Post Pandemic, Congress must Phase out H1-B Work Visas

Studies show that almost 2 million H-1B visas have been distributed between 2000 and 2019. 

The H-1B visa program allows employers to hire foreigners to work in jobs that require highly specialized knowledge and a bachelor's degree or higher. The current annual cap, as set by Congress, is 85,000. Though it's a temporary non-immigrant visa (valid up to 6 years), tens of thousands have been allowed to adjust to permanent status with green cards.  

How to Reduce Dependence on H-1B – A 5-Point Solution...

1. Provide corporations significant Tax Benefits to hire local STEM graduates. Instead of incentivizing US corporations to hire more H-1B workers, the federal government should allow them considerable tax incentives to engage the local STEM (Science, Technology, Engineering, and Math) graduates at the prevailing rate. This particular tax incentive should last, say, up to five years (or the employee's longevity, whichever comes first), thus vastly negating the incentive to hire foreign workers at a reduced rate. This tax incentive will also encourage future STEM students, foreseeing a fast-leveling playing field. Without this assurance, it would be challenging to entice local students to venture into the STEM field. Today, the qualified American workers are training their far-less skilled foreign counterparts to take their jobs. 

2. Introduce higher educational qualifications for H-1B applicants. According to the Congressional mandate, 65,000 H-1B applicants need only bachelor's degrees while another 20,000 require master's or higher. Unfortunately, a bachelor's degree in SE Asia (which accounts for 80%+ applicants) is not equivalent to a US bachelor's. To effectively meet the US standard, Congress should consider transposing the degree requirements, meaning 65,000 applicants with master's + and 20,000 with bachelors. It makes no sense to displace a truly qualified American degree-holder with a much less capable foreign degree-holder. That is why the replacement wages tend to be much lesser for foreign workers. Since H-1B is meant for the highly skilled foreign workers, Congress should gradually move to an all master's + requirement, at least leveling the playing field.

3. Until Higher Educational Requirements are established, Congress must insist on degree evaluation by the ETS (and other entities). While Congress debates on upping the ante on degree requirements, it must require that the foreign degrees are adequately vetted and evaluated. The well-known education evaluation organizations like the Educational Testing Service (ETS) should perform the necessary vetting, forcing the sponsoring organizations to prove that their candidates satisfy the US educational requirements. This independent yet straightforward step will surgically (identify and) disqualify many applicants from the export-oriented private schools as they will not meet the US degree requirements. Ideally, Congress must additionally require all applicants to pass a US-administered standardized test (good for three years), along the lines of Foreign Medical Graduates Exam (FMGE). 

4. The Sponsoring Companies must be incentivized to recruit Foreign Students Graduating from major US Universities first. International students graduating from the major US Colleges and Universities are more valuable candidates for these unfilled jobs than their all-foreign counterparts. There are other advantages to this hiring approach too:

(a) No need for the equivalency assessment;

(b) Since the vast majority of them undergo internship or practical training in the US, they are already used to the requirements of the American workplace and work ethics;

(c) Graduates from the major US schools are at least as good as the best and brightest from foreign nations;

(d) They will command the prevailing wages, negating the arbitrage described above that many sponsors have been trading on;

(g) Better English proficiency (both verbal and written) and so forth.

5. Let the Annual H-1B Quotas steadily decline as we promote STEM Education. If we switch to merit-based immigration, H-1B will be a thing of the past. Whether that comes to pass or not, the rapid and aggressive promotion of STEM education will steadily lower the quotas. Hopefully, the current 85,000 level would decline by 20,000 annually, leading to a total phase-out in 5 years. If we can promote STEM education in keeping with the labor force's needs, this phase-out could take place even sooner. Of course, the promotion (of the positives) of STEM education must start early in high school so that students are always in the know of the unrestricted domain of opportunity the STEM universe offers. 

Stay safe!

-Sid Som

homequant@gmail.com

Protecting Small Businesses from Unscrupulous Foreign IT Vendors

You are a small business owner ("you" "owner"). You have successfully used the web in marketing your services, but the cost of your IT services keeps growing 30-40% each year, despite the much-needed switch to a Cloud platform.

