launching influencer careers.
Is this a unilateral change that will have some collateral damage? Yes.
Is this going to total ruin the US tech sector? Unlikely.
Will all these jobs just go to India directly? Almost certainly not. That option was always on the table and lots of reasons why employers aren’t sending more jobs to India, including deep structural challenges in the country that aren’t close to being solved.
Will they get offshored elsewhere? Mostly not. Maybe a bit, but those jobs were already at risk of being offshored. The H1B change won’t make a huge difference there. More likely is 15% of roles offshore, 15% were truly needed and employers pay up, 15% are just eliminated and absorbed into existing workers, and the rest stay in the US. Thats still a big net win for the United States.
What will happen? Not completely clear yet, but over time this simply raises the bar for claiming you need to import somone to do a job. India will lose the most as it puts big hurdles to folks there getting highly desirable jobs in the US. There may be some very limited movement of roles elsewhere but those will likely go to Canada, the UK, and maybe a few other places.
The administration is calling the bluff of these companies crying foul, and very likely these companies will cave. Expect to see anyone that does actually try to move things abroad to simply be slapped with tariffs that make such moves unprofitable. These companies value access to the US market much more than employing a few H1Bs.
Not saying I agree with everything happening, but the idea that this was some poorly researched jerk reaction dangerously underestimates the playbook being used here. The administration knows exactly what they’re doing.
I mean its perfectly defendable, its a way of depriving the rest of the world of highly skilled, motivated people.
As we've seen several times before, all it takes to turn a country into a backwater is brain drain. Vienna was _literally_ the centre of arts, culture and commerce, until it wasn't.
> These companies value access to the US market much more than employing a few H1Bs.
I think thats the point, its going to be used as a tool of favour/coercion. "good companies" will get h1bs, "bad companies" will not.
On top of that salaries have gotten significantly higher in both countries now ($60k-80k TC mid career)
At this point, most H1B sponsorship is for a candidate on an OPT, but now there is an incentive to relocate those employees back to a foreign office (Canada, India, Singapore, etc).
And, leaving aside tech - healthcare workers like nurses and doctors, along with academics are overwhelmingly sponsored via H1B - not O1. Say goodbye to the Phillipines-to-US pipeline that was helping keep rural healthcare infra on it's last legs.
Just ask anyone who had to train their H1B replacement to get severance.
Those who support H1B should start talking to those who feel displaced, replaced, and cheated. Any one of us could be replaced or off shored.
I have been critical of H1B on here. I think it has been abused by companies and hurt American workers. But I also think we should allow more just plain old immigration (that doesn't give companies crazy leverage over workers).
I think people currently under the program should be exempted. You can't invite people into your home, then after they build their lives around that alter the deal. That's incredibly fucked up. Especially when it's kind people excited to come live in your house with you.
My first responses on here when this happened was 'about time'. And then I saw frantic people posting and my heart broke and I felt sick I had posted that.
Care to share how and why you have this opinion?
op
>>that prefer to stay there
you
>>Dubai an interesting alternative to Amsterdam.
The inherent problem with your last sentence is that Dubai is not in the Netherlands.
And that's before we even start talking about what kind of life that country and salary affords you, i.e. the thing that people actually care about, and not just materialistically but also culturally.
[1] https://thetax.nl/?income=85000&startFrom=Year&selectedYear=...
It'll be easier to hire now that they don't have to compete with US salaries.
Even better there are a lot of US scientists looking for a job since the multi billion dollar funding cuts for cancer research. Perhaps they can also help everyone else out.
It's still America first, he's just using zero based indexing and everyone else is in position 0.
Another possibility is this cost gets shared with the workers who are desperate to get a job and supresses real H1B wages even more-- it's already quota controlled. Hey, what are you going to do if you don't get a raise, give up on your life in this country or pay 100k to move?
As always, the best way of protect labor is better regulations and maybe unions.