I appreciate that Wired is writing about this topic. That said, I don't know anyone who works in tech that is not aware of the following facts:
1. Body shops overwhelmingly exist to abuse the H1B visa allocation system
2. Contractors cost more than FTEs, but it can be booked as CapEx instead of OpEx so looks better during reporting
3. Body shops generally supply subpar labor. People with cooked resumes that are incapable of performing at the same level as their non-body shop title peers.
4. Body shops overwhelmingly arbitrage the fact it's near impossible to legitimately acquire H1B visa allocations and the broken rules about job changes for immigrants on H1B visas.
5. All of this adds up to body shops treating immigrant workers horribly while at the same time largely defrauding their customers and the government offices responsible for visa allocations
TL;DR: Body shops are evil, everyone knows this, management doesn't care because it looks good to shareholders.
The business hiring a body shop typically does not directly pay any wages. They pay a per project fee or a contracted per headcount rate, both of which are treated as CapEx and amortized as a project cost. The economics are different for bringing in headcount unrelated to project work, but project based workloads are typically where body shops find their niche.
Outsourced labor is logged as CapEx in SEC filings and is a means of hiding labor expenses to improve EBITDA (which is used as a primary indicator of business health).
If businesses had to report outsourced labor as OpEx instead of CapEx many would see drastic changes to their EBITDA and their stock would drop (for good reason: They're hiding important investment information).
The SEC has supposedly been planning to fix this problem for years but has done nothing.
India, if you understand how its education system is setup, is essentially a labour market for producing service workers for the Anglosphere. I'm not the slightest bit surprised that India is dirt poor, while Indians form the richest ethnic group in the US.
>India, if you understand how its education system is setup, is essentially a labour market for producing service workers for the Anglosphere.
There is no social security in India so many times aging parents solely depend on their kids for their livelihood. So its ingrained in culture to push your kids into studying what might be profitable than what is interesting to the kids.
Anglosphere? You are wrong. Majority of non resident Indians work in middle east. (Or wherever there is a way to make better money).
Regarding social security you are right but that is not the reason parents push kids into studying. They believe(foolishly) that giving better education to the kids is their life purpose. It's infused so by the culture and society.
Many at this point jut in by saying "English is ours, you Heathen!", but really though it is not. India's English proficiency index was lower than China and Japan in 2011 [2] (before magically jumping up).
I've been extremely disappointed with India. There is very little awareness of political systems, even while many get drawn into pompous nationalism. Everyone is obsessed with how the best of Indians leave for the US, and are greedily optimizing for how to get a share of that sweet sweet dough. This from language teachers,writers to engineers, scientists. When Sanskrit/Kannada teachers start spouting English for class signalling, you realize there is no hope for India (much as with Africa). It's not surprising that the power centers of Indology are in the US.
Most of what you've said doesn't appear to have citations or evidence backing it up.
Power centers in the US? Source? Everyone is trying to leave? From what I've heard India doesn't have enough opportunities for everyone so some people try to leave. Also India has 10+ different languages, all I see you citing are two.
> There is very little awareness of political systems
> I don't know anyone who works in tech that is not aware of the following facts
I've never heard or witnessed any of these body shops or contractors. Do they just work at places like banks' IT departments so I may not run across them?
You've never heard of Robert Half or Randstad? They supply a large number of contractors (across multiple segments, not just IT) in most major US metros. As others have said, if you are VP level (or Director level), it's impossible to not know about them since they'll be trying to get your ear on a regular basis.
Yes I even used to a contractor for a US company via Randstad! So maybe I'm one of these people myself without even knowing it and that's why I don't think of them as being sub-par labor incapable as performing at the same level as full-time employees.
A Congress and President were just elected who claim to support doing something about it. That and there were some high profile abuses that lead to lawsuits and congressional attention in the past year more so than in the past, like the Walt Disney layoff.
I would be shocked if the new administration changed anything. In the end the Republicans will always side with business and they clearly want even more H-1Bs.
Maybe, if we're lucky, these "elite business people" will start to figure out that cutting corners and optimizing for the bottom line on paper is a horrible strategy for knowledge work. Taylorism in offices needs to die already.
Perhaps you didn't notice, but the GOPe(stablishment) that sides with businesses on this issue loathed and loathe Trump with a burning passion, and he got elected in spite of them in terms of active help (passively, their total awfulness in these sorts of areas created conditions that allowed a Trump to win).
