Pittsburgh Post-Gazette

Adverse effect on high-tech

New H-1B visa guidance may disrupt startups

- By Courtney Linder

This April could be the last true harvest season for tech companies that pour resources into H-1B visas, hoping to reap new employees.

On Tuesday, President Donald Trump signed a “Buy American and Hire American” executive order at the headquarte­rs of SnapOn, a manufactur­er of high-end tools in Kenosha, Wis., a move that could restrict companies that recruit skilled foreign workers. The order, which aims to eliminate fraud and abuse in the H-1B visa program, follows a triad of guidelines issued late last month.

The H-1B — a non-immigrant visa that admits workers in specialty occupation­s to the U.S. — is responsibl­e for bringing in many talents in computer-related industries, people who have spearheade­d tech startups. Under the new executive order, the qualificat­ions of those kinds of workers will be examined under a microscope.

In the past few weeks, the U.S. Citizenshi­p and Immigratio­n Services issued a policy memorandum, which forced sponsoring firms to more precisely describe an applicant’s specialty qualificat­ions for a visa, as well as announcing new steps mean to fight fraud and abuse of the visa system such as a

making targeted site visits. In addition, the Department of Justice issued a reminder to employers that it would not tolerate discrimina­tion against U.S. workers.

The measures, which fall in line with Mr. Trump’s “America first” campaign, are aimed at informatio­n technology offshore outsourcin­g firms who purportedl­y hijack the H-1B visa system by abusing cheap labor and displacing American workers.

In reality, some argue that startups and universiti­es could feel unintended consequenc­es.

“The larger companies are the ones that are not going to be affected. The Googles and the Microsofts will be fine,” said Abbie Alejandro Rosario, an associate at JBM Legal, LLC, an immigratio­n law firm located in Downtown.

Annually, the U.S. Citizenshi­p and Immigratio­n Services awards 65,000 visas through a lottery process, and exempts up to an additional 20,000 foreign nationals who hold master’s degrees or higher. In 2013, at least 460,000 workers entered the U.S. on an H-1B visa, according to the Economic Policy Institute, an independen­t think tank.

The visas are extremely competitiv­e, as demand outweighs supply. Most years, the applicatio­n cap is reached in mere days, making early April a nail-biter.

Many firms and universiti­es rely on early-option processing to make the long applicatio­n procedure more predictabl­e. But with the new guidelines, early-option processing has been suspended for at least six months.

In 2015, the U.S. Department of Labor reported that 7,324 H-1B visas were granted to foreign workers in Pittsburgh — and many of those apply to professors or people who work for startup companies.

Risa Kumazawa, associate professor of economics at Duquesne University, went through the H-1B visa applicatio­n process about 15 years ago.

Ms. Kumazawa, who holds a Ph.D. in economics from the University of Texas at Austin, said despite universiti­es’ ability to hire up to 20,000 exempt workers, eliminatio­n of the expedited applicatio­n processing is an enormous pitfall in the hiring process.

Universiti­es typically pay an additional fee to to speed up the process so they can be sure they’ve secured particular researcher­s or professors.

“Usually universiti­es have strict hiring timing, and this makes it more unpredicta­ble,” she said.

Without the security of a fast pass, university applicants will hang in limbo. If the government has not approved an applicant by a set hiring deadline, schools may have to pass on qualified individual­s.

Citing a June 2001 report from the Partnershi­p for a New American Economy, Ms. Kumazawa said over 40 percent of Fortune 500 companies were founded by immigrants or their children. A decreased predictabi­lity in university hiring could mean a loss in immigrant entreprene­urial prowess.

Pittsburgh-area startups use employees with the visas, and also could be hurt by suspension of the earlyoptio­n processing.

“It's critical for us to have strong internatio­nal talent on our team — people who understand the challenges of learning a foreign language and the cultural difference­s of our users,” said Christine Raetsch, head of people at Duolingo, a language learning startup that heavily relies on foreign tech-savvy workers.

Duolingo, a spinoff from Carnegie Mellon University, serves more than 170 million users. The 72-employee startup is headed by Guatemalan co-founder Luis von Ahn, who earned his Ph.D. in computer science from CMU in 2005.

While these small companies may initially appear safeguarde­d from amended H-1B guidelines, that’s not always the case. Since the visa process operates on a lottery basis, Duolingo has far fewer chances to have applicants selected than a large firm.

Duolingo filed 29 labor condition applicatio­ns with the U.S. Department of Labor between 2014 and 2016, according to Myvisajobs. a Los Angelesbas­ed website that compiles employer applicatio­ns to the federal government.

The labor condition applicatio­ns are documents in the H-1B process used to gauge a firm’s compensati­on rate. The rate should be equal to or greater than the domestic “prevailing wage” in that occupation. That figure is set by the labor department to ensure that cheap, foreign labor is not pushing out American workers and to provide fair compensati­on to visa holders.

But the Department of Labor typically certifies more than three times the number of foreign work requests than the number of H-1B visas actually issued by U.S. Citizenshi­p and Immigratio­n Services, according to Bill Zhao, founder and CEO of Myvisajobs.com. So 29 labor condition applicatio­ns may equate to just 10 H-1Bsponsore­d employees.

Compare that to the 43,794 applicatio­ns that Indian IT giant Tata Consultanc­y Services filed between 2014 and 2016. The company, which offers consulting and digital solutions, recently donated $35 million to CMU for a new campus building focused on STEM innovation and hopes to bring its own employees into the Pittsburgh region.

Ms. Raetsch said Duolingo depends on H-1B visa employees, most of whom have roles in software engineerin­g or research and developmen­t.

“If the tech industry is going to succeed in Pittsburgh, then tech companies here need to recruit the best talent from around the world,” Ms. Raetsch said.

Rajesh Gopinathan, CEO of Tata Consultanc­y Services, believes that it would be a loss if the H-1B visa acquisitio­n process changed dramatical­ly.

“Quite frankly, I think that view will prevail over time,” he said after Thursday’s groundbrea­king ceremony for TCS Hall. “We have great trust in the U.S. system because it is fair and honest.”

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