Between a Rock and a Hard Place a.k.a. H1B and Offshoring | DCR Workforce Blog

Between a Rock and a Hard Place a.k.a. H1B and Offshoring

When attempting to find employees with “high demand” skills, companies find themselves between a rock and a hard place.  They are accused of profiteering when they outsource jobs to cheaper foreign countries (referred to as “offshoring”) and so they attempt to source talent from other countries. Unfortunately, the cap on the number of H1-Bs issued, coupled with higher fees usually eliminates that option. While no company objects to keeping the jobs in America, they do have huge problems with their inability to source the right kind of talent.

Like many things in life both the H1-B cap and offshoring have their pros and cons, requiring a judicious approach to the use of either.

H1B Cap: By restricting the number of skilled people who enter the country and compete for highly paid jobs, the government hopes to protect opportunities for internal talent.

Pros:

  • Reduces competition for key jobs.
  • Stems the short-sighted approach to developing the required talent, encouraging businesses to invest in workforce training and partnerships with academic institutions.
  • Protects against knowledge loss that can result from employees who increase their expertise on the job, then return to their own country.

Cons:

  • Failure to fill the gap in labor skills.
  • Loss of revenues from taxes and other fees and licenses when positions remain open for long periods of time.
  • Fails to tap into extraordinary foreign technical talent graduating from U.S. universities.

Offshore Outsourcing:

Offshore outsourcing, also presents two sides to the coin and requires a thorough scrutiny to separate political rhetoric from actual business and economic impact.

Proponents Claim:

  • Companies gain access to specialized vendors who provide quality work with quick turnaround times.
  • Companies can focus on core processes while outsourcing their support processes, saving on management time, resource utilization and cash outflows.
  • Companies lower their costs of labor and also save on recruitment expenses as well as operational costs.

Opponents Claim:

  • Risks arise from sharing confidential data to third parties across the globe.
  • Offshore companies provide low quality deliveries, issues with timelines, lack of responsibility, lack of customer focus, lack of commitment to organizational goals.
  • There is possible loss of control over the business processes.
  • There could be unexpected consequences from hidden costs and risks from frauds.
  • Customers do not wish to face accent-related and other issues when speaking with offshore call centers.
  • Offshoring is an attempt to destroy employee unions.

During this election year, the government is beginning to weigh in, proposing legislation to limit offshoring.  Many banks, insurers, financial firms have downsized their US-based call center operations and sent them overseas. Bishop’s Bill proposes to track call center jobs being outsourced abroad and render them ineligible to any direct or indirect US federal loans or loan guarantees for the next 5 years. It also requires the call center employees to mention their location over the call and allow the customers the choice to route their calls back to a call center in the US.

Will these actions help or hurt an already struggling U.S. economy?  By outsourcing jobs which were non-strategic, some companies have saved themselves from bankruptcy.

Unemployment in the information technology sector is said to be below 4%. Starved of talented workers, the IT industry depends upon overseas talent – so much so that Microsoft testified to the US Senate that issuing visas, to non-US citizens educated in some of the best universities in the world, helps the U.S. improve its competitiveness. The high number of foreign students in master’s degree courses and Ph.D. programs in the US, provides an opportunity to increase our competitiveness by encouraging those top students to stay and contribute to our economy. Otherwise, we are using our top universities to increase the economic strength of other nations at our expense.

Highly skilled talent from around the world is an invaluable and necessary support system. Our economic turn-around is dependent on businesses being able to plan new products and initiatives knowing that they can build the workforce needed to grow their business.  The funds generated from the surcharge levied on H1 B should be used to offer scholarships to American students to pursue STEM (Science, Technology, Engineering and Mathematics) careers. That, unfortunately, is a longer-term solution that can’t address the immediate workforce shortages facing businesses today. To supply today’s teachers, architects, health-care workers, pharmaceutical researchers and software developers, the H1B program should be overhauled.  Further, it is time that the U.S. government ensured that its policies and programs support today’s reality of a global economy.


Disclaimer:
The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.