I sent the following letter to every presidential candidate at the beginning of the campaign…when there were about 100 of them. I also sent it to each of my Senators and my Congressman.
Two of the campaigns sent me a letter solicting funds. My Democratic Senator responded with a form letter letter. My Republican Senator and Democratic Congressman ignored the letters.
With the letter I attached an article from a prominent magazine. I’m trying to find it on the Internet now. The hardcopy I have is packed away. The article detailed how H-1B was not in the best interest of the American worker.
In interest of full disclosure, the company I was contracting for, starting at the beginning of year to flood the place with Indian programmers. I saw the handing writing on the wall, but due to the economy was trying to ride it out.
I did not make it. The company terminated my contract 9 months early. Part of it may have been the economy, but the bigger portion was that rate was much higher than these new folks were getting. My consulting firm told me that they had stopped submitting folks over there as the rate being paid was so low. Just as an aside I was not making a killing there. In fact I am making less now than I was 10 years ago in this business. Even less if factor in inflation. Theoretically, H-1B folks are supposed to be paid the prevailing wage. That is one huge joke.
The Letter
Dear Sir/Madam:
There is an ill wind howling through the Information Technology (IT) world. It may be blowing in other industries too, but I know about IT.
I have accepted that globalization is a fact of our time. While it is not always comfortable, survival implies adapting to changing times. Folks in my position are not going to reroute a paradigm shift of this magnitude.
What is this ill wind? It is the overseas outsourcing. It is the wholesale migration of tech jobs overseas. The storm is further fueled by a flood of foreign tech workers coming into this country. This is effectively taking good paying, satisfying jobs away from American workers. I am not alone in feeling squeezed out of the workforce this H1-B tsunami. And if not squeezed out, I know my wages are not what they could be. Ostensibly, the H1-B program is about bringing workers into this country that have skills Americans do not have. In my opinion that is a smoke screen. The program is about putting downward pressure on wages.
I am not a xenophobe. I have many friends in the workplace that are H1-B or green card carders. I do not fault any individual legal immigrant from coming to this country trying to better their self. I do fault the policy makers that have allowed or even fostered this environment.
The question arises why is happening. There are a multiple reasons for this. I’m sure many unknown to me.
The first is that these large corporations effectively do not want to be married to a work force anymore, especially so to an IT workforce. They want to be able to staff up and staff down as business conditions dictate. I seriously doubt this will change.
How do they manage this? They do so by outsourcing and/or hiring of contract labor. I’ve bounced back and forth between working as a full time IT employee and a contract IT employee. In many ways I prefer working as a contractor, but there is little security and the competition is fierce. Health insurance and saving for retirement is always hurdles and an issue.
I think everyone in American and beyond is aware of the famous court case of the Microsoft permatemps. What that court case did was accelerated the rise of 3rd party consulting firms to shelter corporations from potential litigation from contract workers. The aim of the law is noble. Its goal is to prevent corporations from abusing a segment of the working population.
However the rise of the 3rd party consulting firms has given rise to another set of issues. These issues affect not only the individual, but tech workforce and nation as whole. How can the last be? What happens is that you have a 3rd party involved that is not actually adding to the nation’s productivity index. For the basic service of finding workers and administering those workers, these 3rd parties take anywhere from 10% to 50% of the bill rate. Many of these 3rd parties want to pay “all-inclusive” which translates to “no benefits”. The average bill rate for what I do is around $55 to $65 dollars an hour. The IT worker will see anywhere from $25 to mid $40s on this. We are talking about $15 to $30+ an hour to shelter these corporations from litigation.
It will take someone smarter, with more time and more access to resources than I to come up with the empirical evidence to support intuition. My gut tells me this “litigation premium” is fueling the flight to overseas outsourcing. I am sure it is not the only causative agent, but it is a contributor.
Theoretically, these 3rd party consulting firms are screening and vetting applicants. Some of the better firms do. But some many of them simply find you resume on a job board, ask some basic questions, and then try to get you an interview with the end client. Then they bill on your labor taking their percentages outlined above. It is a dysfunctional system.
The trend that has really bothered me in the last few years in the rise of recruiting firms, both large and small owned and ran by Indians. I do not know what it takes to start one of these companies. Do you have to have green card, or just a H1-B visa? It has gotten to the point that when I get a call from a recruiting firm if it is a non-Indian I am surprised. I wish that was an exaggeration, but it is not.
