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Big U.S. consulting firms to suffer under the new H1B wage rule

The Biden administration is reopening the process for registering for an H1B visa in the U.S. on March 22nd. A potential 65,000 visas will be issued at random under the so-called "lottery rule" and recipients will be able to start their new roles in October 2021.

By reverting to the lottery rule, the new administration has delayed proposals by the previous administration to allocate H1B visas based on wages and skills. However, the concept of wage/skill-based allocation hasn't gone away forever: it's still on the cards for 2022. And if it happens as proposed by the Trump administration, it could cause issues for some large consulting firms who are in the habit of hiring H1B labor comparatively cheaply.

As we reported last year, the new minimum salaries for H1B visas under the Trump rule were set at the 45th percentile or above of a profession's salary for entry-level workers, rising to 95th percentile or above for higher-skilled workers. Baseline salaries for each category of employment are drawn from the U.S. government's Foreign Labor Certification Data Center (FLCDC).  They would imply, for example, that an experienced computer systems manager on an H1B visa in New York City would need to earn in excess of $208k to receive a visa, for example, while a junior computer systems manager would need to earn in excess of $140k. 

Research by David J. Bier, an immigration policy analyst at the Cato Institute's for Global Liberty and Prosperity, suggests that if the minimum H1B salary rule is introduced as Trump proposed, many firms using H1B talent will suffer. Based on historic H1B data, he says 73% of the job offers made by the top employers using H1B visas would involve wages that are too low for eligibility. On average, wages would need to rise by $20k to meet the new requirements.

The new rule could conceivably impact investment banks. Median wages for 'securities, commodities and financial services sales agents' in New York City are $131k, so junior traders on H1B visas would need salaries of $120k to be eligible. However, it's consulting firms that stand to suffer the most.

Bier calculates that 83% of historic H1B job offers extended by Accenture would have been disallowed under the new H1B wage rule, and that 98% of similar job offers extended by Deloitte & Touche would have been banned. At McKinsey & Co., he says 23% of job offers would have fallen short. At EY, the figure is 32%; at Deloitte Consulting, 47% of applications would have been denied. 

Bier says the discrepancies threaten to increase costs for companies that have struggled to fill vacancies since the Trump administration pulled the plug on H1B visas last June. Many of the jobs that would have been filled by H1B visa holders have simply remained empty since, says Bier. Under the new wage requirement he predicts these jobs will disappear: "It will be too expensive to fill them."

Photo by Andhika Soreng on Unsplash

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AUTHORSarah Butcher Global Editor
  • Sa
    Satoko Mizutani
    27 February 2021

    You speak as if every Indian has some master in continuous integration methodologies. They don't. Also It doesn't take a rocket scientist to run a cucumber script or build TDD environment if the culture of the organization truly supports that infrastructure. Let's add that not every environment is doing big data integration so the need for any truly specific skill is low. Both shops are testing websites, they're testing user interactions and they're clicking through sites.

    They usually set up to a scripting tool for the basic automated testing and then they engage in manual testing for things you ought to be the tool doesn't do well. You could train any kid out of high school to do this. You don't need to a computer science degree. Just some time with a mentor and it's done. Especially for functional testing. Tools such a selenium or Test complete make this process very easy. The bottom line is we don't need to import workers to learn these tools.

    I don't know why these Indians feel their are entitled to work in America. It is not your country, you have your own country. Take your energy and your talents and build up your own country. You don't need to destroy the job based in America to fulfill your dreams. You have a 1.2 billion person market of Indian consumers to serve. That should be enough. You tell yourself a lie to make yourself feel good for the discrimination you engage in when you get here that only Indians know what they're doing. As one wave of people move into management and then hire nothing but Indians and the next hire nothing but Indians from their own caste, you can't make the case that it's because they have some special skill anymore. It's solely because they are all Indian and you all feel comfortable working with other Indians now. It is time to end the charade.

  • Bh
    Bharat Patel
    26 February 2021

    In Preparation for Upcoming H-1B Lottery, Immigration Voice Calls on Biden Administration to Stop Issuing New H-1B Visas for Indian Nationals Not Already in the United States Until the Elimination of Systematic Exploitation of Indian Immigrants Due to Discriminatory Per Country Limits on Green Cards

  • Bh
    Bharat Patel
    26 February 2021
  • MK
    M Khan
    25 February 2021

    Many qualified experienced IT local telanted professional not hiring just because of outsourcing, and interview conducting from india and interviewer asking stupid questions and just disqualified, because they just not want to local, cost saving, in every IT project, in US 90% work force outsource to India.

  • De
    24 February 2021

    I have written quite a few times about this in the past. Here it is again.... I will keep on writing until it gets hammered into the heads of the dumbocratic idiots.

    I have been in hi tech for the past 30 years and I FIRST HAND interviewed a bunch (up to about 20) of potential software engineers from India & China, STILL STUDENTS here in the USA WHO HAD NOT EVEN GRADUATED yet, only to be employed later by a company which almost immediately LAID OFF quite a few of the veteran & senior engineers because they could employ these new graduates at a fraction of the cost.

    I have an NDA with the company unfortunately and cannot divulge their name and I was lucky by a hair thin margin not to be laid off myself.

    It is NOT that there are no people for the job. It is the IDIOTIC industry which writes off MANY potential US workers who are prepared to work (but not as slaves) and are discriminated against by age.

    H1B has been the BIGGEST scam for companies NOT to pay deserved salaries to deserving people.

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