H1B Hiring Reality Check

Welcome everyone to another episode of the Nearshore Cafe podcast. I'm your host, Brian Samson. Today's episode is sponsored by Plug Technologies, Plugg.tech. Great way to connect talent from Latin America. To growing US companies. If you are a fan of the H-1B Guy, like many of you are, this is going to be a special edition treat for you. We've got the man, the one and only, the H-1B Guy, Robert Bouchard. We'll introduce him in a second, but this show is going to get into geopolitics, all sorts of movement happening in the labor markets. I can't wait to get into it. So without further ado, Robert Bouchard, Chief Digital Officer of Tier4 Group. We're so happy to have you.

Hey Brian, excited to be here on the Nearshore Cafe with you. Looking forward to this conversation.

Me too. Well, let's get started. I mean, you've had just a really interesting career journey. You know, obviously Chief Digital Officer today for Tier 4 Group. You've had the H-1B guy, but kind of walk us back, you know, where did your career start and give us a little bit of the journey and the history.

Yeah, I started working for an outsourced IT support for small, medium-sized businesses and technology many, many years ago and got my first exposure into network infrastructure, Microsoft Server, SQL Server, Access databases, really taking it back here. And then I moved into recruiting for that organization and realized that it was just a skill for me that came naturally. I've always been really curious in people and their backgrounds and what their career objectives are. And so I had an opportunity, went to the agency side, worked for K-Force for many years, spent almost 8 years at Matrix Resources. And, you know, kind of through all of that, wore a bunch of different hats within the agency, mainly on the delivery and recruiting side. Like a lot of us, I was impacted during the pandemic. That's when I launched theh1bguy.com and the H-1B Guy YouTube channel. I had no idea what was going to happen at the time, but it took off really quickly. It's a very political and polarizing subject. And I think what made me unique at that time and place, you know, almost 6 years ago now, Brian, is that I come from a staffing and recruiting background. And when we look at a lot of individuals on their platforms that talk about workforce solutions, high-skilled immigration, it's a lot of immigrants themselves and a lot of attorneys. And so I think I brought a different perspective that a lot of people resonated with. I tried to really just simplify what I know about the process and provide really sort of thought leadership and opinions on if I were you, here's what I would do. If you were my employee, here's what we would do. And then it became almost a glue where I was connecting people to a lot of different aspects in the immigration world, immigration technology, immigration counseling, and legal advice, helping organizations to establish really criteria and evaluate and mitigate their risk. And so through all of that, it led me to a path to where I got introduced to our CEO here at Tier 4 Group, Betsy Robinson, and her and I hit it off and we realized very quickly, Brian, that we have these complementary skills. She is a true hunter, a serial networker, and a connector. And I've always been a deliverer, a tinkerer, very curious, but also a connector. And I think my technical background mixed with her executive presence was really the two of us finding each other at the right time. And so I like to say that I'm a former self-taught recruiter, now technologist in recruitment technology., but I also have this expertise in, to your point, geopolitics, high-skilled immigration, and I still have a lot of opinions on, on the subject.

Yeah. Well, I can't wait to get into some of those. Um, just so we've kind of got some context, recruiters that listen to this and yeah, you know, um, for those that maybe have broken into recruiting the last couple years, different landscape, but at least for me, you know, when I was kind of getting my career off the ground, I would work with a lot of H-1B candidates.

Yeah.

When I went in-house in San Francisco, a lot of H-1B hires that we made that were kind of tracking for a green card. Can you just kind of set the context a little bit on what the H-1B world looks like in the staffing agencies and how how that supply chain kind of works?

