H1B visa restrictions; short term solution or large trouble... ahead

In his second book, The Audacity of Hope: Thoughts of Reclaiming the American Dream, President Barack Obama wrote about making an investment in research to have an innovative economy for future…
In an era, where attracting the high level and diverse intellectuals from around the world is the most important competitive advantage a growing and forward looking economy can have, annual cap on H-1B visas and now restriction on US companies receiving the federal bailout package from hiring H-1B visa holders is predicted to bring long term impact on economic growth of the country.

What you loose, is a matter of vision?

This arrangement is forcing US companies to make a compromise, as they are not allowed to hire better-qualified non-American personnel where as other non-American companies like Infosys and others are not bounded under this scheme. They are free to hire the best person suited for the job irrespective of his domicile status. This will further deepen the problem as the affected project outcomes and deliveries will incline clients and future projects towards these non-American corporations; leading outsourcing of projects and jobs, resulting into money flowing out of US in large amounts.

Why do companies look for H-1B visa holders?

Currently maximum intake allowed under H1B visa program is 65000+20000 and despite of all the difficulties and government mandate, technology companies in the US asks for an increase in the quota of H1B visas every year due to several reasons -

1. An H1B visa worker brings an advantage that a permanent resident does not have: mobility. Permanent residents are usually more settled in their habitats, and are thus often unwilling to uproot themselves.
2. Most of the IT projects last for about six to eight months and then it becomes to expensive for these companies to consume and retrain person on new technology, once the project is over.
3. Companies say that US has not invested enough in engineering education. The US produces at the most 100,000 engineering graduates a year compared to India’s 400,000. An earlier study done by US Chamber of Commerce had predicted that there would be a severe shortage of engineers in the country by 2012.

Microsoft and other technology companies have also noted that main problem is shortage of talent and not issue of foreigners depriving Americans of employment.
To bridge the gap and boost economic growth, immigration of qualified professionals is required in large number and on priority basis.

Think global

Several Critics note the provision as “antithetical to innovation and domestic prosperity, turns away talent that US needs”.
Jagdish Bhagwati, Indian-born Professor of Economics at the Columbia University, has argued that "the provision to restrict hiring of H1-B visa holders would deprive the US of the best global talent which comes in the form of highly trained and talented people." New York Times columnist Thomas L. Friedman called it a “Bad signal.”
Also a study by William R. Kerr of Harvard Business School and William F. Lincoln of the University of Michigan found that in periods when H-1B USA visa numbers went down, so did patent applications filed by immigrants [in the US]. And when H-1B USA visa numbers went up, patent applications followed suit. According to Vivek Wadhwa, a senior research associate at the Labor and Work life Program at Harvard Law School, “Cutting visas for high-skilled immigrants is not the answer to the country’s rising unemployment rate and may undermine efforts to spur technological innovation.”

In nutshell...

Towards end, I can say “this arrangement might bring short-term solution to struggling economy but will bring a big hole in the system and large impact will be felt in near future.”