Outsource or Hire from Abroad?
I just finished reading this Ars Technica feature on Bill Gates’ comments on the need to increase of the number of H1-B visas issues by the US government. The article primarily discusses the wages that companies like Microsoft pay to their foreign employees under the H1-B program. The assertion of anti-H1-B proponents is that the program depresses US IT wages by bringing in cheaper labor.
In an op-ed in yesterday’s Washington Post, Microsoft Chairman Bill Gates argues yet again in favor of raising the cap on H1-B foreign worker visas from its present number of 65,000. Gates’ basic argument boils down to this: fewer students at American universities are opting for computer science degrees, which means that we need to raise the H1-B cap so that the software industry can import more foreign labor to fill those jobs that Americans—for whatever reason—don’t seem to be equipped for.
Of course, the fact that the importation of cheap foreign labor into the software industry job market hampers American programmers’ ability to compete and leads to depressed wages overall is never mentioned by Gates as a major reason why a computer science degree just isn’t that attractive any more to Americans. Who wants to spend four or five years getting a CS degree, only to be priced out of the job market by foreign programmers who are willing to work for less in exchange for a green card?
But Bill Gates would vigorously dispute my assertion that Microsoft pays its H1-B workers any less than they pay American workers to do the same programming job, and indeed a big part of Gates’ case for raising the cap is built on his claim that H1-B workers are paid the same salaries as American workers. Unfortunately for Gates, that particular claim, which he himself has made in the Washington Post before, is falsifiable.
The fact of the matter is that technology companies in the US are really hungry for IT talent. The industry is growing but the pool of available talent is the US is not. With enrollments for computer science courses at an all time low, these companies are forced to source their IT talent requirements from abroad. Unless there are more US computer science graduates, these companies have two (2) major choices: hire developers from abroad OR outsource the work. Both have their pros and cons. If they need to hire developers from abroad then the number of H1-B visas can be increased. These developers have to follow American labor laws and their wages comply with US wages (abiet towards the lower range). If they decide to outsource their work then job leaves US soil but the eventual revenue is still taken by the US company. So, which would they rather support?
