To: H-1B/L-1/offshoring e-newsletter

Tue Sep 24 22:26:01 PDT 2013


Here I'll comment on several recent press items on the Indian bodyshops.
These really bring out the issues I've been emphasizing on what I regard
as unwarranted scapegoating of the bodyshops.  

My writings about this topic often bring negative reactions.  After I
wrote my Bloomberg piece on this, I got mail from angry Indians, asking
why I'm defending the Indian firms, whom they consider "crooks."  And as
some of you will recall, even Senator Schumer chimed in against me,
http://heather.cs.ucdavis.edu/Archive/SchumerResponds.txt

But my point here is that even among critics of the H-1B program, there
are some who have some investment, be it emotional experiences in the
job market, a stance in a research project or whatever, in the "blame
the Indians" movement.  Some of these people find my comments
uncomfortable.  These are people whom I highly respect, but I continue
to believe that this focus on the Indians is misguided.

To me, the situation is quite clear.  Not only is the anti-bodyshop
argument incorrect--abuse of H-1B pervades the entire industry, not just
the bodyshops--but also I have tried to explain to the activists (of
which I am not one) that this approach is counterproductive for them
politically.  I've warned over the years that it would result in
Congress writing a bill that rewards the mainstream firms with an even
more liberal H-1B policy, but also will in the end take only cosmetic
action even against the bodyshops.  At least the first part of that has
come to pass now in the Senate bill.  Basically, "blame the Indians"
gives Congress an excuse to actually expand H-1B access, by allegedly
taking care of the abuse by targeting only the Indian firms.  I've heard
that at this point no immigration bill has much chance, but the issue
isn't going away, and the Senate bill will likely be used as a marker
for future bills.

A perfect example of the misguided thinking regarding the Indian firms
is in this article from the Web page of the American Federation of
Teachers, titled "H-1B visa provision is important immigration reform
issue," Sept. 13, 2013,

http://www.aft.org/newspubs/news/2013/091313immigration.cfm

AFT writes, 

      "The AFT is paying close attention to any proposed immigration
      reform law's provisions related to requiring employers to document
      the need for H-1B visas, which allow employers to temporarily
      employ foreign workers in so-called specialty occupations. In the
      past, loopholes in the law have allowed some employers to hire
      workers on H-1B visas, and then use those workers to displace
      public employees when state and local governments contract out
      government services to them.  This is particularly true in
      employment areas such as data processing and information
      technology."

The key phrase is "contract out," alluding to the bodyshops.

The reason this is such a good example is that, as many of you know,
some of the worst H-1B abuse has been in the hiring of teachers--not via
bodyshops, but by direct hiring of H-1Bs by the school districts.  See
for instance

http://heather.cs.ucdavis.edu/Archive/Cantonese.txt
http://heather.cs.ucdavis.edu/Archive/H1BTeachers.txt
http://heather.cs.ucdavis.edu/Archive/H1BTeachers2.txt

(Teacher pay is typically rather formulaic, but H-1B enables districts
to hire at the low seniority level, a big advantage.)

This shows the absurdity of focusing on the bodyshops.  The Senate bill
would make it easier for districts to hire H-1B teachers, exactly what
the AFT says it doesn't want.

Note too the mention of loopholes, an allusion to the claim that the
H-1B law was never intended to include rent-a-programmer firms, i.e.
bodyshops.  That argument is popular on the Hill, and also with some
prominent critics of the H-1B program, but it's never made sense to me.
H-1B is supposed to remedy labor shortages.  Well, if there were a real
labor shortage, what would be wrong with remedying it with agencies?
Say I have a small firm and can't hire the workers I need.  Am I
supposed to personally make a trip to India, and somehow find people?
What would be so terrible if I were to turn instead to a
rent-a-programmer agency, and get H-1Bs through them?  It still would be
fulfilling the ostensible purpose of H-1B.  Frankly, I don't understand
how reasonable people, indeed ones I respect so highly, can make so
vacuous an argument.

Next, a TechCrunch article by Jon Evans, "‘Scuse Me While I Solve This
Immigration Problem," Sept. 21, 2013,

http://techcrunch.com/2013/09/21/scuse-me-while-i-solve-the-immigration-problem/

does the same thing.  Evans claims to have a novel resolution to
the H-1B controversy:  Punish the Indians!  Gee, there's a fresh idea.

As evidence, he cites data showing that a mainstream firm, Google, is
paying its H-1Bs double what an Indian bodyshop, TCS, pays.  Part of
that gap is due to the fact that Google hires mainly in the
hyperexpensive Bay Area, where a but driver earns $80,000/yr.  But the
gap cited by the author, Jon Evans, is much more problematic than that.