You keep hearing how others have been saving a ton by off-shoring web development/maintenance services, leading to all of their IT services. Yes, even smaller outfits have been outsourcing to vendors in emerging countries ("vendor") for a while. And one can anecdotally confirm that a well-researched exercise could save owners some decent money as well. But, as an owner, what you may not necessarily hear is the negative ("dark" is more appropriate) side of off-shoring IT services. Here are some of the negative issues, usually unreported, you must be aware of:

1 . Quality – When dealing with a small vendor, you are practically dealing with engineers and other technical graduates from 2nd and 3rd-tier (mushrooming and mostly export-oriented) schools. Given this axiom, you are getting significantly lower quality products and services from the get-go. By the time you figure this difference out, it might be a day too late, meaning you might be stuck with them for a while. Have you ever seen a Harvard MBA working for a local butcher? If you ever see one working for the butcher, he is probably developing a global franchise. The point is, do not expect to work with superstars there. Of course, the crooks may use a superstar to close the sale, but nothing more! 

2. Communication – Though they are all English-speaking, you will be lucky to understand every third word (over the phone), if not every third sentence. And, with their inferior telecommunication system, you are faced with the proverbial unintended consequences. Your primary business quickly turns into pleasing ("begging" is more appropriate) to get them to do something, however substandard the quality might be. The stress will continue to mount, but you will be in denial that things would get better.

3. Time Difference – It's a huge issue, particularly if you are planning to outsource to Asia. For example, after returning from lunch with a prospective client, you are ready to place a call to your Asian vendor to discuss a few changes to the existing client profile. As you are prepared to speed-dial, you realize that its midnight there. Now you have to wait 12 hours to make the call. And, if you happen to hook up with a crooked vendor, you are now unimportant to them. Email communication (you'll receive replies once in a while) is the only way out. Though you got an excellent deal while signing up with them, it now costs you an arm and a leg for every simple change you ask for. That's how the crooks operate. If you ever question them about the skyrocketing pricing, you will get tons of mambo jumbo – all structured talks from different sites where thieves of the world unite.

4. Due Diligence – It's challenging to conduct any meaningful due diligence of small vendors in emerging countries. While there are many ways to check the standing of a small vendor in the US - from D&B to BBB to Licensing boards to Trade organizations to local Chamber of Commerce, etc. - there is hardly any such reliable source there, making it almost impossible to separate the honest from the crooks. It may so happen that due to change in ownership, the honest ones are not-so-honest anymore. Moreover, the vast majority of thieves maintain fake references (and fake/shared sites) in the US. Clients may not stand by old recommendations either.

5. Hidden Cost of Apps – To identify and separate the real ones from the crooks, you must try to zero in on the accurate pricing. If the first project entails developing a website, you must ask if the site would be mobile-friendly. Nowadays, most small business sites, including e-commerce sites, are mobile-friendly without developing a set of separate iOS and Android Apps. When a vendor insists on keeping them separate, you must be a bit careful. The crooked vendors often offer very attractive pricing on the initial website, followed by exorbitant pricing on the Apps. However, if the separation makes business sense, you must ask for the vertical pricing (site + apps), in writing, and upfront (must be valid for at least twelve months), to be in the know before signing any contract. 

6. Update Capability – All other factors remaining constant, you must also insist on having the full capability and flexibility to update and upload news, data, video, etc. on to your new site. "Send us the changes, and we'll take care of it" is a serious red flag. There are no free lunches, so you must not walk into this trap. The cooked vendors use this trap to churn owners, and it gets exponentially worse over time. Even if the vendor is honest, owners must realize that it's not a workable solution, as no business is all-proactive; they need to promptly and intelligently react to momentum situations as well (and this is where the trouble starts, generally resulting from the time difference, frequency of updates, immediate availability of right personnel, etc.).

7. Employee leasing – And this goes hand in hand with #6 above. Unlike here in the US, most emerging markets do not have clear-cut laws regarding temporary staffing and employee leasing. To create a round-the-year income stream, the crooked vendors try to own/retain the update capability. Later, citing frequent and volume updates, they try to promote employee leasing. They package and market the very ordinary kind at the prevailing rate (with fake resumes, etc.) and simultaneously lease them to multiple clients. Therefore, it is critically important that the owners retain the full update/upload right from the get-go, without which it could pose serious trouble, just a matter of time!