Yeah, I think that's a good question and a great lead-in. I will go back to when I first started really recruiting on the agency side. It was my first exposure to an H-1B visa. So this is 2007, 2008 timeframe when I started to look at how are my peers filling these very niche technical roles. Engineering, .NET, Java, C++. There was very few that were being filled on a perm basis with US citizens, green card holders, permanent residents. A lot of them were being filled on contract temporary basis. So decided that I needed to understand this world and build relationships with employers, sub-vendors, if you will, that had access to this talent. And fast forward, to a point to where when I was working, you know, in the early 2010s, it became very evident that in order to fill some of these very niche technical roles, the firm I was working for at the time needed to get into the sponsorship business. And we needed to have these individuals where they were permanent full-time employees and we were using them both internally as well as placing them on external projects. And that gave us a pathway to talent pipelines that we previously didn't have. And so for anyone who's not familiar, we can go way, way back to when the H-1B visa was created. The current green card policy that's in place for employers, employment-based green card sponsorship, we're talking about legislation that Brian is over 30 years old at this point, 1990, so 36 years old. 6+ years old nearly. While there's been modifications to the system over time, it still is very similar to what it looked like even back then. Where we really saw the influx, if we look at the timeline, it was around the Y2K era and the increase of H-1B visas that were allotted. There wasn't really a true lottery or age cap like there is now. The cap was significantly increased. Whereas we see now there are 85,000 visas annually that are up for grabs, and 65,000 of those are specifically for, uh, international individuals with a high-skilled background. The other 20,000, um, is for advanced degree exemption. And really what that means is those are international students that have come to the U.S. and obtained a master's degree, and they're eligible to go into a, a different allotment so that additional $20,000. And when we look at kind of the trend that happened over the last 4 or 5 years, we started to see some, some really explosive application numbers. And when we look at the percentages of H-1Bs that were actually being awarded, we saw percentages drop down into the acceptance or the selection rate around 16 to 18%. And we went from 250,000 applications being the norm to over 750,000 as recent as a couple of years ago. And so, you know, the demand for H-1B visas never was higher than it was literally coming out of the post-pandemic era. And when we look at the previous administration that was in place, we had really high approval rates. It was a little bit of Wild West when we looked at how the actual HCAP lottery was working. And I think at the end of the Trump administration, they wanted to go to more of a wage-based, level-based selection process. And so I think when we saw the reelection and the Trump administration coming back into office, I think it became very evident to a lot of us in this space that Clearly, they were going to focus on undocumented immigration first. But as soon as they were able to get their, their hands around that, there was going to be a target put on high-skilled legal immigration. And we've seen that through the ending of several different types of employment authorization documents, specifically individuals from Ukraine and Nepal that are no longer valid. We have also seen them come in and re-implement this wage-based HCAP selection. And that really comes back to that is rewarding organizations who are willing to pay top dollar, which, you know, no debate around that. Like, we want individuals to be fairly compensated. But Brian, when we look at how the H-1B is constructed, there's labor condition applications that are part of that that basically takes the wage and says this is what you're legally obligated to pay this individual. Based on their level of experience. And so with that, we saw an increased application fee that was implemented. All of this to really try to curb and reduce the number of applications that USCIS was receiving on an annual basis. But the math—

mass—

when you look at USCIS, its revenue is built on fees and the H-1B lottery and premium processing around H-1B applications, extensions, amendments, change of employers are the primary revenue sources for USCIS. So I don't see there ever being a time where an HCAP lottery doesn't exist, Brian, because it being a fee-based, revenue-based organization. But if we get into the numbers for this past lottery, which opened in March and closed before April, selections have gone out. The estimates that I've seen are somewhere around 250,000+ applications for this year. And we're seeing selection percentages over 30% is what's being estimated. Why? You had a significant reduction in the amount of applications. But I think the number that's really interesting, Brian, when you start to look at the statistics, there's 4 different wage levels. So level 1, 2, 3, and 4, level 4 being the highest. The percentage of selection for level 4, the highest level, is being estimated at over 60%. So you can see this impact immediately hit where the level of the resource and the wage that they're being paid was being rewarded through the random selection process. And so I think when we take a peek into what the administration is trying to do, they're trying to kill this narrative that H-1B visas are low-skilled, low-paid, you know, indentured labor, if you will, and moving that narrative more to the high-skilled Level 4 type resources. I think, Brian, there's a balance to be had there. Because if we are starting to diminish the number of Level 1 and Level 2 international resources that US-based organizations can obtain H-1B visas for, we'll see that impact in 3 to 4 years, not necessarily this year, because you're not grooming and growing that talent here domestically that is international-based.

Yeah, a lot, a lot there to dive into. So I appreciate all that. Can we start with just some of the basics of You know, the Y2K era really kind of drove this. You know, from my personal experience, India's really got like the— like, he's like the dominant player here.