I know that that kind of argument sells.  But it's quite fallacious.
firms like Google on the one hand, and those like TCS on the other hand,
are simply in different segments of the labor market, with the Googles
hiring at the high end (Master's degrees or higher, very sophisticated
workers) and TCSs at the low end (poor quality, 3-year Bachelor's
degrees, etc.).  My point is that BY HIRING H-1BS, EACH OF THEM IS
GETTING A BARGAIN IN ITS OWN MARKET SEGMENT.  They're BOTH using H-1B to
cut labor costs.

A Google senior engineer, talking to a group of us labor researchers
last year, stated that the firm hires only one applicant out of a
thousand.  If they really are hiring the best and the brightest, then
the data show that they are underpaying their foreign workers; see my
EPI article,

http://www.epi.org/publication/bp356-foreign-students-best-brightest-immigration-policy/

They can't claim to hire BOTH the best and the brightest AND be paying
them fairly, because the data are not consistent with that.  (Actually,
I believe that both claims are inaccurate to some degree.)

So it's incorrect to say, "Google pays more than Tata, so Google must
be using the H-1B program responsibly while Tata is not."

One point I've made many times, but that tends to be forgotten, is that
for many Silicon Valley employers, saving in wages is secondary.  The
primary attraction to these firms to to hire IMMOBILE workers, who can't
leave the employer in the lurch in the midst of an urgent project.  I've
written at length on this point, and cited public statements by
immigration lawyers about how much employers love this aspect of green
card sponsorship.  (I've also had at least two major Silicon Valley
firms tell me this personally.) 

The key point here is that it makes hiring a foreign worker much more
attractive than hiring an American of comparable quality.  I know
various Americans of very high quality who were ignored by Google,
Facebook etc., while those firms hired foreign students whom I knew to
be no better than the Americans, often weaker.  That is just my own
assessment, of course, but again, the statements by the immigration
lawyers say it all.

The third news item I'd like to comment on is the reports that state
governments are hiring, or anticipate hiring, a number of H-1Bs...from
bodyshops:

http://www.huffingtonpost.com/adam-andrzejewski/h1b-obamacare-illinois-bombshell_b_3936877.html
http://www.computerworld.com/s/article/9242648/H_1B_workers_in_line_for_Obamacare_work

There are a couple of issues of interest here.  First, there is again
that unwarranted blaming of the Indian firms, this time on the grounds
that they offshore some of their work.  Again, what is the big deal
here?  Whether a job is offshored or it is filled by an H-1B in the
U.S., that job is lost to U.S. citizens and permanent residents--a
situation that all sides of the issue claim that policy must strive to
avoid.  So again, I am baffled when I see smart, sophisticated people
make this argument.

Second, look at the excuse Cognizant et al are giving for hiring the
H-1Bs:  lack of qualified American programmers, in the sense that they
don't have experience with the intricasies of Medicaid.  This one has
some interesting subtleties, as follows.

Remember, one of the industry lobbyists' favorite lines is that
"American universities are not producing enough tech graduates."  Well,
here they are in effect saying, "American universities are not producing
enough tech graduates who know Medicaid," which is absurd.  Should our
universities be developing curricula in "Medicaid science"?  Just how
many hundreds of different niche fields like that should the
universities teach?  It would be physically impossible, not to mention
not being the type of thing universities ought to do in the first place.

In 2003, TCS disclosed, rather unwittingly, how they play this game:  In
order to be "qualified" to work with them, you need to know TCS project
management software!  Well, there's something those out-of-date U.S.
university curricula are failing to cover too, eh?  Same for those older
Americans with out-of-date skill sets--they don't know TCS software, so
sorry, we can't hire 'em.

Now, lest you think that even I am targeting the Indians here, my point
is exactly the opposite.  The mainstream U.S. firms do exactly the same
thing, though much less overtly.  As I've said before, these firms are
hiring new university graduates who lack the same skills the employers
say they are rejecting older Americans for lacking.  Universities simply
don't teach most of that stuff, nor should they, again because it would
be physically impossible to cover the hundreds of nich technologies.  So
it's not a matter of skill sets, but of cost; the younger ones are
cheaper, end of story.  So much cheaper, in fact, that in some cases the
employer would rather hiring a young worker who doesn't have the skill
than an older worker who does have it; again, the skills excuse is just
that, an excuse, in many cases.  Once again, the mainstream firms are
just as culpable as the Indian ones; they just have better PR people.

Norm

Archived at http://heather.cs.ucdavis.edu/Archive/IndianFirmsAgain.txt