H-1B visas that enable IT professionals from overseas to work in the U.S. have always been a controversial issue. However, with the current administration’s decision to impose $100,000 annual fees for each successful applicant, the issue may soon simply fade away. The simple truth of the matter is the number of IT services providers able to absorb that level of additional cost are going to be few and far between.
The evolving H-1B landscape
Much of the H-1B controversy arises because U.S. companies have historically issued the majority of these visas to IT professionals from India. Employers often pay these individuals lower rates than other IT professionals. In theory, H-1B visa holders fill roles where the U.S. lacks sufficient expertise. However, over the years, many organizations have abused that intent, as documented in multiple reports. In fact, the U.S. Citizenship and Immigration Services (USCIS) agency earlier this year launched a campaign to encourage reporting of such abuses.
It’s not clear how many holders of H-1B visas are currently in the U.S. However, all of them are expected to be grandfathered into the revamped program, meaning they will not need to immediately apply for a renewal. Ultimately, however, any IT services provider that has been relying on IT professionals with H-1B visas to augment their workforce will eventually see higher costs if they want them to continue to employ them in the U.S.
However, U.S. citizens will not automatically take over much of the work currently performed by H-1B visa holders. Other solutions, such as offshoring, may become more likely instead. Companies are likely to move a significant percentage of H-1B visa holders’ work offshore, where costs are even lower. This kind of move is likely to encounter resistance from customers in the U.S. Many of them prefer service providers to be located in a time zone that aligns with their typical working hours. Managing outsourced IT projects is already challenging, and global distribution of team members creates additional hurdles. These challenges intensify unless the IT services provider maintains a team in another country that is willing to work U.S. hours.
AI and global politics reshape IT outsourcing
The changes being made to the H-1B visa program are, of course, going to occur at the same time that artificial intelligence (AI) will be increasingly relied on to automate many of the tedious tasks previously performed by visa holders. In fact, as that transition continues to occur, it may matter even less where members of an IT team are located. This is particularly true when IT teams manage tasks that do not require frequent or direct interaction with customers.
The one thing that is clear is that the outsourcing of IT services no longer exists in a vacuum. As geopolitical issues ebb and flow, it’s apparent that IT services are just one of many elements that are now part of a larger political calculus. Managed services providers (MSPs) now face both a challenge and an opportunity. They must determine how to navigate these issues in a way that allows them to serve their customers as profitably as possible.
Photo: nivens / Shutterstock
This post originally appeared on Smarter MSP.