Background image: The Bold Italic Background image: The Bold Italic
Social Icons

Silicon Valley’s Outsourcing Addiction

5 min read
Paris Marx
Photo courtesy of Clara Jordan/Flickr (CC)

Donald Trump’s targeting of immigrants as the cause of many of the country’s problems has led to reprehensible policies like the proposed Mexican wall and the twice-defeated Muslim ban. However, there’s one policy area for which Trump, if not for his persistent xenophobia, might have actually had some merit: changes to the H-1B visa program.

Silicon Valley would be particularly impacted by any changes to the program, because tech workers received nearly two-thirds of H-1B visas in 2014, 65,000 of which go to applicants with bachelor’s degrees; and an additional 20,000 are reserved for those with master’s degrees. But why is this program in the crosshairs of Trump’s fascistic administration? Because instead of using the visa to recruit skilled workers from outside the United States, it has far more often been used to bring in low-skill foreign workers to replace domestic workers.

Often, H-1B workers will take over the same desk as the employee they’re replacing, and sometimes the people being fired have to train their replacement in order to get their severance package.

These practices are not only unfair to American tech workers, who lose their jobs to these outsourcing schemes, but they’re also unfair to the foreign workers being exploited by the companies that use them.

The Outsourcing Visa

The problems with the H-1B visa are not new, but rather are getting renewed attention because of the ideological position of the current administration. In 2014, the top 10 companies receiving H-1B visas all specialized in outsourcing and employed large workforces in low-wage countries like India. Their business models involve bringing in Indian workers on H-1B visas, who are paid less than Americans, to replace existing workers.

In a piece for the Economic Policy Institute, Ron Hira described how this often results in H-1B workers taking over the same desk as the employee they’re replacing, and sometimes the people being fired have to train their replacement in order to get their severance package. Once they’ve mastered the job, the H-1B workers are shipped back to India, taking the job with them, as outsourcing companies rarely help their workers apply for green cards to remain in the United States.

Workers on both sides are treated unfairly so massive corporations can drive down labor costs and increase their profits.

H1-B visas that are used in this way are not fair to anyone. American workers lose jobs they have the skills to perform, and the low-wage replacements being brought in do not even get the opportunity to remain in the United States and make a contribution to the country. Instead, workers on both sides are treated unfairly so massive corporations can drive down labor costs and increase their profits. It makes sense to put new rules in place to ensure that this doesn’t happen.

A distinction should also be drawn between these outsourcing companies, which exploit workers and misuse the H-1B visa, and the more traditional tech companies that generally use the visa as intended: to bring in skilled workers. Tata Consultancy Services Ltd. received 5,650 H-1B visas in 2014, the most of any outsourcing company, while Amazon, the largest traditional tech company, received 877 visas, with Microsoft and Google not far behind. The number of H-1B workers that an outsourcing firm receives in a single year can exceed the total number of employees of some of the most well-known tech companies.

Can the H-1B Visa Be Saved?

Some initial changes have been made to more closely scrutinize companies and ensure that programming jobs require specialized skills, but more needs to be done to ensure that the H-1B program isn’t simply being used as an easy means to outsource tech jobs to low-wage countries.

Representative Darrell Issa wants companies to prove they can’t hire an American for any job paying less than $100,000, with an exemption for companies with less than 50 employees. This would make it more difficult for outsourcing companies to bring in low-paid workers to replace Americans.

Senators Chuck Grassley and Dick Durbin made a different proposal to end the H-1B lottery system, and to instead prioritize foreign students educated in the United States, people with valuable skills and those being paid high wages. Representative Zoe Lofgren also wants to end the lottery and prioritize workers being offered the highest salaries, while setting aside 20 percent of H-1B visas for start-ups with less than 50 employees.

These changes to the H-1B visa take aim at how it is used to outsource jobs, but they would still allow major tech companies and small start-ups to bring in skilled individuals, as they would presumably be paid higher than the proposed cap in Issa’s plan and would be prioritized under the criteria of Grassley, Durbin and Lofgren. However, not all the suggested changes are so reasonable.

In a bill cosponsored by Jeff Sessions in 2015, Ted Cruz proposed not just to increase the salary requirement to $110,000 but to require advanced degrees for all applicants and force companies to wait two years before seeking an H-1B visa to replace a terminated worker. Sessions has since gone even further and suggested the outright elimination of the H-1B visa. These proposals should come as no surprise from people who have little interest in ensuring that the immigration system works fairly, but instead want to do all they can to restrict the number of immigrants and foreign workers.

Turning against Immigration

The United States isn’t the only country suffering from growing anti-immigrant sentiments. It was one of the driving forces of the Brexit campaign in the United Kingdom, where the government promised to restrict immigration once it ends freedom of movement with the European Union, and other countries are already implementing new restrictions.

Australia eliminated its 457 temporary work visas after Trump announced changes to the H-1B visa and replaced it with two more restrictive visas with 200 fewer eligible occupations. The country also updated its citizenship test to better reflect “Australian values.” New Zealand is also placing new restrictions on its skilled-work visas in a “Kiwi first” crackdown. The language in both cases is reminiscent of that used by the right wing in the United States.

Canada has also been making changes, but they’ve been trying to be more welcoming to high-skilled tech workers in particular. The government removed the requirement for a labor market impact assessment for certain positions and, counter to Trump, introduced a two-week fast track for “low-risk, high-talent” foreign workers. Its goal is to use the image of Canada as an open, tolerant and inclusive country to attract top talent not just from the United States but from around the world.

Making the H-1B Fairer

There’s no denying the H-1B visa has been used as an easy means to offshore jobs, which is something that any changes should try to stop. Forcing companies to search domestically for jobs paying less than $100,000 probably wouldn’t have a significant impact on major tech companies looking to use the visa to bring in skilled individuals from abroad because of the high salaries necessitated by the soaring cost of living in Silicon Valley, especially if start-ups are exempt or have their own quota.

The administration’s attempts to restrict foreign workers are part of a wider turn against immigration in many developed countries. In such an environment, it’s absolutely paramount to remember that welcoming people with different backgrounds and experiences does not make the country poorer, but far richer, and that any attempt to shut down immigration instead of simply making the system fairer will not result in positive outcomes.



How Silicon Valley Decimated the Middle Class and Fueled the Rise of Trump
Silicon Valley likes to think of itself as a bastion of progressive social values. Indeed, tech CEOs regularly speak…
Why Silicon Valley Should Get behind Universal Health Care
Universal health care isn’t just good for poor people — it’s good for rich people too. Here’s why.

Last Update: January 03, 2023

Author

Paris Marx 20 Articles

Subscribe to our Newsletter

Subscribe to our email newsletter and unlock access to members-only content and exclusive updates.