8. Local Legal System – It is not easy to fight the crooks in their territory; they know all the tricks to play the legal system. When I played soccer, I did believe in 'it ain't over till it's over,' but this concept does not necessarily work for a small business. Sometimes when the writing on the wall is abundantly clear, it's better to cut the losses short and call it a day. It could be a defeat emotionally, but a real victory intellectually. Smart business owners understand there is a better use of the R & D capital than wasting it on fighting some crooks overseas. Alternatively, this could be a boon or a silver lining to bring the business back home and try out a real engineer who is smarter and inherently more ethical.

9. Tip of the Iceberg – You must strictly keep the relationship at the business level, meaning the vendor should be treated as a professional services vendor; anything more personal than that will cause trouble down the road. Suppose the relationship becomes friendlier than that, one sunny morning, you may get a call or email (one of those rare occasions!) from the principal of the vendor firm indicating (actual email quote follows), "I have got a personal medical emergency in my family, and looking to arrange [$$] ... If you could help me in providing [$$], I can arrange (to pay it) back before 10th of the next month." This event could be the tip of the iceberg. If you become emotional and fall for this type of ploy, it will be the end of your business relationship with them. Forget about the loan; they will walk away from all unfinished projects, leaving you in a real lurch. It's not all that green on the other side!

-Sid Som, MBA, MIM

homequant@gmail.com

Link to the Book

Post Pandemic, Congress must Phase out H1-B Work Visas

Studies show that almost 2 million H-1B visas have been distributed between 2000 and 2019. 

The H-1B visa program allows employers to hire foreigners to work in jobs that require highly specialized knowledge and a bachelor's degree or higher. The current annual cap, as set by Congress, is 85,000. Though it's a temporary non-immigrant visa (valid up to 6 years), tens of thousands have been allowed to adjust to permanent status with green cards.  

How to Reduce Dependence on H-1B – A 5-Point Solution...

1. Provide corporations significant Tax Benefits to hire local STEM graduates. Instead of incentivizing US corporations to hire more H-1B workers, the federal government should allow them considerable tax incentives to engage the local STEM (Science, Technology, Engineering, and Math) graduates at the prevailing rate. This particular tax incentive should last, say, up to five years (or the employee's longevity, whichever comes first), thus vastly negating the incentive to hire foreign workers at a reduced rate. This tax incentive will also encourage future STEM students, foreseeing a fast-leveling playing field. Without this assurance, it would be challenging to entice local students to venture into the STEM field. Today, the qualified American workers are training their far-less skilled foreign counterparts to take their jobs. 

2. Introduce higher educational qualifications for H-1B applicants. According to the Congressional mandate, 65,000 H-1B applicants need only bachelor's degrees while another 20,000 require master's or higher. Unfortunately, a bachelor's degree in SE Asia (which accounts for 80%+ applicants) is not equivalent to a US bachelor's. To effectively meet the US standard, Congress should consider transposing the degree requirements, meaning 65,000 applicants with master's + and 20,000 with bachelors. It makes no sense to displace a truly qualified American degree-holder with a much less capable foreign degree-holder. That is why the replacement wages tend to be much lesser for foreign workers. Since H-1B is meant for the highly skilled foreign workers, Congress should gradually move to an all master's + requirement, at least leveling the playing field.

3. Until Higher Educational Requirements are established, Congress must insist on degree evaluation by the ETS (and other entities). While Congress debates on upping the ante on degree requirements, it must require that the foreign degrees are adequately vetted and evaluated. The well-known education evaluation organizations like the Educational Testing Service (ETS) should perform the necessary vetting, forcing the sponsoring organizations to prove that their candidates satisfy the US educational requirements. This independent yet straightforward step will surgically (identify and) disqualify many applicants from the export-oriented private schools as they will not meet the US degree requirements. Ideally, Congress must additionally require all applicants to pass a US-administered standardized test (good for three years), along the lines of Foreign Medical Graduates Exam (FMGE). 

