As the April 1 deadline to file H-1B visa applications nears, the debate is heating up among IT industry watchers and skilled workers over whether the often maligned program adequately serves U.S. companies or American workers as it was originally intended.

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For IT industry watchers, the H-1B Specialty Occupation Visa originated as a means for U.S. companies to hire non-citizens with skills that seemed in short supply in America, fostering innovation within the country and keeping jobs from being sent overseas. The program applies to industries other than IT, such as education, science and medicine, but seems to have earned the worst reputation for displacing U.S. tech workers. Now industry watchers say the bad reputation the program engenders hinders the system from working to its full potential as American firms and foreign applicants scramble to receive one of 65,000 slots available for 2009.

"H-1B dominates in the tech industry by far, for engineering, architects and other technical skills, and there are many false theories out there that people from India are qualifying under fraudulent pretenses. It has hurt the public perception of the program," says Sonia Munoz, president of Immigration Legal Counsel, a law firm specializing in immigration law. "U.S. companies need to be competitive in a global economy, and it is most definitely detrimental to the U.S. economy to limit the number of H-1Bs and have fewer specialists hired by this program."

Yet for IT workers, many of whom say there are currently many challenges they face in getting hired by a U.S. company, the program can only been seen as having a negative impact on the American economy as firms look to hire less expensive, foreign workers for jobs that could be filled by U.S. citizens.

"Executives are being told by their hiring managers that there are not skilled workers in the U.S. and they must seek H-1Bs to fill positions," says Terri Morgan, a principal at Wudang Research Association who says she has encountered issues when seeking IT employment from U.S. companies, such as IBM. "There are a whole host of us out here that have really good skills and know the culture, but maybe we don't have one item on the check list HR is seeking. H-1B applicants know how to manipulate the system and companies know how to make it appear as though they exhausted their options here."

One company that reportedly has more than 4,000 jobs to fill is Microsoft, and Chairman Bill Gates, adding fuel to the fire, is expected to speak to Congress this week to encourage lawmakers to increase the cap of H-1B visas available. Companies such as Microsoft argue they need to be able to draw from a broad pool of specialized skill sets to be able to innovate and compete in a global economy. And while an additional 20,000 visas are available to applicants with U.S. graduate degrees, last year the number of available visas expired within a day of the filing start and industry watchers expect the same this year.

"We expect to see the slots be overbooked almost instantly. The backlog is so huge, and there is no doubt there is a problem with this system that has been continued and serious for years but could only be greater this year than it was last," says Roger Cochetti, group director of U.S. public policy at the Computer Trade Industry Association, or CompTIA.

For Cochetti and other H-1B advocates, the problem is an unreasonable cap based on U.S. fear within the IT community that the program is designed to let American firms hire inexpensive labor elsewhere. But immigration experts argue there is effort and expense companies must absorb when filing for H-1B visas that doesn't support the cost-saving argument of program detractors. And companies that use H-1Bs cannot pay foreign workers less than they would pay an American citizen for the same position or they will endure penalties.

"H-1B involves people with really special skills that needs to be documented in the application. The program is not about hiring baseline technicians when you are referring to the IT industry," says Bo Cooper, a specialist in business immigration law in Paul Hastings' national immigration practice. "Anything that raises concerns about jobs for U.S. workers is destined to be a sensitive issue, as it should be, but H-1B fuels the American economy more than it takes away from U.S. workers."

For instance, companies could opt to locate facilities overseas through offshore providers and staff entire locations with non-U.S. workers, feeding money into another country's economy. H-1B advocates argue that while the cap was temporarily raised during the tech industry boom earlier this decade, not all applications were filled. In fact, when the cap was 195,000 in 2002 and 2003, fewer than 80,000 visas were issued against the cap in each of those years, according to research released this week by the National Foundation for American Policy. NFAP argues in the report that the current cap is similar to that of 1990 and places a stranglehold on U.S. firms in need of skills not currently available to them from American workers.

"An additional indicator of the need for skilled labor in the economy is the regular lack of availability of H-1B temporary visas for skilled foreign nationals," the report reads. "The supply of H-1B visas has been exhausted before the start of each of the past four fiscal years. This can often leave employers with no choice but to hire foreign nationals they have recruited outside of the U.S. or see individuals lost to competitors overseas."

Yet IT workers remain unconvinced that an increase in the number of visas provisioned would help anyone. Even those not firmly opposed to hiring foreign workers suspect the program suffers from what many IT workers say is abuse and manipulation.

"Unfortunately, the program often seems to be abused and results in American workers being sacrificed for cheaper resources and facilitates the transfer of jobs abroad," says James Kritcher, vice president of IT at White Electronic Designs in Phoenix. Reports of Indian outsourcing firms snagging many temporary visas concern Kritcher, who says if the program worked as it was intended, he would support it fully.

"Where there is genuine need, the increasing number of visas going to foreign companies means fewer are available for U.S. companies," he adds. "I'm not in favor of increasing the cap at this time. I would leave it as-is for now, until more light is shed on the actual use and impact of the program."

Others say the program is designed to fail by setting a limit not based on the actual need in the economy.

"I am in favor of the H-1B visa program in general. I understand there is some abuse of the system, some sponsor companies talking up to 50% of the salary mainly in small consulting firms," says Albert Porco, CIO at Kings County Medical Center in New York. "I think that any number is the wrong way to look at the situation, what the market will bear is a better way to handle it. One year it could be 150,000 and the next it could be 30,000."

And some in IT even think the cap is too low, which hurts the program's effectiveness for finding specialized skills. "It's most likely too low, but any arbitrary number is just that: arbitrary," says Kamal Jain, Director of Operations and Customer Service at Auraria Networks in Boxborough, Mass.

Regardless of the actual figure, Kritcher says the current debate over H-1B visas will have long-term and potentially detrimental effects to the U.S. tech economy.

"Long term, I think that the program may create market interference that drives down wages, displaces qualified candidates, encourages companies to outsource offshore and removes incentive for college students to enter IT—as evidenced by recent drops in computer science enrollment. No one wants to enter a profession where they may become "disposable,'" he says. "The U.S. is known for creativity and innovation. If core use of technology is sent offshore it could result in less innovation and a reduced comparative advantage."

This story, "Why the H-1B Visa Has Such a Bad Reputation" was originally published by Network World .