The New Brain Game

Baldwin Louie — Mon, 01 Jan 2001 14:00:00 -0800

Last fall, DigitalESP estimates it was losing out on about $1 million in revenue per month due to a severe shortage of geeks. The Raleigh, N.C.-based e-commerce services firm, whose clients include Ariba (ARBA) and IBM (IBM), desperately needed to hire programmers to push several delayed projects through the pipeline. Despite the superhuman efforts of DigitalESP's in-house recruiting staff and outside headhunters, no amount of "ESP" was enough to locate the technical talent the company needed.

Then in October, President Clinton signed into law the American Competitiveness in the 21st Century Act, which increases the annual cap of H1-B visas for skilled foreign workers from 115,000 to 195,000 for each of the next three years.

Chip Bullock, president of DigitalESP, believes the law will allow his company to get back on track with its hiring plans. In November, one month after the law passed, the company reports that it made 30 job offers, many to H1-B visa holders.

Employers and foreign workers across the country are breathing a sigh of relief because the new H1-B rules, which in addition to increasing the number of visas issued, also make it easier for visa holders to switch jobs once they're in the United States. But the law is far from a panacea: It includes ambiguities that might pose new problems for both employers and employees.

Workers who lose their jobs in a layoff, for example, stand to lose their visas. And even though the law provides funding to train domestic workers in high-tech skills, it doesn't solve the larger issue of filling the huge number of open information-technology jobs in the U.S. Opponents of the visa program complain that funding for training domestic workers is too little, too late.

On the surface, the new rules provide plenty of good news. Backlogged applications for visas from this year won't be counted toward the new cap, ensuring that 2001 will start on a fresh slate with 195,000 available visas. In addition, H1-B visa holders in later stages of applying for a green card - the coveted certificate that guarantees foreigners permanent U.S. residency - can now receive extensions beyond the six-year maximum stay for H1-B visas.

The new law states that once an H1-B holder's green card application has been pending for 181 days, she can work for any U.S. employer without jeopardizing the process. The worker's job must be in the same field as the job that served as the basis for her application, but she doesn't need to have the exact job title that appeared on the application.

That clause would have been a relief for Tarun Sharma, who cofounded the Westborough, Mass.-based software firm EC Cubed in 1996. When he was promoted from an engineer to a business development position during the middle of his green-card processing, he had to reapply for his green card and start the waiting process all over again.

One of the biggest wins of the new law is a provision that lets foreign workers switch employers within a few weeks of filing a petition to change jobs, rather than wait for months while the Immigration and Naturalization Service processes the paperwork. The lengthy process often discouraged employers from interviewing H1-B workers already in the United States.

But the law also creates a host of new difficulties. Most companies hire specialized lawyers to help them navigate the complex immigration procedures, and the relaxed rules now give employers reason to worry that the worker they spent thousands of dollars to hire and train will jump ship at the first opportunity for more money or a promotion. Baltimore-based immigration attorney Sheela Murthy believes it will now be easier for companies to poach H1-B workers - although she says employers have legal recourse if they can prove breach of contract.

Workers lack protections, too. If they quit a job because of exploitation, because of a family member's medical emergency or if they are suddenly laid off during a company restructuring, then they technically have lost their H1-B visa and can't remain in the States unless they secure a job offer from a new employer willing to sponsor the visa, according to Murali Krishna Devarakonda, a board member of the San Francisco chapter of Immigrants' Support Network, a lobbying group for foreign workers.

Many opponents of the visa program, however, say the issue is bigger than the implications of the new law. "H1-B workers make up only 10 percent of the IT workforce," says Grant Midland, manager of government relations for the Computing Technology Industry Association, a national lobbying organization that pushed for the new H1-B law. "The real problem is our educational system. Why aren't we producing enough programmers and tech workers in America?"

The Information Technology Association of America's latest study of the IT labor market found that 850,000 jobs were unfilled as of last April, with that figure expected to increase to 1.6 million by April 2001.

Even with a doubling of foreign workers, that leaves a need for well over 1 million domestic workers. To address the labor crunch, the new rules increase companies' H1-B application-processing fees from $500 to $1,000 per visa to help pay for programs that train American workers in high-tech skills.

Skeptics believe the higher fees won't have much impact. Norm Matloff, a computer science professor at the University of California at Davis and a critic of the visa program, says the training is geared toward technicians, not those with more advanced skills, such as programmers. Harris Miller, president of the ITAA, counters that the U.S. needs technicians, too, and those jobs are a good foundation for programming careers.

Congress is working on legislation that gives employers incentives to train domestic workers. One bill, the Technology Education and Training Act of 2000, outlines tax credits for small businesses that pay for employees' IT training. But until legislators, educators and business leaders can figure out how to funnel more Americans into high-tech careers, skilled workers from overseas will be the U.S. high-tech community's main staffing salvation - no matter how controversial.

Reena Jana is a writer in New York.

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The New Brain Game