4. The Sponsoring Companies must be incentivized to recruit Foreign Students Graduating from major US Universities first. International students graduating from the major US Colleges and Universities are more valuable candidates for these unfilled jobs than their all-foreign counterparts. There are other advantages to this hiring approach too:

(a) No need for the equivalency assessment;

(b) Since the vast majority of them undergo internship or practical training in the US, they are already used to the requirements of the American workplace and work ethics;

(c) Graduates from the major US schools are at least as good as the best and brightest from foreign nations;

(d) They will command the prevailing wages, negating the arbitrage described above that many sponsors have been trading on;

(g) Better English proficiency (both verbal and written) and so forth.

5. Let the Annual H-1B Quotas steadily decline as we promote STEM Education. If we switch to merit-based immigration, H-1B will be a thing of the past. Whether that comes to pass or not, the rapid and aggressive promotion of STEM education will steadily lower the quotas. Hopefully, the current 85,000 level would decline by 20,000 annually, leading to a total phase-out in 5 years. If we can promote STEM education in keeping with the labor force's needs, this phase-out could take place even sooner. Of course, the promotion (of the positives) of STEM education must start early in high school so that students are always in the know of the unrestricted domain of opportunity the STEM universe offers. 

Stay safe!

-Sid Som

homequant@gmail.com

How to Steadily Reduce Dependence on H-1B Foreign Workers

Studies show that almost 2 million H-1B visas have been distributed between 2000 and 2018. Here are some basic facts about the H-1B visa program:

a. The program was created by the Immigration Act of 1990

b. It allows employers to hire foreigners to work on a temporary basis, for up to 6 years, with two 3-year back-to-back stints

c. It allows foreigners to work in jobs that require highly specialized knowledge and a bachelor’s degree or higher.

d. Visas are awarded to employers on a first-come, first-served basis, with applications accepted each year beginning in April

e. If the number of applications exceeds the annual cap set by Congress (currently at 85,000) during the first five business days of April, visas are awarded through a lottery system

g. Though it's a temporary non-immigrant visa, many workers have been allowed to adjust to permanent status with green cards (adjustment data are unavailable).  

How to Steadily Reduce Dependence on H-1B Skilled Foreign Workers – A 5-Point Solution

1. Provide Corporations Significant Tax Benefits to Hire Local STEM Graduates – Instead of incentivizing the US corporations to hire more of H-1B workers, the federal government should allow them significant tax incentives to hire the local STEM (Science, Technology, Engineering and Math) graduates at the prevailing rate. This special tax incentive should last, say, up to five years (or the longevity of the employee, whichever comes first), thus vastly negating the incentive to hire foreign workers at a reduced rate. Of course, in order to neutralize the arbitrage (lower hiring rate vs. additional tax advantage), it must remain effective for the proposed tax incentive period (could be more or less). This tax incentive will also encourage the future STEM students, foreseeing a fast leveling playing field. Without this assurance, it would be difficult to entice local students to venture into the STEM field. Today, the qualified American workers are training their far-less qualified foreign counterparts to take their jobs. Hopefully, the tax incentive would force corporations to hire local STEMs while a renewed interest among future students would reinvigorate the field, the sum of which would reduce the dependence on H-1Bs.      

2. Introduce Higher Educational Qualifications for H-1B Applicants –

According to the 2018 Congressional mandate, 65,000 H-1B applicants need only bachelor's degrees while another 20,000 require master's or higher. Unfortunately, a bachelor's degree in SE Asia (which accounts for 80%+ applicants) is not equivalent to an US bachelor's. In order to effectively meet the US standard, Congress should consider transposing the degree requirements, meaning 65,000 applicants with master's+ and 20,000 with bachelor's. It makes no sense to displace a truly qualified American degree-holder with a much lesser qualified foreign degree-holder. That is why the replacement wages tend to be much lesser for foreign workers. Since H-1B is meant for the highly skilled foreign workers, Congress should gradually move to an all-master's+ requirement, at least leveling the playing field.