So I'd a) watch to see if he doesn't pack his administration with too many GOPe types and/or b) fires them quickly if they revert to type (he's decisive that way, even legendary, you might say), and c) ends up campaigning against a Do Nothing Congress (https://en.wikipedia.org/wiki/80th_United_States_Congress) in 2018 (and on) so that he'll eventually be able to get promises like his "Intel, not Infosys" one on H-1Bs fixed in the law.
Actually, administratively he can nuke the Infosys type bodyshops from orbit, especially if he takes a page from JFK's playbook and starts putting their executives in Federal prison.
As I said I am ready to be positively surprised. There is a lot of talk in American politics but when it comes to action the actions are usually very predictable. In my view Trump is no revolutionary when it comes to actual policy.
Well, the calculus a lot of us Trump voters made starting in the primaries was that we were certainly going to lose with any other candidate, Trump at least offered a chance of "winning" (or not losing so hard, whatever; my local power plant that converted it's coal boiler to gas (and boy was that forced change stupid from a fragility standpoint) is not going back to coal absent a serious gas shortage and a lot of time, but he can in this area at least stop trying to explicitly kill off the industry, as Obama promised and did, and Clinton promised to, on the campaign trail (really, what were the Democrats thinking when they nominated her???)).
Note that he doesn't have to be "revolutionary" in one sense, if he's just another FDR Democrat like Reagan labeled himself as (albeit neither being viciously anti-business), that would be a huge improvement.
The direction that I fear is most likely is that we will have an immigration bill that appeases Trump's supporters by marginalizing immigrants while simultaneously quietly advancing business interests by expanding H1-B in a way that won't end the current exploitation.
What does "margininalizing immigrants" refer to, vis-a-vis policy and enforcement of immigration law?
Trump's stance on H1-B is quite clear from his policy papers, speeches, as well as those policy documents written by his main immigration advisor Sen. Jeff Sessions. This is all out in the open for anyone to read, but I suspect you just wanted to take a gratuitous shot at Trump's supporters, so, good job.
I was an H1-B but not for a contractor. I'm pretty sure the only reason I got off my TN was because I applied during the recession.
There are 2 quick solutions:
1) Allow people to keep their H1-B after quitting their job. Looking for a job while you're on an H1-B sucks, you have to deceive your employer until the transfer goes through. And the transfer itself is a barrier to getting hired because you can't start immediately.
2) Prioritize applications within each occupation class by wage instead of lottery. That way these low wage body shops can't spam the system, they'd actually have to pay a good wage rather than the "prevailing wage" to get a visa approved.
About 2, do you have any thoughts about how equity should play into the H1-B system? Often times people working for early stage startups are getting paid far less than even "prevailing wage" because their equity is valued at next to nothing.
Leaving a loophole will only invite more abuse. If the equity is worth $0 (which it is for all illiquid startups big and small), then it shouldn't count for anything.
The 409A valuation should be used.[1] Definitely not the fundraising valuation for preferred shares. Employees should use the 409A too when trying to evaluate competing offers. While early 409A evaluations can be a bit of a swag they are much more reasonable then fundraising valuations. Example, left a seed stage startup where the founder liked to brag about the $10 million dollar valuation (had a convertible note with a $10 million cap so not really a valuation). The 409A was at $2 million, which was much more reasonable for the progress, potential, and risk.
It's perfectly fine to shop around for other opportunities while you're working for a company - In fact you should always do it - There is nothing deceptive about that. You're selling your time, your employer doesn't own you.
If you are on an H1B and your employer fires you, you immediately lose your right to live in this country, and to seek work, and must leave in the shortest amount of time you can.
So if your employer doesn't like you shopping around they can stop you.
Re: (1) You do have to leave these here United States on your last day of work -- ask me how I know. However, a new employer can apply for a new H1B for the balance of unused time in the original 6 year block without being subject to the cap even after you leave the US. The time can even be extended via H1 recapture by the sum total of days you spent outside the US while on the H1 subject to documented evidence. It counts as a transfer which employers are much more willing to sponsor. Check with an immigration attorney. This is a fairly common misconception.
Agreed they should let you remain in the US for say 6 months after you leave to seek a new job for balance of time remaining though.
>> However, a new employer can apply for a new H1B for the balance of unused time in the original 6 year block without being subject to the cap even after you leave the US
So, say a worker on H1b quits and goes back to home country on last day of employment.
Then, after 6 months, they decide they want to come back to the US to work for a different company, is this a simple transfer of H1b?
"Even after the H-1B cap is reached, employers may continue to file H-1B petition on behalf of foreign nationals who are currently outside the U.S., as long as they held H-1B status during the past six years, and have not exhausted the full six years."