Yeah.

And then I, I tend to, just from my own personal experience, SAP, functional consultants, Java developers, .NET. Do you see that too? And could you, you know, just give some sense on like you know, as you know, when I started technical recruiting, you know, there were COBOL developers and now it's data engineers and AI. So maybe you can give a little bit of history on the types of roles and the major countries, the major players as that's progressed.

I think that's a great question. And I would tell you the statistics tell us that 90% of H-1Bs in the last decade have been issued to individuals from two countries, India and China. So that leaves 10% of the rest of the additional H-1B visas to go to the rest of the world. That's a pretty staggering number when you think about it. But when you also look at the number of international students, there's estimated at any given time somewhere between 250,000 to 300,000 international students here in the US. Guess which two countries have dominated that percentage as well? It's also India and China and South Korea. You know, is another one that comes up a good bit when you start to look at the number of international students here studying abroad in the US. So I think those numbers are absolutely related. They're corollary. There's no doubt about that. But if we were to go back to your question on why are these niche skills, ERP, SaaS-based, legacy-based technologies, why are they primarily those resources, the ones that are coming from abroad, coming from India, coming from China, Brian, I would point right to our US educational system. And at a much earlier age, international students are learning technology and going down technology tracks much earlier than we are here in the US. And so we're behind in our educational system and how we teach and train and develop technology talent. And when we look at the number of degrees for American US citizens, the computer science degree is still relatively small compared to other degrees that US-born individuals obtain here in our higher education systems. And so all of that is related, Brian, because what's happening is we don't have a people problem necessarily. It's a skills-based talent problem. So it's a training and education problem that exists. And that's where the international education system, specifically in India and China, that's where they're years ahead of us. And it doesn't mean that we can't train the people that we have when we look at, you know, AI-based technology and our ability to pick up and learn things a lot faster now. It doesn't mean we can't close that gap, but for us to continue to innovate and attract top talent from around the world, there's only a very select number of pathways that these individuals can pursue. And those generally are US-based education, which leads to work authorization for a temporary period of time, and the H-1B visa. There are a few others, but those are the two primary that lead to opportunities to have work authorization here in the US.

Yeah. Would you mind arguing both sides of it? What are the real, like, the primary reasons why H-1B is sorely needed? And what are some of the reasons that maybe the other side is arguing that, hey, we don't need this, there's alternatives to this?

Yeah, I think the argument is displacement of American workers. There's documentation on that. Low pay. But when we look at what is the average H-1B salary right now that's in the US, it's over $100,000. Yeah. I wouldn't consider that like low pay. I think you look at where a lot of the integrators have come in and sold bulk contracts at the large enterprise level. And when you have US workers feeling like they're training their replacement and somebody that literally just came to the US, that vocal minority becomes very loud. And when you look at the politics of it, which is the current administration is definitely pro-American. I'm not saying that I'm not, but they're pro-American worker. I absolutely am as well. We have a skill gap. We have a training problem. We can look at declining birth rates as well, Brian, which says that we're averaging 1.9 children for every family. We need to be above 2 in order for that to continue. And so where are we going to have access to that talent? Well, it has to be from high-skilled immigration. There has to be pathways and pipelines for us to access it. From a perspective of a pro opponent, we look at the niche technologies and the ability to step into a role and make an impact. We can also look at a lot of the data out there that says for every H-1B employee that an organization has on staff, it creates 2.5 jobs for that organization. It's a really interesting statistic. It still holds true that for every H-1B employee that you employ on your staff, they are creating 2.1 additional jobs for American workers. So who, who's telling the truth here when you look at both sides of the data? Because the argument is, yes, H-1B workers have displaced American workers. But then the other side of the argument is H-1B workers are creating 2.5 jobs for every one that their employer has on staff. So it's, it's this interesting, messy middle that I think when we try to look at what does this all really mean, it's an ebb and flow. And I think for us, when we look at the system as it is, is currently broken. When we look at the green card backlog that exists for individuals that have been living and working in the US on H-1B visas, for 10 to 12 years. That's not what the H-1B visa was really intended to be. We have to go back to what is the reform that we can do to help create a better immigration system. And I think for me, when I've really given this a lot of thought, it almost is the creation of a new type of VAD, whether the H-1B employment authorization document is the terminology we want to use or something else, because just the connotation of an H-1B right now has so much negativity and is so politically polarizing. But we have to give a pathway to those international students who are coming into the US, being US educated, and then ultimately are self-deporting because they run out of status. Even if they're in a full-time job, if they're not able to obtain an H-1B visa in the lottery, they have to deport. And we are losing that talent, and that talent is going back to India, going to the United Arab Emirates, going to Germany, going to the UK, going to Australia, going to Latin America and Costa Rica and Brazil and Argentina and Chile, where the quality of life and the Nomad Visa has become a thing for these types of resources. And so the more that we isolate ourselves and try to restrict high-skilled immigration, The impact isn't immediately felt today, but when we start to look down the future and our ability to innovate, that's where the impact is going to be felt.

