Will President Trump’s temporary ban on H-1B visas boost domestic hiring, or will it lead companies to embrace outsourcing?
That’s the multi-billion-dollar question, and the ultimate answer could have a seismic effect on how many tech companies operate. Of course, quite a bit hinges on whether Trump wins this year’s presidential election; if so, he may extend the ban, which will currently run through the end of 2020.
Some business leaders and pundits are already predicting that companies will respond by moving at least some of their operations overseas. “Putting up a ‘not welcome’ sign for engineers, executives, IT experts, doctors, nurses and other workers won’t help our country, it will hold us back,” U.S. Chamber of Commerce CEO Thomas J. Donohue wrote in a statement soon after the ban was announced. “Restrictive changes to our nation’s immigration system will push investment and economic activity abroad, slow growth, and reduce job creation.”
There’s some data to back up Donohue’s assertion. Over the past three years, the U.S. government’s visa restrictions have sent tech talent to Canadian cities such as Toronto, according to reports. A 2020 study from Envoy Global found that 74 percent of employers believed Canada’s immigration policy more favorable to their operations than U.S. policy. Around 51 percent were thinking of an expansion into Canada (up from 38 percent in 2019), while 61 percent said they were either sending more people to or hiring more foreign nationals within the country.
“While the States has gone, ‘Let’s make it difficult to get the employees here on a visa,’ Canada’s gone the exact opposite, and it’s beneficial for Canada,” Alex Norman, the other co-founder of TechToronto, told NPR earlier this year. “You had a fast-growing ecosystem here that’s been getting a shot of steroids.”
Will the outright ban on H-1B visas accelerate that trend? It’s difficult to tell at this juncture, although there are also signs of heightened investment in training U.S. workers, especially as the COVID-19 pandemic recalibrates the nation’s ideas of remote work. A month before Trump’s ban went into effect, the American Workforce Policy Advisory Board called for connecting workers to “upskilling and reskilling pathways and ensure they have access to the online tools and distance learning they will need to guide them toward good jobs in rebounding fields.”
When people refer to “rebounding fields,” of course, they often mean tech; the federal government is also pushing apprenticeship programs that could channel candidates into jobs such as coding.
“The Great Recession was a lost opportunity,” Lawrence Katz, an economist at Harvard University, recently told The New York Times. “Now, are we going to take this moment to help low-wage workers move into the middle class and give them skills to thrive? Or are they just going to go back to low-wage jobs that are dead ends?”
The Biggest Impacts
Last year, an analysis by the National Foundation for American Policy (NFAP) of U.S. Citizenship and Immigration Services (USCIS) data made it clear that the Trump administration’s earlier restrictions on H-1Bs were crushing business-services and consulting firms in particular. Meanwhile, tech companies such as Apple and Google experienced far fewer H-1B application denials. Check out the chart:
Firms such as Cognizant and TCS, in other words, were already feeling the pressure before the Trump administration instituted its temporary H-1B ban—and this latest executive order could upend their business model entirely.
“Traditional” tech firms will end up impacted, as well, since many drew H-1B contractors from those business-services and consulting firms. The question now is whether they’ll outsource their talent, focus more on expanding their offices in other countries, boost their domestic workforces, or some combination of all of the above. Firms such as Google and Microsoft have talked quite a bit about building out their domestic talent pipelines, particularly in a diversity context; now they may have to deliver more fully on those promises.