Now that banks and technology firms are facing a temporary ban on H-1B visas, the potential for bidding wars for top tech talent in the U.S. has increased. Banks in particular may find it necessary to put more money on the table in order to beat out the biggest technology firms.
The Trump administration sent a ripple through U.S. tech recruiting when it announced that it was suspending the issuance of H1B and L-1 visas issued to immigrant workers in the U.S. for the rest of this year. For the next six months, U.S. firms will need to make do with talent they find locally.
This could be problematic for companies that have come to rely on the H-1B visa for some kinds of specialized workers. Even though hiring has fallen off due to the coronavirus pandemic, headhunters say demand has remained strong for elite candidates in technology and finance. Traditionally, employers in both sectors have been able to fish in a wider global sea and use H-1B visas whenever necessary.
“There is only a finite pool of these super smart folks,” said Anthony Keizner, Partner at Odyssey Search Partners. “With H-1B visas stopped, you could find technology firms now being more interested in tapping students without a computer science background who might previously have looked at finance, and you could find banks having to react to make sure those students don’t get their heads turned. That will lead to pressure on pay.”
Last year, Google employed around 10,000 people on H-1B visas. Many of Google’s H-1B employees were software engineers (and highly paid ones at that), but there were also strategists, account managers, data scientists, quant analysts and a whole host of other roles with overlaps in the banking sector.
By comparison, Goldman Sachs employed around 2,000 people on H-1B visas last year. Goldman doesn’t break out their exact job titles, but around 40 percent of them were analysts: Roles at the bottom rung of the corporate ladder that often go to recent graduates.
Banks and tech firms have long been competing for the same cohorts of highly technical, highly talented students from America’s top universities. And in many cases, banks have been coming in second place. At MIT last year, for example, just 17 percent of undergraduate students went into finance and insurance, compared to 30 percent who went into tech. Finance hirers included top names such as Goldman Sachs, Morgan Stanley, Bank of America and Citadel. Tech hirers included equally impressive brands such as Google, Amazon, Facebook, Microsoft, and Apple.
When it comes to attracting graduates, it doesn’t help that banks have long had a reputation for underpaying compared to the big technology recruiters. Entry-level pay in FAANG firms starts at around $180,000 for technologists, including salary and bonus, and can rise to $300,000 to $400,000 within five years. By comparison, technologists at banks complain that they struggle to make more than $250,000, even after years in the industry. Last year, JPMorgan was paying associate level technologists on H-1B visas in New York City (typically with four years’ experience) salaries of just $120,000.
With H-1B visas out of the picture for however long (much hinges on the 2020 elections), something has to give. Initially, that something is likely to be pay at banks, which will need to be competitive to win students back from technology firms. However, over time, technology firms might hike pay, too. That’s good news if you’re the sort of highly technical U.S. student everyone wants to hire now, but it’s not great if you’re a large organization competing for what has become a far smaller pool of talent.
A modified version of this article originally appeared in eFinancialCareers.