Analysis of a Key Provision of the Immigration Reform Bill: The H-1B Outplacement Provision

In April, 2013, the United States Senate’s “Gang of Eight” released a 900-page proposal for comprehensive immigration reform.  The bill contains a lot of provisions, but I will focus on the impact on the IT services industry and the H-1B Provision.  The proposed bill as it relates to H-1B visas is called the “Outplacement” Provision, which seeks to prohibit “labor for hire” and would completely restrict the placement of H-1B workers at third party worksites by IT staffing firms.  


The H-1B visa program helps companies bring the most highly trained and technical people into our labor market.  For example, when companies undertake an IT project, they put together a range of team members with various skills.  If they cannot find a US worker with a particular skill set required for a project, they often reach out to an IT staffing firm to help fill the need.  The individual with the required skill may sometimes be an H-1B visa holder employed by the IT staffing firm.  This worker may be selected to join other US workers placed on the project in order to supplement and accompany the skill set already held by the team.  This usually is a temporary arrangement allowing the company to successfully complete the IT project.  If passed, the “Outplacement” Provision would prohibit such arrangements.  This would not only be a loss for IT staffing companies and the businesses who use their services, but would be a missed opportunity for other US workers who would have been members of the project team.  As a consequence, if the required work is performed offshore, rather than in the US, no tax revenue is generated.  

As part of the debate, proponents of the “Outplacement” Provision suggest it will protect against fraud and abuse within the H1-B visa program.  Other proponents of the Provision contend it will protect potential H-1B workers from being taken advantage of by unscrupulous employers who would pay them less than their US counterparts.  Most analysts contend that such protection is not needed since sufficient protections are already in place.  It is argued by some that there should not be restrictions on legitimate employers from sponsoring H-1B workers by prohibiting the placement of an H-1B visa holder at the worksite of another employer.  

If these restrictions are imposed, it also is argued by some that it would have a devastating impact on business and would actually cause the work to go to other companies who would perform the work offshore - an outcome that would be highly undesirable for the US economy and the US citizens employed by the IT staffing firms. 


Even at a time of 7.5% unemployment, Microsoft has a few job openings:  over 6,000 at last count.  Most pay well and come with an array of benefits.  The reason many positions remain vacant is that most are for seriously smart engineers and code writers.  There just aren’t enough of those coming out of US universities.  So, companies such as Microsoft do what they can.  One approach is to sponsor foreign job applicants for H-1B visas, a program for highly skilled foreign workers.

But with just 85,000 such visas available annually for the entire country, the pickings are getting very slim.  Last year, it took 10 weeks for the cap to be reached.  This year, it took 5 days.  

Canada does not restrict H-1B visas.  In fact, the Canadian government has even rented billboard space in California with the message: “H-1B problems? Pivot to Canada.”  Microsoft is among several tech companies that have opened offices in Canada to employ skilled workers they can’t get into the United States.  

Efforts to attract and retain the smartest workers should be a matter of little debate.  Companies such as Microsoft, Google, Intel and Facebook are among America’s biggest economic engines, and they are in a global competition for top talent.  However, opponents led by organized labor contend that foreign workers displace American workers, but that’s hard to square with the huge numbers of unfilled jobs.

I suggest and submit that it is time to give America’s technological leaders the tools they need to compete in a global marketplace.  Companies should not have to open offices north of the border or across the ocean to fill the jobs they desperately want to fill at home.  In my view, any plan to place restrictions on H-1B visas should be rejected since it would limit American firms from competing in the global economy.

expert labor relations advice