Basically you have 6 years after you quit/are fired and return home to transfer that H1B to a new employer, for the balance of time remaining on that visa, without being subject to the cap.
The actual fix is even easier: just declare that the minimum salary for an H1B is a million dollars per year. That will guarantee it's only used for its intended purpose of impossible-to-hire-locally skills.
Off topic: Even Wired is giving cert errors these days. What gives? I heard there was a major problem with a cert issuer recently, but it seems like it was a couple months back. Shouldn't this be cleared up by now? Anyone else getting this? Is Wired even aware of the problem?
I hear a lot of solutions, but they're all downstream of a core problem. Any "immigration" visa that denies immigrants the right to choose where they live, what profession or trade they enter, and what employers (if any) they work for, has already failed.
I understand it is tempting for silicon valley employers to lobby for control over workers lives, under the guise of a shortage of software engineers. But citizens are allowed to choose their path in life, and if becoming a developer in the vally isn't appealing to them, thats the market's answer.
Don't try to fix this by creating a large scale tier of noncitizen worker with limited mobility right. Whatever system we have, it must not coerce immigrants into working as a developer as a condition of living in the us.
As long as this deep flaw remains, all "fixes" will just be window dressing.
You're stating an extremist fringe position, sadly.
There is no political will for a broadly available "because I want to be an American" visa program. To the extent that we give work authorization to foreigners en masse, it is to fulfill specific needs for labor that can't be met by domestic workers, or because they are exceptionally skilled.
Workers are locked down to specific fields because otherwise they might start competing with Americans for jobs, and the electorate doesn't want that.
I'm not sure I agree. The United States takes well over a million immigrants a year into the country as free participants in the labor market, with the right to choose a career path not dictated to them by the terms of their visa or a corporation that "sponsors" their limited residency rights. It turns out that these immigrants don't go into software development in the numbers silicon valley leaders feel they should, either. That's why they tech employers have lobbied for an parallel "immigration" system run by corporations. Basic human freedom isn't convenient for them.
50 comments
[ 3.8 ms ] story [ 107 ms ] thread1. Body shops overwhelmingly exist to abuse the H1B visa allocation system
2. Contractors cost more than FTEs, but it can be booked as CapEx instead of OpEx so looks better during reporting
3. Body shops generally supply subpar labor. People with cooked resumes that are incapable of performing at the same level as their non-body shop title peers.
4. Body shops overwhelmingly arbitrage the fact it's near impossible to legitimately acquire H1B visa allocations and the broken rules about job changes for immigrants on H1B visas.
5. All of this adds up to body shops treating immigrant workers horribly while at the same time largely defrauding their customers and the government offices responsible for visa allocations
TL;DR: Body shops are evil, everyone knows this, management doesn't care because it looks good to shareholders.
But they are contractors from the point-of-view of the company that is paying the body shops, and that's the point he's making.
If businesses had to report outsourced labor as OpEx instead of CapEx many would see drastic changes to their EBITDA and their stock would drop (for good reason: They're hiding important investment information).
The SEC has supposedly been planning to fix this problem for years but has done nothing.
Another commonly used trick is to send people on L1b or B1 visas. H1Bs are on lottery, these other two aren't.
[0] https://www.amazon.com/Sold-Out-Billionaires-Bipartisan-Crap...
http://scroll.in/article/741723/full-text-narayana-murthy-qu...
http://timesofindia.indiatimes.com/india/Narayana-Murthy-run...
India, if you understand how its education system is setup, is essentially a labour market for producing service workers for the Anglosphere. I'm not the slightest bit surprised that India is dirt poor, while Indians form the richest ethnic group in the US.
There is no social security in India so many times aging parents solely depend on their kids for their livelihood. So its ingrained in culture to push your kids into studying what might be profitable than what is interesting to the kids.
Regarding social security you are right but that is not the reason parents push kids into studying. They believe(foolishly) that giving better education to the kids is their life purpose. It's infused so by the culture and society.
See:
http://koenraadelst.blogspot.in/2015/11/propagating-english-...
Many at this point jut in by saying "English is ours, you Heathen!", but really though it is not. India's English proficiency index was lower than China and Japan in 2011 [2] (before magically jumping up).
I've been extremely disappointed with India. There is very little awareness of political systems, even while many get drawn into pompous nationalism. Everyone is obsessed with how the best of Indians leave for the US, and are greedily optimizing for how to get a share of that sweet sweet dough. This from language teachers,writers to engineers, scientists. When Sanskrit/Kannada teachers start spouting English for class signalling, you realize there is no hope for India (much as with Africa). It's not surprising that the power centers of Indology are in the US.