3. Until Higher Educational Requirements are Established, Congress must Insist on Degree Evaluation by ETS (and Other Entities) – While Congress debates on upping the ante on degree requirements, they must require that the foreign degrees are properly vetted and evaluated, a priori, by well-known education evaluation organizations like Educational Testing Service (ETS), thus forcing the sponsoring organizations to prove that their selected candidates, at least, satisfy the basic educational requirements. This simple yet independent step will surgically (identify and) disqualify many applicants from the export-oriented private schools as they will not meet the US degree requirements. Ideally, Congress must additionally require all applicants to pass a US-administered standardized test (good for 3 years), along the lines of Foreign Medical Graduates Exam (FMGE). Conversely, these requirements will work to the advantage of the truly qualified candidates as they will pre-qualify themselves (by getting their degrees evaluated and passing the exam in advance). Needless to say, the rouge employers will not be able to abuse the truly qualified workers either (by forcing them to work outside of the US labor laws, etc.).

4. Let the Sponsoring Companies Recruit Foreign Students Graduating from the Major US Universities First – Foreign students graduating from the major US Colleges and Universities are more valuable candidates for these unfilled jobs than their all-foreign counterparts. There are other advantages to this hiring approach too:

(a) No need for the equivalency assessment;

(b) Since the vast majority of them undergo internship or practical training in the US, they are already used to the requirements of the American workplace and work ethics;

(c) Graduates from the major US schools are at least as good as the best and brightest from foreign nations;

(d) They will command the prevailing wages, negating the aforesaid arbitrage that many sponsors have been trading on;

(e) Rouge sponsors will be discouraged;

(f) Will foster the enrollment of foreign student population, benefiting the US Schools;

(g) Better English proficiency (both verbal and written) and so forth.

5. Let the Annual H-1B Quotas Steadily Decline as we Promote STEM Education – If we switch to a merit-based immigration, H-1B will be a thing of the past. Whether that comes to pass or not, the rapid and aggressive promotion of STEM education here will help lower the quotas steadily. Hopefully, the current 85,000 level would decline by 10,000 annually, leading to a total phase-out in 8-9 years. In fact, if we are able to promote STEM education in keeping with the needs of the labor force, this phase-out could take place even sooner. Of course, the promotion (of the positives) of STEM education must start early in high school so the students are always in the know of the unrestricted domain of opportunity the STEM universe offers. 

The advantages of lessening the dependence on H-1B are numerous:

a) Producing thousands more of home-grown engineers, scientists and technologists (by far, the best on earth!) every year;

b) No need for a debate everyday whether the spouses of the H-1Bs must be given work permits or not;

c) Our politicians won't be able to convince us of the need to admit 85,000 (yes, per year!) foreign engineers and scientists at the expense of our own;

d) The Housing boom and the list can go on and on.

- Sid Som, MBA, MIM

President, Homequant, Inc.

homequant@gmail.com

Link to the Book

How to Reduce Dependence on H-1B Foreign Workers

Studies show that almost 2 million H-1B visas have been distributed between 2000 and 2018. Here are some basic facts about the H-1B visa program:

a. The program was created by the Immigration Act of 1990

b. It allows employers to hire foreigners to work on a temporary basis, for up to 6 years, with two 3-year back-to-back stints

c. It allows foreigners to work in jobs that require highly specialized knowledge and a bachelor’s degree or higher.

d. Visas are awarded to employers on a first-come, first-served basis, with applications accepted each year beginning in April

e. If the number of applications exceeds the annual cap set by Congress (currently at 85,000) during the first five business days of April, visas are awarded through a lottery system

g. Though it's a temporary non-immigrant visa, many workers have been allowed to adjust to permanent status with green cards (adjustment data are unavailable).  

How to Steadily Reduce Dependence on H-1B Skilled Foreign Workers – A 5-Point Solution

1. Provide Corporations Significant Tax Benefits to Hire Local STEM Graduates – Instead of incentivizing the US corporations to hire more of H-1B workers, the federal government should allow them significant tax incentives to hire the local STEM (Science, Technology, Engineering and Math) graduates at the prevailing rate. This special tax incentive should last, say, up to five years (or the longevity of the employee, whichever comes first), thus vastly negating the incentive to hire foreign workers at a reduced rate. Of course, in order to neutralize the arbitrage (lower hiring rate vs. additional tax advantage), it must remain effective for the proposed tax incentive period (could be more or less). This tax incentive will also encourage the future STEM students, foreseeing a fast leveling playing field. Without this assurance, it would be difficult to entice local students to venture into the STEM field. Today, the qualified American workers are training their far-less qualified foreign counterparts to take their jobs. Hopefully, the tax incentive would force corporations to hire local STEMs while a renewed interest among future students would reinvigorate the field, the sum of which would reduce the dependence on H-1Bs.      

