outsourcing a team

You are about to see your development costs soar and this is why

If the latest news coming out of Washington D.C. are any indication, then yes, you are about to see you development costs go through the roof. Just last Friday, the government announced that, as of April 3, the “premium processing” option for H1B visas will be suspended. This might seem like a relatively small thing, but in fact, this is actually the opening salvo on the attack on the H1B visa program.

The beloved program of the US tech industry is now facing multiple challenges and it might not survive intact. The program has been on the cross hairs of the new administration even before taking office. During the 2016 campaign, then candidate Trump voiced his dissatisfaction about how the program was managed and its purpose. It now looks like he is going to take action.

The administration could shape its action in the form of tougher compliance raising the cost for companies to use H1B workers. Recent press reports have shown an uptick in work site visits and other types of enforcement action by U.S. immigration authorities. This is clearly an attempt by the Trump Administration to stay true to their campaign promises to clamp down. Another way that the Administration can take a big bite of the program is by denying the renewal of individual visas. H1B visas are good for 3 years but can be renewed again for another 3 year period. Denying renewals would not require the administration to go to Congress and could be used to slowly reduce the total number of H1B visa holders in the country.

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If that wasn’t bad news, some Democrats are joining the fight to dismantle the program. Senator Richard Durbin (D) and the Assistant Minority Whip from Illinois wrote a letter to President Trump urging him to follow through on a promised crackdown on H1B visas before the end of the month. He has also reintroduced a bi partisan bill with Senator Chuck Grassley (R) from Iowa, which would completely revamp the program. Their bill would eliminate the lottery system and replace it with a system that would prioritize employers that pay higher wages and hire workers with advanced science and engineering degrees from US Universities. The bill will also impose stronger regulation, enforcement, penalties, and reporting requirements on companies using the program. Other Bills in the House of Representatives from Democrats and Republicans go even further. One bill, proposes raising the exempt attestation salary requirement from $60,000 to $130,000, while another would award visas to companies that are willing to pay 200% the average wage as calculated by the Department of Labor.

If the alliance of the left and the right to revamp the H1B and L1 visa programs is not alarming enough then this might. A federal class action suit in Portland Oregon is asking the US government to eliminate the lottery system for the H1B visa program and replace it with a waiting list and a priority date similar to the Green Card application process. All attempts by DHS to dismiss the case have failed and it is now awaiting a final verdict from the Judge. If the decision is in the favor of the plaintiffs, then H1B visa program will be bogged down with a waitlist that will leave companies waiting for years for an application to be approved and undermining the program completely.

The H1B visa is in real jeopardy and would undoubtedly lead to a significant increase in competition for talent within the United States. We might be in fact, be going back to the IT bidding wars of the late 1990s and early 2000s when companies would fight to retain workers and seeking out new recruits.

Some might avoid this by offshoring but wait, President Trump also believes that the US dollar is too strong. His policies might be able to push the dollar down but in the very least it will create exchange rate volatility (which we are currently seeing). This will force offshore outsourcing companies to hedge against the dollar by raising fees.  Jobsity, decided a long time ago to hedge by opening offices in Ecuador a US dollar bases economy and in Colombia that uses the Colombian Peso. This allows us to ride currency volatility without raising fees.

Update: Portland Federal Judge Michael H. Simon has ruled against the plaintiffs in the class action suit to end the H1B lottery. The plaintiffs have 30 days to appeal to the Ninth Circuit Court of Appeals. A big sigh of relief. Now we just have to worry about the new legislation in Congress and what the Trump administration will do next.



Nov 21, 2017