The Trump Administration’s H1B Hike Is Pushing Mid-Level Roles Nearshore And Changing Global Outsourcing

Foreign. Welcome to another episode of the Nearshore Cafe podcast. I'm your host, Brian Sampson, and I am a veteran of the nearshore world. And today we are going to talk about a big topic in the world of current events. This is what the Trump administration is doing to the H1B. Before I get into the details, let me thank our sponsor. That's Plug Technologies, plu, GG Tech, T E C H. Great way to connect talent from all over Latin America with growing U.S. companies. Well, let's get into it. You're listening because you want to know what's going on with this H1B, the Trump administration, and we can talk about the impact to say, India, China and Latin America. If you haven't heard already, the Trump administration is in process. Some of this has been rolled out. Some of this is, is in process. Some of this may or may not be blocked by the courts. So there's a lot of in flight things that are happening. But the intent is to increase the sponsorship fee for a brand new H1B from roughly $3,000 to $100,000. I mean, this is a crazy increase, right? This isn't like a 10% increase, 3,000 to 3,300. This is 3,000 to 100,000. Now, why on earth is the Trump administration doing it? From my understanding, I think there's a couple key reasons. One of which is, is it's a little bit punitive. India has had a 25% tariff, you know, on goods that they export to the US and recently the US has made a reciprocal tariff. So the US Is trying to counter, you know, what India is doing. But what they're also, you know, what is also in play is you have, you know, things like, like energy, right? So there's, it's hard for the US to do business in India, US Companies to do business in India. You have India continuing to import Russian oil. So this is a way of the US Kind of doing like a backdoor sanction on India. India is siding more with China recently. So this is all like geopolitical driven. Countries are friends, countries are enemies, who's in charge, who benefits, things like that. So this is, in my eyes, you know, India being penalized for siding with Russia, China having high tariffs, being hard to do business with for US Companies on the other side. You know, India is also part of brics, right? Brazil, Russia, India, China, South Africa. And then more and more countries are joining this, looking at a potential alternative currency. And the US doesn't want this. The US has been the reserve currency for A long time. You know, really coming out of World War I when it replaced England as the hegemon to the world. All right, so that's, that's the geopolitical piece of it. But let's talk about who's affected. You've got some major, call them H1B shops, companies based out of India that are doing thousands and thousands of new H1B applications every year. And these are Indian companies, not American companies. Tata, Infosys, Cognizant, tens of thousands. And you know the, the cap years ago was about 65,000 new H1B visas every year were issued. Massive percentage were going to non American companies. And then you also look at the types of roles that were filled by those engineers. Now granted some of these engineers are top talent. You know, they went to IIT Indian Institute of Technology similar to like an MIT or a Stanford and you know, all the power to them. That's the kind of talent that companies are looking for is like the 10x engineers. Now the vast majority of these technical roles were done by mid level engineers. Think about integration work, testing work, your run of the mill Java developer, NET developer, qa, some SAP, you know, technical, you know, functional roles. There's a lot of, a lot of like just kind of mid level, cog in the wheel type of positions. So it's one thing for a wealthy company like OpenAI, Google, Meta to pay 100k posting fee. That's basically what it is to get access to these 10x engineers. Data scientists, researchers, R&D, AI engineers. These are game changing engineers. And just look a few months ago some of these pay packages were well into the millions, even tens of millions of dollars. So 100k posting fee for that kind of talent drop in the bucket, especially when you're a rich company. But how about those average engineering roles that you know would have normally gone to a Cognizant or Tata engineer, you know, sponsored build out to a US company that's really going away. You're not going to pay that kind of money for an average engineer. Well where are you going to look to? Alternatively? Unfortunately the US everybody I talked to, that ship is kind of sailed. There's not a lot of those kind of run of the mill developers anymore. Maybe 20, 25 years ago there was, but those are going away now. You are Getting these like 10x React Angular Python AI data engineers, the game changing engineers that are working at these early stage, mid stage, high hiring bar technical startups. But you know, middle market, enterprise, they just need a lot of decent developers. And again, they're not worth 100k posting fee plus their salary, you know, plus the visa implications and their ability to travel. So they're turning to Latin America. We've already seen this big rise in Latin America eating the market share of global outsourcing. So India's kind of been flat for a long time where Latin America share of the pie keeps growing and growing even if it outsourcing spend is flat. Latin America, that piece of the pie has got to come from somewhere. So Latin America is kind of eating the pie that India used to have. But in the case of a rising tide lifts all boats, more of that work is going to Latin America than it is India in a baseball term. You know, you think of like Shohei Ohtani, you know, and his team had a posting fee or more recently Roki Sasaki, the Dodgers had to pay a posting fee and then they could have access and negotiate directly with that talent. Those middle of the road engineers, you know, they're not Otani, they're not Roki Sasaki, they're not superstars. So Nearshore is already being validated, Latin America is validated, same time zone, easy travel visas. But again, you're near shoring because you don't necessarily need that. You're already comfortable with distributed teams. Pay rates are kind of right there. Where again, if you were to load up all the visa fees, all of a sudden that's way more expensive than, you know, just the easy hourly monthly fees you're working with with Latin America talent. So summing all this up, I think this is going to be very detrimental to engineers, especially in India and China where the relationship that the US has is it's going south. But just like politics, you know, there's winners and losers. The loser is going to be India and China talent. The winner is going to be Latin America talent. We're going to expect to see a bigger surplus of demand for a big surge of demand for US interest in Latin America talent. Again, same time zone, less visa restrictions, easy travel. It's already been validated. Google, Meta, Oracle, Mulesoft, Salesforce, all big players already in Latin America. So the talent's there and it's, it's a friendly region for America right now. If you have any more questions about this trending hot topic, please drop a link in our comments. I'll be happy to answer. And you can always check out Plug Technologies for more information. Plugg Tech, that's our sponsor. Thanks for listening.