Yeah. You know, the other element that I'd love for you to expand on is it's not just the, you know, like these great engineers and the loss of talent, but it's the entrepreneurs that originally came on H-1Bs. Yeah, I had, I had it right. I think the CEO of Google was an H-1B originally. Same with Microsoft.

Yep.

Yep. Yeah. Can you talk more about that and like the jobs that they're creating as entrepreneurs and CEOs?

Yeah. I mean, you know, maybe taboo to say, but even Elon Musk, right? So I think we've tried to make it more friendly in the last few years for H-1B visa entrepreneurs, which I'm really excited about because there was a time where if you didn't have $1 million, you couldn't get an investor visa. Whereas now, even if you're on H-1B, they're allowing H-1B visa holders to have a majority ownership in firms and organizations, in corporations. There was a time, Brian, where they could only have 49% ownership. And so I bring that up because when I think about what I love about this country, one, we get to choose what we want to do with our lives. And when we look at high-skilled immigrants who come in, they come here to pursue a better opportunity for themselves and for their families. And the ones who really innovate, really take that and go with it. We can look at, you know, the founder, creator of Perplexity is another one, you know, on the list. I think we have to ask ourselves, if we start to restrict and tighten the talent pipelines for international resources like the ones that we've mentioned, that impact on our innovation and technological advancement, again, won't be felt today, but for future generations and those multipliers that, that we're going to miss out on.

That's a great point. Let's talk a little more about the climate today and, uh, with the increase in the fee for the H-1B, companies still need talent. So like what's happening? Are they offshoring? Are they nearshoring? Are they going to Eastern Europe? You know, what's happening?

Yeah, I think it's a little bit of everything. Of course, we've seen a lot of investments in artificial intelligence.

Yeah.

Trying to, I'll say, do more with less. I think to your point as well, when we've looked at it and we've had conversations with with our clients, nearshore becomes really the avenue that seems to be the most preferred. However, when we look at the cost associated with it, there are times where Southeast Asia may become more attractive. But for us, and the reason why we take that stance and why I believe that the Latin America pipeline is critical, communication, so bilingual primarily Spanish and English. Most of the Western Hemisphere speaks in one of those two, right? Time zones is another one that I think really matters. When you look at Eastern, Central, Mountain, Pacific time zones, Latin America has an ability to support that very seamlessly. They're not working overnight like Southeast Asia or even parts of Europe may be. But I also think that if I go back to their educational institutions, there's been a heavy emphasis in Central and South America from a technology perspective, I think you're seeing some very high-skilled talent come out of Brazil. I think it's probably the South American country that may be leading that technology revolution the most. But then we look at the capabilities that exist in Mexico. I alluded to Costa Rica. I know Plug has, you know, a lot of great technical resources in Nicaragua. You start to think about that. And I mean, literally, it's littered up and down the Western Hemisphere with high-quality resources, very loyal, but also very skilled and capable of stepping in seamlessly. And so that becomes very attractive to US-based organizations. But the question becomes, and I think we talked about this a little bit, is, you know, for the first year of the second term of the Trump administration, tariffs were a buzzword and they were something that we heard a lot about. Well, how are we going to handle that from a relocation of jobs when we start to look at if we can't get access to talent here in the US, we've got to seek international talent. So nearshore becomes a part of that conversation. Offshore becomes part of that conversation. But at the end of the day, are we really having access to the best talent possible is the first question. And then is there truly some sort of cost savings or benefit or innovation that happens? And those are the questions for me as an employer we're trying to answer when we get very tight on what are our use cases and what are our requirements. And when we meet with our clients to understand what their needs are and then partner with an organization like Plug that can help us, that's really tapped into that Latin American environment and that can be a true partner and act on our behalf. So I think you're starting to see a lot of this movement and Let's be honest, the world as a whole has become a global society. The fact that you and I can get on an airplane and, you know, travel around the world, or the fact that you and I can get on a video conference call and no matter what time zone or hemisphere we're in, we can still get work done. The organizations that get this right are going to blend 3 things. They're going to blend technology, domestic hiring, and international hiring.