Also see,
[1] http://sankrant.org/2011/03/the-english-class-system-2/
[2] https://www.amazon.com/Decolonising-Mind-Studies-African-Lit...
[3] http://www.ef.co.th/sitecore/__/~/media/efcom/epi/pdf/EF-EPI...
Power centers in the US? Source? Everyone is trying to leave? From what I've heard India doesn't have enough opportunities for everyone so some people try to leave. Also India has 10+ different languages, all I see you citing are two.
> There is very little awareness of political systems
Uh-huh. Right. https://en.m.wikipedia.org/wiki/Government_of_India. Have you ever heard of a parliamentary, democratic republic? They have a constitution and 3 branches of government too.
I'm just googling shit here and I already appear to know more than you do.
Perhaps Google can teach you reading comprehension too.
propose a fix -> club it with proposals dealing with illegal immigration -> stalemate -> back to step1
I've never heard or witnessed any of these body shops or contractors. Do they just work at places like banks' IT departments so I may not run across them?
http://www.nytimes.com/2016/01/26/us/lawsuit-claims-disney-c...
But I am ready to be positively surprised....
So I'd a) watch to see if he doesn't pack his administration with too many GOPe types and/or b) fires them quickly if they revert to type (he's decisive that way, even legendary, you might say), and c) ends up campaigning against a Do Nothing Congress (https://en.wikipedia.org/wiki/80th_United_States_Congress) in 2018 (and on) so that he'll eventually be able to get promises like his "Intel, not Infosys" one on H-1Bs fixed in the law.
Actually, administratively he can nuke the Infosys type bodyshops from orbit, especially if he takes a page from JFK's playbook and starts putting their executives in Federal prison.
But we'll see...
Note that he doesn't have to be "revolutionary" in one sense, if he's just another FDR Democrat like Reagan labeled himself as (albeit neither being viciously anti-business), that would be a huge improvement.
Trump's stance on H1-B is quite clear from his policy papers, speeches, as well as those policy documents written by his main immigration advisor Sen. Jeff Sessions. This is all out in the open for anyone to read, but I suspect you just wanted to take a gratuitous shot at Trump's supporters, so, good job.
There are 2 quick solutions:
1) Allow people to keep their H1-B after quitting their job. Looking for a job while you're on an H1-B sucks, you have to deceive your employer until the transfer goes through. And the transfer itself is a barrier to getting hired because you can't start immediately.
2) Prioritize applications within each occupation class by wage instead of lottery. That way these low wage body shops can't spam the system, they'd actually have to pay a good wage rather than the "prevailing wage" to get a visa approved.
[1] https://www.quora.com/What-is-a-409A-valuation
If you are on an H1B and your employer fires you, you immediately lose your right to live in this country, and to seek work, and must leave in the shortest amount of time you can.
So if your employer doesn't like you shopping around they can stop you.
>> you have to deceive your employer until the transfer goes through
It sounded like it is morally bad to do so. @jondubois says that there is nothing wrong in it as you do not belong to your employer.
Agreed they should let you remain in the US for say 6 months after you leave to seek a new job for balance of time remaining though.
So, say a worker on H1b quits and goes back to home country on last day of employment.
Then, after 6 months, they decide they want to come back to the US to work for a different company, is this a simple transfer of H1b?
"Even after the H-1B cap is reached, employers may continue to file H-1B petition on behalf of foreign nationals who are currently outside the U.S., as long as they held H-1B status during the past six years, and have not exhausted the full six years."
Basically you have 6 years after you quit/are fired and return home to transfer that H1B to a new employer, for the balance of time remaining on that visa, without being subject to the cap.
Ask your attorney ^_^
I understand it is tempting for silicon valley employers to lobby for control over workers lives, under the guise of a shortage of software engineers. But citizens are allowed to choose their path in life, and if becoming a developer in the vally isn't appealing to them, thats the market's answer.
Don't try to fix this by creating a large scale tier of noncitizen worker with limited mobility right. Whatever system we have, it must not coerce immigrants into working as a developer as a condition of living in the us.
As long as this deep flaw remains, all "fixes" will just be window dressing.
There is no political will for a broadly available "because I want to be an American" visa program. To the extent that we give work authorization to foreigners en masse, it is to fulfill specific needs for labor that can't be met by domestic workers, or because they are exceptionally skilled.
Workers are locked down to specific fields because otherwise they might start competing with Americans for jobs, and the electorate doesn't want that.