H-1B Limits Allow Mega-Tech Correction
One of the most vocal opponents of President Trump’s temporary travel ban has been the Mega-Tech companies. Although it has been placed on hold, it doesn’t mean promises of H-1B limits will not take place. Many are postulating what could be but none have taken the time to see how a limitation will be good for the Mega-Tech companies.
Coding is the prime criteria for these companies. Professions often need formal education and certification. Coding also has as much abstractness as math application. Believe it or not, these Mega-Tech companies pay top dollar for unconventional persons that can code well, and may or may not have a degree. Good error free coding is about thirty lines per hour, a standard that has existed for many years.
Mega-Tech companies thrive on the credo of hiring only the “top performers”; however flawed this is for the serious long term. This means companies use very narrow selection criteria, as to quickly deplete the global supply as to who comes out the bottom of their funnel to be a perceived top performer. Mega-Tech companies are joining other industry segments seeking only the top fifteen percent. Failure of many of the start-ups is also an indicator this criterion not always works. It is like a high profile actor in a movie with a bad script. A failed company places the H-1B holder without a sponsor and placed in a life decision as to be independent or have representative presentation and negotiation to find another sponsor before the clock runs out.
Specialized employment agencies are part of an over $100 Billion a year industry that is multi-national. This industry is broken into two groups of commissioned fees companies. Both are referred to as body shops. One is the agency that has commissioned agents that are part of store front businesses. Most of these commissioned recruiters have no experience in human resources (other than what are the legal and illegal questions and documentation) and are good sales persons. Even the most common high turnover positions of clerical and warehouse jobs earn in excess of $120,000 per year. Technical positions can earn $200,000+ and the headhunter type agent can earn $500K or more. Typical commissions run at a low of $10,000 per recruit and $50,000 per recruit with mandatory retention requirements. However, it is not uncommon for some industries to have a commission (bonus) added to salaries for in-house recruiters.
Most high-level technical outside recruiters do have technical training, experience and also maintained contacts at the upper executive levels. These are the piranha of the profession called headhunters. They are looking for the extrinsically motivated person where money, position, and control are the lures. Mega-Tech companies require non-competitive clauses with penalties. This is not to mention the non-disclosure, proprietary rights, compensation packages, etc., that are all part of the system. Any company that has branding or patentable product or intellectual properties has these restrictions.
Human capital follows flexible and inflexible economic rules. When there is a large supply and volume, a lower cost can be applied and turns can produce the margin of revenue. When supply is specialized, there is need for higher premiums to insure profit. In this case, a premium salary is needed to have the kind of employees these Mega-Tech companies say they require, as part of the business model.
Human capital also is a fluid source that can follow the same theory of constraints that any process can have. If the design is purely theoretical without any safety margin, as the Mega-Techs inflexible design mirrors, then it will suffer at some given point when a constraint is introduced.
Thus, human capital for the Mega-Tech companies is at critical mass and a breakdown in the supply chain causes chaos from a tightening of travel and any H-1B limitations. Although the President’s action has been called political, both parties bear the onus of not addressing internal supply issues.
Most systems have a design to operate within safety margins. Not many systems last long when operated at 100% or above normal parameters. This is the area Mega-Tech companies have that are causing them consternation. When every company has near identical criteria to obtain only the theoretical 15%, you are going to run into a constraint and limits.
Depending on which numbers are used, Mega-Tech companies are between 82% and 87% filled. That means they have been in overload mode for recruitment. While constraint will not destroy a sector, its narrow policies can eventually make branding an issue that results in more recruitment issues. Remember the agencies mentioned above, these are the profiteers, not to mention legal fights that are sure to ensue.
It is assumed that Mega-Tech companies are also flexible in where they do their work. Thus, if there is the restriction of H-1B candy, they pick up their company playpen and relocate to another country where they have an existing office and relations. That is the argument many H-1B holders and CEOs would make. It is also a limited argument that has many facets posing immediate problems. Of those are: Culture, Capital, National Infrastructure, Societal Protection, Taxes, Worker Protections, Schools, Social Services, and Housing. Not to mention access to national recruiters and people.
For the above list, it is the reason these companies are in the United States of America. While India and Pacific Rim countries are also having a tech boom, they are also having issues of affordable housing, stable infrastructure, and cultures that may have geo-political stability issues. Moving to wealthy elite countries, like the UAE, increases travel expense to see or transport family. Nice environments with all the tech goodies without US cultural norms of freedom, rights and protections.
Like the tech bubble of 2000, it was one of market correction. Old school principles for business plan development and investment were important once again. Curtailing H-1B visas will allow a needed market correction factor. There are solutions.
Darrel Keesee is associated with the Ascending Career Solutions Group, Inc. (ACS Group) that is a 501(c)(3) FBO. Darrel Keesee is an Educator, Counselor, Career Assessment Advisor, Community Financial Educator, Workforce Boards, and assisted distressed populations. He can be found on LinkedIn, Facebook (Personal and Acs GroupInc), Twitter and Instagram (@darrel_keesee)
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