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June 19, 2018

Software Outsourcing and H1B Visas

If your company uses custom-developed software—whether the software is developed by in-house staff or a third party—then you should care about the H1B Visa program. You should also be aware of what factors affect how this program works—and who can utilize the H1B program. Arguably, no current political or government policy topic has a more direct affect on application software development and the IT community in general than the subject of H1B Visas.

Article originally published on February 22, 2018 on DevOps

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In this article we want to help you understand:

  • What is the H1B Visa program—and why should you care?
  • What conditions are impacting this program currently?
  • What are the implications for the use of outsourced software development?

Background on H1B Visa

The H1B Visa program exists as part of the Immigration and Nationality Act. The purpose of H1B is to allow U.S. companies to employ citizens of foreign countries in certain “specialty” occupations. Broadly, H1B Visas were created to help U.S. companies hire talent with scarce or “hard to find” skills. In other words, companies can hire non-U.S. citizens because the companies believe U.S. citizens with comparable skills (at comparable cost) are not available in sufficient number as candidates for hire. Visas are issued for a specific term (multiple years) and an individual may—or may not—be renewed.

H1B Visa Lottery

Around April 1 of each year, U.S. employers begin applying for new, multiyear visas. The U.S. government approves and grants visas in October of the same year, which are good for the coming year. For example, new visas beginning in 2018 were issued in October 2017. The visas are awarded by random selection from a “pool” of applications—hence the term “Visa Lottery.” There are actually two lottery selections each October:

  1. 20,000 Visas are issued from a pool of candidates who must have a master’s degree (or higher) from a U.S. university. Once 20,000 candidates are selected, then …
  2. 75,000 Visas are awarded from a pool of remaining candidates—including anyone eligible—but not selected in the “U.S. Masters Only” lottery. To be clear, those without a U.S. master’s degree will only be entered in this second lottery. Persons with a U.S. master’s degree will be entered in both lotteries.

What Skills Are We Hiring?

OK, so what are the skill sets of people being hired through the H1B program? IT professionals are being hired—this is by far the largest group that receives visas! Each year the U.S. Citizenship and Immigration Services publishes an annual report. According to its 2016 annual report, 75 percent of H1B visas were issued for computer-related jobs.


Political Factors – Unclear Future

On April 18, 2017, President Trump signed a “Buy American, Hire American” Executive Order, which established broad policy guidance to federal agencies. Government agencies are asked to take steps to give preferential treatment to U.S. citizens in hiring practices and to U.S. businesses in commerce. In particular, the U.S. Immigration Department was charged with evaluating elements of the H1B Visa program. Many suspect that additional steps will be taken in 2018 to further restrict the H1B Visa program.

A Rigged Game Against SMBs?

Some advocates of small and midsize businesses (SMB) have complained that the H1B Visa program unfairly favors large businesses. Two of the most common examples given are:

  1. Expedited processing — Companies can pay for expedited processing of visa applications. By most estimates, this reduces the time to submit an application to the “lottery pool” to a matter of days versus the standard time of multiple months. SMB proponents feel this gives an unfair advantage to large companies with deep pockets.

Stuffing the ballot box — There’s no practical limit to the number of applications that a company may submit. SMBs may literally have one candidate and one position they seek to fill. In contrast, large companies may submit and be awarded thousands of visas. This phenomena is even more telling when you look at which companies receive the most visas each year. According to the most recently available report from the U.S. Department of Labor, the top visa recipients are top-tier tech companies; many of them specialize in software development and even contract software development.



Looking at the particulars of this situation, these are our key takeaways:

  1. There’s an IT skills shortage in the United States, which can only be supplemented by using outsourced software development.
  2. SMBs may be at a double disadvantage—finding top U.S. citizen talent and competing with tech industry giants in the H1B visa lottery.
  3. The particulars of the H1B visa lottery are changing—and it’s unlikely that the changes will result in more (or easier) hires through the visa program.
  4. Offshore outsourcing as a strategy can help mitigate the challenges of hiring talent in the United States, whether U.S. citizens or H1B visa holders, and also minimizes the risk of finding value-priced outsourced software developer talent from inside the United States.

Andy Hilliard

As CEO, Andy leads and advocates for the globalization and collaboration of great software teams with companies in search of talent, innovation and a globally-distributed extension of their engineering function and culture. Andy founded the ground-breaking nearshore software development services company, Isthmus Costa...

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