Yeah. Yeah. And that's great. I want to give you a chance to talk about the last kind of leverage and especially how it applies to the staffing world. And that's AI. What do you see? What are you predicting? How is this changing the world of recruiting?

And yeah, it's a great question. And I think for me, it's It's one of those things that can be really, really tough to answer. And when I think about here at Tier 4 Group, we made a conscious decision that we wanted to lead. But when I think about our people and as we've gone through our own really set of transformation technology fatigue, people, you know, aren't necessarily resistant to change. They're resistant or trying to survive. Complexity. And when I think about December of 2022 with the launch of ChatGPT, and then we fast forward 2 years, December of 2024, there was a period of time where anything that we talked about AI was really just generative AI. Yeah, right. But now we're talking about cognitive adaptive AI and voice agents and digital recruiting agents and sourcing agents and administrative agents that have the ability to reduce manual and administrative tasks. But I think the biggest mistake, to answer your question, that organizations are making right now is they're buying blindly based on a very small number of demos. And when they buy blindly, they're buying a product versus a solution. And that product is not a set it and forget it and it always works. And I think that is where a lot of organizations are getting it wrong right now is the concept of it requires constant administration and tuning and inspection and iteration to make sure that it's functioning, working, and doing what it's supposed to be doing, whatever type of cognitive or adaptive agent you're utilizing. It is not set it and forget it technology. And then the last point I'll make, and this is something I tell our team all the time as we've struggled through our change management and utilization and adoption, is at this moment in time, as we're recording this podcast, this is the worst our technology will ever be. Hmm. Tomorrow it will be better. A week from now it will be even better. So the pace of which technology is advancing is really tough to fathom. And I think as an organization, as a buyer, you have to be very careful with the partners that you select, whether you build or buy. Um, and if you're buying, you need to make sure that those partners are ones that are going to constantly be iterating, advancing, and rolling out releases, because they can roll out releases and product features and requests now in almost simultaneous real time, whereas years ago, 2 or 3 years ago, that took months and sometimes years to do. So I think those are some of the biggest changes that we've seen. When I think about recruitment technology as well. The pandemic really accelerated the amount of products and solutions that have hit the market. Um, it went from a small catalog to one that's probably over 1,000 now at this point. So there's so much noise out there that exists for recruiters and for staffing executives. And so being able to navigate through that is really key.

Yeah, well said. Words of wisdom from a staffing veteran. AI veteran, H-1B veteran. You gotta— got a lot of great things in here. For those that are interested in reaching out to you directly, what's the best way to do that, Robert?

Yeah, you can find me on LinkedIn. It's, uh, uh, /rbouchard on LinkedIn. Of course, I've got the H-1B Guy YouTube channel and theh1bguy.com. You can find me there. I've not been posting as much over the last year, but I definitely have intentions to get back out there and content because people like you, Brian, are asking me for it. So I know there's still demand for it. But my role here at Tier 4 Group is very demanding. It's very exciting work that I love doing. And so trying to keep the main thing, the main thing. But yeah, you can also check me out on Twitter. I'm easy to find.

Awesome. Well, we'll drop all the links in the show notes for everybody for easy access as well. Thanks again, Robert. What a great show. Thanks to our sponsor, Plug Technologies, plugg.tech. A great way to connect talent from Latin America to growing U.S. companies. This is the Nearshore Cafe podcast. We'll see you again next time.