U.S. high-tech workers cry foul over H-1B visas
Sherri Cruz
Star Tribune
Published 08/27/01
"Buy American!"
The blue-collar call to patriotism has been revived. This time
it's from computer programmers -- white-collar workers who
say their jobs are being outsourced to foreign contractors.
The Minnesota chapter of the Programmers Guild, made up
primarily of people who work as independent contractors for
companies, say they can't compete against cheaper foreign
labor. The programmers say they've had to cut their rates as
much as 50 percent.
"We're up against foreign markets," said Steve Millman during
a recent Programmers Guild meeting. Undeniably angry, the
group of about 17 contractors who attended say the federal
H-1B visa program has flooded the market with inexpensive
programmers. The program lets foreign workers in specialty
and high-skilled occupations work in the United States for up
to six years. That foreign worker glut, combined with layoffs
and declining technology spending, has left U.S. programmers
with limited job opportunities.
Now the group is hoping to raise public awareness in
Minnesota, joining a national effort to stop the influx of H-1B
workers or abolish the program altogether.
Other groups calling for an end to the H-1B program include
the national Programmers Guild and the Federation for
American Immigration Reform, which wants a moratorium on
all immigration.
Why now?
This comes while the proliferation of offshore consultants --
companies that are based overseas or use foreign labor -- has
changed the technology landscape by providing an easy and
inexpensive alternative for U.S. businesses with reduced
information technology budgets.
Tata Consultancy Services and Wipro Limited, both based in
India with Twin Cities offices, are two of the nation's largest
H-1B employers, according to the Immigration and
Naturalization Service. Tata alone has about 820 people
dedicated to Minnesota-based projects -- 520 consultants
here and 300 in India.
Computer programming jobs are just the tip of the iceberg,
Millman said. Soon, other professional jobs will be outsourced
overseas. The group also warns of a brain drain -- shipping
jobs overseas will discourage students from entering computer
technology fields.
Some of the local companies using foreign labor for tasks such
as computer systems maintenance include Target, American
Express Financial Advisors, 3M, Northwest Airlines,
Supervalu, ADC Telecommunications, Stellent (formerly
IntraNet Solutions), Best Buy and Fingerhut.
The problem began a few years ago, said Program Guild
member Linda Nesheim, when U.S. companies began
complaining about a high-tech labor shortage, and it
culminated last year when businesses succeeded in persuading
Congress to raise the number of H-1B visa holders allowed to
enter the United States.
But in reality, Nesheim said, companies didn't need more
bodies -- they wanted cheaper ones.
H-1B visa holders are to be paid the higher of either the
prevailing wage in the industry for that job or a wage
comparable to a similar position within the company,
according to the program's terms.
However, as the programmers have discovered, determining
the prevailing wage can be a complex issue. The Department of
Labor, which oversees the prevailing-wage question, doesn't
require employers to use a specific method to figure what the
going wage is or should be.
In addition, wages have been driven down by companies
routinely paying less. The median hourly wage for computer
programmers in Minnesota in 1999 was $35, according to the
Bureau of Labor Statistics. Although the data are two years
old, $35 an hour is significantly less than the wages of $70 an
hour and higher that many of the Programmers Guild
members traditionally have been paid and grown to expect.
Wage differences
But companies that employ offshore contractors get around the
prevailing-wage issue for the most part. That's because the
consultant company is the employer -- responsible for hiring
the foreign workers and handling the related wage and
immigration paperwork.
Pat MacCormick, a member of the Programmers Guild, blames
the H-1B program for undercutting her wages. She has
lowered her rates from $70 an hour, but she won't go any lower
than $35 an hour, or about $72,000 annually. During a recent
guild meeting, all of the 17 contractors who attended said they
have had to cut their rates.
MacCormick, who has 26 years of experience, was a project
leader for the Y2K team at Minnetonka-based Fingerhut
Companies Inc. When her contract expired in January, it
wasn't renewed. (She recently landed a contract.) She said she
could have performed some other job at Fingerhut. But she said
she was replaced by a foreign worker whom she had trained.
Fingerhut contracts with IMRGlobal, a company that uses
offshore programmers. MacCormick and her fellow
contractors point out that U.S. workers can't be replaced by
H-1B workers under H-1B regulations, but like the issue of the
prevailing wage, issues of replacement are complex.
In this case, there are a few reasons why Fingerhut's action was
permissible under the H-1B program -- namely,
MacCormick's contract expired and the Labor Department
generally doesn't consider that a layoff, and therefore a
replacement. Fingerhut officials declined to comment for this
report.
The most likely reason that programmers are having difficulty
getting jobs is because business has slackened, said Todd
Graham, an economist with the Minnesota Department of
Economic Security.
There are about half as many programming jobs open as a year
ago. Since companies need fewer programmers, they eliminate
the workers who are easiest to get rid of -- independent
consultants and H-1B workers, Graham said. In Silicon Valley,
many H-1B workers have been laid off since the Internet
industry crashed. H-1B visa holders in Minnesota haven't been
affected as much because the industry is smaller here.
How it works
Aside from the question of whether using foreign labor is
ethical or patriotic, one thing is certain -- programmers face
an uphill battle to change the practice.
The H-1B program, originally designed to import the "best and
the brightest," has expanded somewhat, affording companies
significant savings on what traditionally has taken a big bite
out of their budgets.
The reason it works is that by using a mix of offshore and
onshore workers, the consultancy can pay less in total wages
and pass those savings on to its clients. The majority of the
work usually is done by offshore workers who are paid as much
as 50 percent less, and the consultant company pays the
prevailing wage only to the on-site H-1B workers.,
When Tata is retained for a project, for example, it works with
a client company to assemble a team composed of 70 percent
offshore personnel and 30 percent onshore. If you have 10
people on a project, seven will work in India and three will
work temporarily on-site in the United States, explained Arup
Gupta, president of Tata Consulting Services America.
With the money saved on low-level programming work --
often associated with old-line skills such as the once-dominant
programming language COBOL -- companies have shifted
their U.S. resources -- money and people -- to software
development projects that require newer computer language
skills such as C++ and Java.
Best Buy, for example, hasn't laid off any employees as a result
of its contract with Tata, said Laurie Bauer, spokeswoman for
Best Buy. On the contrary, Best Buy has made a substantial
investment in training for other development areas more
pertinent to the company's business, she said.
"Best Buy is meeting short-term demand for specific skills that
are either not available within our associates, or those
associates are already assigned to other projects," Bauer said.
Offshore consultants gained a foothold in the U.S. market
during the all-out efforts to prepare computer systems for the
turn of the millennium, or the so-called Y2K bug. Much of the
work was done by information technology workers in other
countries electronically linked to U.S. operations.
While working on Y2K, offshore consultants offered U.S.
companies fixed, long-term contracts to handle future
programming tasks, such as mainframe system maintenance.
Now the offshore consultants are marketing higher-level
software development projects to U.S. companies, with little
success so far.
But that may change as more companies get comfortable with
the offshore scenario, and U.S. programmers who can't afford
to lower their wages may have more to worry about.
"It's a pretty sad state of affairs when people with high-tech
experience can't get jobs," Millman said.
-- Sherri Cruz is at scruz@startribune.com .
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