Immigration barriers are forcing U.S. companies to outsource and relocate employees
Leo Wang packs a suitcase at his home in San Jose, Calif., on Feb. 4, 2019. Wang has found himself trapped in an obstacle course regarding H-1B work visas for foreigners. (AP Photo/Ben Margot, File)
There aren't enough work visas to go around.
While the tight U.S. labor market is already a major headwind for companies trying to hire, American employers are also finding themselves forced to outsource talent overseas due to a slew of immigration barriers.
According to Envoy Global CEO Dick Burke, there are three main reasons why foreign destinations for workers have become "much more attractive."
Take, for instance, "the confluence of, still, a very tight STEM market — STEM unemployment is only 2%," Burke told Yahoo Finance Live (video above). "Take challenges with the U.S. immigration system, where there's just not enough spots to go around, and take employers' comfort with remote work."
A new report from Envoy Global, a global immigration services provider, found that 81% of companies transferred foreign national employees to an office abroad and 80% of companies relocated employees to work remotely overseas, both because of visa-related issues in the U.S., in the past year.
Additionally, the survey found, 94% of companies would be willing to sponsor foreign nationals for a work visa if there were fewer immigration obstacles in place.
Supply and demand
The most common work visa sponsorship is the H-1B, which extends up to six years.
The H-1B visa is a temporary non-immigrant work visa often filed by large tech companies. It provides less flexibility for an employee, who cannot switch jobs unless another employer files for an H-1B petition within 60 days of the employee leaving their current job.
The recent tech layoffs that have swept through Silicon Valley have left many H-1B holders scrambling to look for a new job within two months or leave the country. In fact, 51% of companies laid off foreign national employees in 2022, according to the Envoy Global report.
Supply and demand with H-1B visas have become a major challenge for both employees and their companies.
"H-1B — which is one of the bread-and-butter for employment-based immigration to the United States — 85,000 [are] issued a year," Burke said. "For the last three, four, or five years, demand has outstripped supply by three-to-one or four-to-one."
Most H-1B holders are STEM workers — employees in the field of science and technology — and while the industry suffered major layoffs in 2022, STEM jobs are still expected to increase by nearly 11% by 2031, further creating a supply-and-demand imbalance.
In 2022, there were 483,927 applications for 85,000 available H-1B visas, meaning that applicants had an 18% chance of being selected in the lottery system, according to the Capitol Immigration Law Group.
Green cards, which allow immigrants to stay in the U.S. and work permanently, are similarly capped. And because of demand, certain foreign nationals, particularly those from India and China, have to wait up to 10-15 years for approval.
"So the first big problem is a lack of supply and a supply that cannot keep up with demand," Burke said. "The second problem is processes which are still deemed by employers to be too slow, too analog, particularly compared with those in foreign jurisdictions."
To retain talent in the already strained labor market, some U.S. companies have begun relocating their foreign employees to countries with more lenient immigration systems.
And it's not just tech companies: Finance, manufacturing, insurance, and consulting are a few examples of industries that have offshored their foreign workers, according to Burke. The go-to destination is Canada, followed by Mexico and the United Kingdom.
In addition, 93% of companies surveyed by Envoy Global expect to "turn to nearshoring or offshoring to fill positions abroad due to immigration barriers and labor shortages in the U.S." Specific hurdles listed include limited H-1B slots, slow processing, regulations/paperwork, and the cost of sponsoring a foreign employee.
"The challenge we face as a citizenry is to have a discussion around how do we focus on this issue, take our eye off the southern border for a moment, and address this perennial issue of not enough slots to go around for folks that everyone seems to want to have in the country," Burke said.
by Tanya KaushalYahoo Finance