So I see the rise of these 3rd party consulting firms:
- 1. As fueling the flight to offshore outsourcing
- 2. Creating a workforce with poor or no benefits
- 3. Fostering an environment for decreasing wages
- 4. Fueling the influx foreign workers at the expense of American workers.
What do I see as solutions to these issues? I can only answer in broad terms, but here goes.
First, would be to revamp the IRS regulations dealing with contract/temporary work forces. As it stands right now it is very hard for me as an individual to contract with a corporation. You are forced to come in through one of the 3rd party vendors. This is especially true as the corporations get larger.
If contractors could deal directly with employers this obscene premium could be eliminated. There has got to be a middle ground somewhere between abuse by employers and ability to contract.
Secondly is health insurance issue. It is almost impossible to get health insurance that is affordable as an individual. Somehow we have got to get it where health insurance is not tied to the employer. This would help the situation outlined above, and I believe it would make our companies more competitive in the global market place.
Thirdly, we need to make education affordable again. I read recently that many of our corporations are shifting their education donation dollars from American universities to oversea universities. They feel they are getting more bang for their buck. A well educated, well trained workforce benefits all of us. Who does it benefit for a kid to finish college saddled with wagon load of debt? What does it say about the loyalty of our corporations that they would do this at the expense of the American student.
I think it should be declared a national emergency that American students are so far behind the rest of the industrialized world in science and math education. Our future as a nation is not in jobs that do not require these skills.
Fourthly, the H1-B issue needs to be addressed. As stated earlier I feel this is more about keeping wages down. If it is really about bringing skills that are lacking in this country why are we not educating our population to do these jobs? I know a portion of the H1-B fee is supposedly going towards training Americans in these missing skills. So how is that training program working? I would not advocate eliminating this program, but I am advocating keeping the numbers reasonable. Not reasonable for corporations, but reasonable for the American worker.
Fifthly, if it is not feasible to revise the law regarding contractor’s status as permanent or temporary work, then the issue of these 3rd party consulting firms needs to be addressed. As it stands now, a whole underclass of workers with second class rights and second class benefits have been created. It strikes what has changed is where the abuse of the worker is taking place. This is entirely anecdotal, but some of the worse abusers are these Indian firms that have proliferated in H1-B tsunami.
These are complex issues and the solutions are not easy. But it is time that some stood up for the American workforce against corporations interested in only the bottom line.
I just read your post titled Ill wind blows in Information Technology. Very thoughtful and well written. I agree with almost all of it.
I agree H1B programs must be strictly enforced as per law. No question about that. Any misuse or abuse of the program should be stopped.
In your summary, you have listed 5 points. I feel you may have missed one point – which is possibly as important, if not more:
1) American Corporations like IBM, Accenture, HP, Cognizant, etc have opened large offshore centers in India, China AND other low cost countries like phillipines etc. For the last 2 – 3 years, I have seen a trend where companies are outsourcing portions of the IT departments to the above companies. These companies turn around send most of the jobs to their offshore centers… and so are not available here at the homeland.
2) Transnational companies like TCS, Wipro, Infosys, Satyam and dozens of such companies that are based in other parts of the world with cheaper labor cost also sign large contracts – yearly or T & M with American corporations. They operate with the goal of moving 90 % of the jobs to offshore centers [sometimes 80 %]. I know that for a fact.
3) Both of the above are jobs that no one in this country – however qualified – can even compete against. While I do not know the exact percentage of the above, I am willing to bet (1) and (2) above takes about 60 % – 70 % of the pie.
4) When any Contractor [citizen or not] competes for a job here stateside, we are all competing for the remaining 30 % of the pie. And we “compete” against the offshore workers too who work for 1/7th the salary of an average worker here.
Are we going to let the 70 % the jobs that is offshored without even being offered here in this country continue without asking why???
Why shouldn’t we be able to compete for that 70 % the pie that is not even made available here?
I know for a fact that Bank of America, Morgan and Stanley, Prudential, AIG, Citibank… … … all who used Taxpayer money have large offshored projects that employ tens of thousands of workers abroad. Most of those jobs are held by (1) or (2) above.
What if the corporations decide to increase the percentage shipped directly offshore say for example to 80 % from the current 65 – 70 % as the recession progresses.
It happened the last time in 2001.