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Priority Issues – H-1B, L-1 & Offshore Outsourcing Ron Hira, Ph.D., P.E., Chair Career & Workforce Policy Committee IEEE-USA Leadership Workshop 19 March.

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Presentation on theme: "Priority Issues – H-1B, L-1 & Offshore Outsourcing Ron Hira, Ph.D., P.E., Chair Career & Workforce Policy Committee IEEE-USA Leadership Workshop 19 March."— Presentation transcript:

1 Priority Issues – H-1B, L-1 & Offshore Outsourcing Ron Hira, Ph.D., P.E., Chair Career & Workforce Policy Committee IEEE-USA Leadership Workshop 19 March 2004

2 Guest-Worker Visas – H-1Bs & L-1s What is the issue? –Programs are being used outside intent of law and they need to be reformed –Lobbyists (Immigration Lawyers & Industry) do not want reform, in fact they want to expand the programs exposing them to more misuse What IEEE-USA would like: –Reform the H-1B & L-1

3 Guest-Worker Visas – H-1B Problems H-1Bs –Intent of Law: When an American worker cannot be found for a particular position, companies can petition to hire a foreign national on a temporary non-immigrant visa Protection of American workers through prevailing wages and other safeguards Cap on maximum number of H-1Bs in a particular year –Problem With Law Companies can and do prefer foreign workers over US workers Protections dont protect Sneaking in expansion in Free Trade Agreements

4 Guest-Worker Visas – L-1 Problems L-1s – Intra-company Transfer –Intent of Law: Multinational Companies can bring their foreign workers to the US for up to 5 years Only workers with specialized knowledge can come –knowledge specific to the company, –not generic skills like a common programming language –Problems With Law Companies, such as Tata, bring rank-and-file workers in to work at a customers site essentially as a contract workers NO Protections for US Workers – e.g., no prevailing wage NO Cap Sneaking in expansion in Free Trade Agreements

5 H-1B Examples That Meet Intent of Law CompanySample Position Sample Location Sample Annual Wage #Jobs FY /Median Wage Rockwell Scientific Company, LLC Senior Scientist Thousand Oaks, CA $120,00054 / $72,500 Rochester Institute of Technology Assistant Prof of Economics Rochester, NY $60,00057 / $50,000 Johns Hopkins University Postdoc Fellow Baltimore, MD $30,5001,052 / $38,590 Source: R. Hira Analysis US Dept of Labor LCA Database:

6 H-1B Examples Stretch Intent of Law Offshore Outsourcing Companies Use Is Order(s) of Magnitude Greater CompanySample Position Sample Location Sample Annual Wage #Jobs FY /Median Wage Accenture, LLCChief Programmer Houston, TX$25,11312,684 / $53,042 Cognizant Technology Slns System Analyst Tampa, FL$32,87033,148 / $54,578 Tata Consultancy Services Programmer Analyst 1 Warsaw, IN$21,46013,237 / $34,541 Source: R. Hira Analysis US Dept of Labor LCA Database:

7 Offshore Outsourcing Companies Pay Low Wages to H-1Bs Company% Jobs < $40k $40k < % Jobs < $60k % Jobs > $60k #Jobs FY /Median Wage Accenture, LLC15.3%40%44.7%12,684 / $53,042 Cognizant Technology Slns 2.5%74.1%23.4%33,148 / $54,578 Tata Consultancy Services 81.9%17.8%0.3%13,237 / $34,541 Source: R. Hira Analysis US Dept of Labor LCA Database:

8 Offshoring Definitions Outsourcing – Classic Make or Buy Decision –Procter & Gamble contracts with HP for IT services Offshore Outsourcing –Sending work to outsourcers who operate overseas Offshore Sourcing aka Off-shoring –Daimler Chrysler has an R&D center in Bangalore On-site Offshore Outsourcing –Tata Consultancy Services, Infosys, Wipro, Satyam Blended Sourcing Near Shore, Best Shore, etc

9 Why Do Companies Utilize Overseas Technology Talent? Cost Exceptional Talent? –Shortage of U.S. workers? Ph.D.s? Politics & Access to the Local Market –Trade, e.g., China & Russia – Boeing engineers Developing Countries Strategy –Tax Holidays & Incentives 24/7 Capabilities Collaborative Engineering Technology Companies Aware Of Possibility & Believe It Helps Their Performance

10 Overseas Engineers Can Afford To Be Paid Less CountryPurchasing Power Parity (PPP) Salary U.S.1.0 * $70k$70,000 Hungary0.367 * $70k$25,690 China0.216 * $70k$15,120 Russia0.206 * $70k$14,420 India0.194 * $70k$13,580

11 How Much Engineering Work Has Moved Offshore? No One Knows –No one in government is collecting data Commerce Department has pilot study underway - $300k –Companies are reluctant to reveal their plans US workers unwittingly training their replacements –Many believe it is only low-level work No data to support or refute this claim Estimates Abound from Self-Interested Research Firms –The Forrester Report is most-cited but also dated Completed in November, 2002

12 Domestic IT Labor Market Record Unemployment (source: IEEE-USA from BLS) Occupation Employed (000s) 2003 Unemployment All Managers14,4682.9% Computer & Information Systems Mgrs3475.0% Engineering Managers773.6% Computer Scientists & Sys Analysts7225.2% Computer Software Engineers7585.2% Computer Programmers5636.4% Computer Support Specialists3305.4% Computer Hardware Engineers997.0% Electrical & Electronics Engineers3636.2%

13 Tech Unemployment Rates

14 Jobs Moving Overseas Predicted Impacts Job Dislocation –Creates immediate problems for US engineers who are displaced –Job market is still soft so displacement generally leads to un(der)employment –Not creating jobs No one knows why Change in Mix of Domestic Occupations –Longer term questions on whether we will have a healthy technology workforce in the US

15 Job Dislocation During Low Job Creation

16 Offshoring Policies Need to get an objective count of nature and scale of jobs moving offshore Reform H-1B & L-1 visa programs –accelerating off-shore outsourcing No coincidence major offshore outsourcers are heavy users of H-1B & L-1 –Cognizant, Tata, Wipro, Infosys, Satyam, IGate, etc. Help displaced workers Ensure healthy US technology workforce Begin open & sober dialogue about implications of off-shoring –Dialogue has been rife with misinformation

17 What IEEE-USA Can Do Continue to engage congressional staff by providing them objective information –formally (hearing testimonies) and informally (staffer to staffer) Engage the press and provide objective information Facilitate IEEE members engagement in the policy process

18 What You Can Do 1.Meet with your Congressperson in the district office 2.Go to IEEE-USAs Legislative Action Center website and write to your legislators Respond to Action Alerts Russ Harrison, IEEE-USA staffer, can help 3.Write to state legislators

19 What You Can Do 4.Enlist members of Regions/Sections/ Chapters/PACE To be effective, we need large numbers 5.Spread the word amongst colleagues, family and friends 6.Provide IEEE-USA with individual stories We want to better understand the situation of members Back up the statistics with individualized stories to get an effective message out


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