Software Professionals' Political Action Committee 311 Ranch Road 620 South, suite 209 Austin, TX 78734 email:

Larry Richards Executive Director, SoftPac


Companies Replacing Workers With H-1Bs


Printed in the Novemer newsletter of the National Systems Programmers Association. On August 14,  1995

The New York Times reports that Sealand Services in New Jersey has laid off 325 data processing professionals and replaced them with programmers from the Philippines working in the U.S. on temporary visas. 

In October, The Washington Post reports that American International Group has outsourced its data processing operations to Syntel Inc., of Troy, Michigan, whose staff is 80% composed of foreign workers here on H-1B visas. In the process, 250 American programmers lose their jobs. 

The Wall Street Journal reports in September that the National Association of Securities Dealers is replacing 30 American programmers with programmers from India. And in November, CBS Evening News reports that the Federal National Mortgage Association is also hiring foreign programmers and displacing 10 to 12 Americans. 

A little known, and even less understood provision in the immigration laws is allowing American companies to bring tens of thousands of foreign computer programmers to the U.S. each year, often at the cost of American jobs. Created by Congress in 1990, the H-1B visa provides a mechanism for corporations to obtain skilled workers from overseas for up to six years. Though the program was intended to allow companies to rapidly obtain workers who had skills not available in the U.S., but the law was so loosely written that violations of this intent have become rampant. For instance, the law allows companies to fire American workers and replace them with lower paid foreign workers. And no one in the government is checking that these workers are needed, or even that they will be paid what an American would be. 

To demonstrate just how lax the current regulations are, I submitted an application to the Department of Labor in June asking for permission to hire 40 foreign programmers on H-1B visas at a rate of $4.50 an hour (25 cents above the minimum wage). This application was approved and sent back to me in less than two weeks. Because of these loop holes, an entire industry has sprung up composed of companies that specialize in hiring foreign programmers whom they contract out to clients seeking low cost labor. 

SoftPac has obtained sales pitches from these companies promoting their low cost engineers. In one, Chemtech International Services pitches its British engineers, "who are prepared to work here in the United States of America for as mush [sic] as a 40% reduction in current United States salary levels." In another, Falcon International boasts that foreign workers are "highly-coveted because ... they are basically indentured to the company(s) sponsoring their employment tenure." 

While the immediate threat is obvious, the H-1B program may have long term consequences that will be even more damaging to U.S. software professionals. Since the visas are temporary, many of these workers will eventually be returning to their home countries, in many cases taking the jobs they were doing in the U.S. with them. 

In both the Sealand and NASD cases, the foreign programmers were brought to the U.S. specifically to be trained in the systems they were to manage--trained by the people they were replacing no less--and are being sent home to run these operations from offshore via satellite links. Right now, Congress is considering changes to the immigration laws to fix some of these problems.

 While SoftPac has gained some support for closing these loop holes, (especially from Sen. Alan Simpson, Chairman of the Senate Immigration Subcommittee), the business lobby is fighting hard to keep the current laws unchanged. Without concerted action on the part of U.S. software professionals now, the likelihood that these abuses will continue and grow even more widespread is a very real possibility.