2. Introduce Higher Educational Qualifications for H-1B Applicants –

According to the 2018 Congressional mandate, 65,000 H-1B applicants need only bachelor's degrees while another 20,000 require master's or higher. Unfortunately, a bachelor's degree in SE Asia (which accounts for 80%+ applicants) is not equivalent to an US bachelor's. In order to effectively meet the US standard, Congress should consider transposing the degree requirements, meaning 65,000 applicants with master's+ and 20,000 with bachelor's. It makes no sense to displace a truly qualified American degree-holder with a much lesser qualified foreign degree-holder. That is why the replacement wages tend to be much lesser for foreign workers. Since H-1B is meant for the highly skilled foreign workers, Congress should gradually move to an all-master's+ requirement, at least leveling the playing field.

3. Until Higher Educational Requirements are Established, Congress must Insist on Degree Evaluation by ETS (and Other Entities) – While Congress debates on upping the ante on degree requirements, they must require that the foreign degrees are properly vetted and evaluated, a priori, by well-known education evaluation organizations like Educational Testing Service (ETS), thus forcing the sponsoring organizations to prove that their selected candidates, at least, satisfy the basic educational requirements. This simple yet independent step will surgically (identify and) disqualify many applicants from the export-oriented private schools as they will not meet the US degree requirements. Ideally, Congress must additionally require all applicants to pass a US-administered standardized test (good for 3 years), along the lines of Foreign Medical Graduates Exam (FMGE). Conversely, these requirements will work to the advantage of the truly qualified candidates as they will pre-qualify themselves (by getting their degrees evaluated and passing the exam in advance). Needless to say, the rouge employers will not be able to abuse the truly qualified workers either (by forcing them to work outside of the US labor laws, etc.).

4. Let the Sponsoring Companies Recruit Foreign Students Graduating from the Major US Universities First – Foreign students graduating from the major US Colleges and Universities are more valuable candidates for these unfilled jobs than their all-foreign counterparts. There are other advantages to this hiring approach too:

(a) No need for the equivalency assessment;

(b) Since the vast majority of them undergo internship or practical training in the US, they are already used to the requirements of the American workplace and work ethics;

(c) Graduates from the major US schools are at least as good as the best and brightest from foreign nations;

(d) They will command the prevailing wages, negating the aforesaid arbitrage that many sponsors have been trading on;

(e) Rouge sponsors will be discouraged;

(f) Will foster the enrollment of foreign student population, benefiting the US Schools;

(g) Better English proficiency (both verbal and written) and so forth.

5. Let the Annual H-1B Quotas Steadily Decline as we Promote STEM Education – If we switch to a merit-based immigration, H-1B will be a thing of the past. Whether that comes to pass or not, the rapid and aggressive promotion of STEM education here will help lower the quotas steadily. Hopefully, the current 85,000 level would decline by 10,000 annually, leading to a total phase-out in 8-9 years. In fact, if we are able to promote STEM education in keeping with the needs of the labor force, this phase-out could take place even sooner. Of course, the promotion (of the positives) of STEM education must start early in high school so the students are always in the know of the unrestricted domain of opportunity the STEM universe offers. 

The advantages of lessening the dependence on H-1B are numerous:

a) Producing thousands more of home-grown engineers, scientists and technologists (by far, the best on earth!) every year;

b) No need for a debate everyday whether the spouses of the H-1Bs must be given work permits or not;

c) Our politicians won't be able to convince us of the need to admit 85,000 (yes, per year!) foreign engineers and scientists at the expense of our own;

d) The Housing boom and the list can go on and on.

- Sid Som, MBA, MIM

President, Homequant, Inc.

homequant@gmail.com

Link to the Book