This past Friday, US President Obama signed into law a new bill which drastically raises the cost of hiring foreign workers using H-1B and L visas from $320 to $2,320 in situations where a company has more than 50% of their workforce holding these visas and also having at least 50 employees in total. The chief sponsor of this bill is Senator Chuck Schumer who has been positioning himself as a protector of the American worker through other initiatives like the anti-offshoring bill which would add a 5 cent surcharge to domestic calls transferred overseas.
Let’s look at the good and bad regarding this new legislation. The best part is it only applies to companies with 50 or more employees which thankfully shows the administration understands the importance of small companies to growing jobs and strengthening the economy. The second best part of the bill is it targets outsourcers who oftentimes but not always bring overseas workers to the US to train them on the ways of the American workplace and US culture. After a stay in the states, these workers are rotated back to their homeland to help the overseas offices Americanize. Cultural immersion is crucial to international workers who want to export the maximum number of US jobs overseas.
It is extremely difficult in fact to match US culture in other countries and the closer overseas workers can get to approximating US behavior, the more likely they are to take US jobs.
Another great part of the bill is that the increased revenue it potentially raises will be spent on tighter border security. This is positive news because most Americans are used to both Republican and Democratic administrations more or less ignoring the issue of border security.
The bad part of this bill is that it seems to once again ignore the advent of technology these past years meaning politicians seem to be oblivious to the fact that it is now possible to approximate face-to-face meetings with video conferencing and telepresence solutions. In other words if push comes to shove, it is possible for outsourcing firms to not bring foreign-born workers to the US at all and instead of hiring Americans they can just use video conferencing technology to train workers in other countries.
For a company meeting the criteria of more than 50% foreign-workers, the cost to bring in 2,500 employees has just increased to $6,425,000. The cost of an entry level telepresence solution is about $1,000 per station (depending on quality standards. You could argue this price is low but I am comfortable with this number for this example.)
So in this situation the outsourcing company can purchase 6,425 telepresence systems (no tax in this example) and keep them year over year as they hire new workers. Note that you would need 5,000 systems to train 2,500 workers.
Chuck Schumer complains that outsourcing companies are nothing more that multinational temp agencies which drive down the cost of American workers. The challenge with this argument is he assumes American workers will be hired if overseas workers are not. In other words, using technology you can get around this new fee increase and most companies will no doubt do so.
So instead of American workers getting these jobs, tens of thousands of foreign workers will not come to the US which will in turn reduces the sales of airlines, hotels, apartments, convenience stores, drugstores, department stores, supermarkets, restaurants and countless other American businesses.
I have mentioned before that the US government is pursuing policies which are blind to the massive job drain to other countries which is being facilitated by the Internet and IP communications. My fear is this new Visa cost increase while well-intentioned could end up doing more harm than good. That is of course unless you sell bandwidth or telepresence systems. I just wonder how long it will take Wall Street analysts to issue buy ratings on Polycom, Cisco and soon Skype as a result of this new regulation.