Imported Talent Fuels Hi-Tech Industry
For 50 years, Oregon high tech has grown up on a diet of cheap land, clean water, tax breaks and plentiful electricity. Now the silicon forest is feeding on another key ingredient: an obscure federal loophole called H-1B. "It's a tool we don't want to give up," says Jim Craven, Oregon's lobbyist for the American Electronics Association. "If we don't have the H-1 program," says Jimmy Go, a Portland lawyer who works for several high-tech companies, "we don't have high-tech." H-1B is not a magic alloy for computer chips, nor is it the long-sought-after "killer app" the Wired generation is constantly speculating about. It's an arcane loophole that enhances corporate America's ability to shop for international talent and avoid the red tape of immigration law. H-1B permits allow foreign workers to spend up to 6 years gaining experience in U.S. companies. Then they must either apply for U.S. residency or return to their home country for at least a year, after which they can apply for a new H-1B. "The fact of the matter is that the demand for software engineers is phenomenal," says Intel spokesman Bill Calder, while the number of competent domestic software engineers is limited. "We need to search internationally for the people with the right skills." The story of H-1B is not simply the saga of a politically powerful industry using federal regulations to its own ends. It's also the disheartening tale of an undereducated and underqualified Oregon and U.S. workforce. "Right now we're finding very skilled people in India and China," says Tektronix immigration lawyer Franco Capriotti. "India especially has the premier software universities in the world. I'll look at authors of software and you don't see as many Joneses... as you do Iranian, Chinese and Indian names." "Higher education hasn't been listening to the needs of high tech," says Jim Huntzicker, senior vice president at the Oregon Graduate Institute, a private school founded to serve the state's science and technology needs. The bottom line? Companies like Intel, Tektronix and Sequent are relying increasingly on immigrants--and the cherished H-1B program--for Oregon's brainpower.Raiyo Aspandiar was up early last Sunday morning--transforming the baseball diamond at Beaverton's Five Oakes Middle School into a cricket field. Team Microsoft was on its way down from Seattle to face off against Aspandiar's Team Beaverton--which might as well be called Team Intel, given that most of the players work there. Only within the past year has the Northwest cricket club blossomed into a full-fledged league. The reason? More and more workers from cricket-playing countries such as India are getting H-1B permits and moving to high-tech central, i.e. Beaverton."In 1985 we only had one team," says Aspandiar, an Intel employee whose bright-white cricket attire and floppy cowboy hat look a bit goofy on the Beaverton playground. "Now there are four teams in the Portland area alone. With all the growth at Intel and Tektronix, we are going to have to add another team next year." The majority of Team Beaverton's bowlers and batmen are specialized software programmers and engineers at the 8,000-plus employer Intel. Most of the players are from India. A quick pan across the middle-school playing field last weekend might have led an observer to believe he'd touched down on another continent. Cricket player Anand Verdhan, one of an estimated 600 Indian employees at Intel, says the high-tech industry in the United States has created a buzz in India, making the United States the country of choice for Indian emigres, rather than the once-popular United Kingdom. "In the '90s, everyone is talking about going to the U.S. next year," Verdhan says. The Indian population in the Portland area is estimated at 8,000, and its members are changing the local landscape. The Indian tech boom of the past three years has brought new restaurants and stores to the lily-white Kmart plazas of Beaverton. Reddy Guduru, co-owner of Indian restaurant Abhiruchi, moved to Oregon last year specifically because he heard about the burgeoning Indian neighborhoods. "It's because of these high-tech companies like Intel and Tektronix," he says. "They are helping create this Indian community." Hari Rao, a baby-faced 27-year-old software engineer wearing a red cricket cap, is part of this new community. Rao moved to the Portland area 18 months ago when a childhood friend--who grew up on the same street in India--alerted him to the high-tech opportunities in Oregon. Now the two are neighbors in Beaverton, celebrating Deepavali (the Indian festival of lights) and playing cricket. The high-tech industry's consistent flattery for highly skilled and well-trained Indian programmers like Rao becomes almost monotonous--as does the reasoning: India's schools offer a rigorous math and science curriculum that is revered internationally. "India offers a strong academic background in electrical engineering and information systems," says Jolanda Arellano, director of human resources at Tektronix. "We're all seeking talent right now, and the demand is greater than the supply. We are pursuing individuals with specific and unique backgrounds in technology, and we can't look only in the U.S." Unlike China and Japan (other countries in which the tradition of math-oriented education is similar to India's), India uses English as its official technical language. This makes it a unique talent pool for engineer-hungry American software firms such as Tek.Under normal conditions, a foreigner seeking to work for an American company would have to apply for a green card, which often takes one to two years. For high-tech companies whose product lines can become obsolete within months, the delay is simply unacceptable. In 1990, Congress passed the Federal Immigration Act, making it even more difficult for foreign workers to move to this country. But business lobbyists managed to turn the spirit of the 1990 act on its head, using the H-1B provision to make it easier for companies to bring talented immigrants onto their payroll. H-1B was conceived to serve a variety of U.S. industries, but a number of sources say that the software industry makes the most use of it. "This is an industry where major changes happen over night," Tektronix attorney Capriotti says. "Getting a green card [permanent residency] can take up to a year, but with an H-1 visa the company can get them working on the project right away." In addition to allowing employers to secure foreign talent quickly, the H-1B program has other advantages. When a worker receives a green card, he is allowed to come to this country and find work--anywhere. In the case of H-1B, however, the employer is responsible for filling out the application and has exclusive rights to that worker. If the worker wants to stay in the United States, he must work for the company that sponsored the H-1B visa--or else return to his own country. Critics, including Sen. Ted Kennedy (D-Mass.), say the arrangement amounts to indentured servitude. Workers have no leverage and--according to critics such as David North, a consultant for the Department of Labor--are paid less than their American counterparts. "Not only are high-tech companies getting cheap talent, they're getting non-complaining, docile workers," North says. H-1B workers are aware of the controversy surrounding their status. Almost every H-1B worker who spoke with this author was clearly uncomfortable talking about his or her status. "When you're on a temp visa, you really don't want to speak for the company," said one Indian programmer who works for Portland software company Informix. "You are in a delicate situation." Stateside criticism of the H-1B program has naturally been less concerned with the plight of foreign workers than with the American laborers whom opponents say the program replaces and undervalues. Anti-immigrant sentiment--demonstrated in recent years by California's infamous Proposition 187 and Pat Buchanan's presidential campaign--fueled an immigration reform bill by Sen. Alan Simpson (R-Wyo.) last fall that tried to make hiring H-1B workers financially unattractive to U.S. companies. The Senate bill would have heaped new taxes on high-tech companies and used the money to train U.S. workers. The bill included a provision prohibiting U.S. companies that had recently laid off American workers from hiring H-1B workers. The high-tech industry spent a lot of money lobbying against the immigration bill, says the EAE's Craven. Intense lobbying by Microsoft and Intel-including overt threats to move jobs overseas--eventually derailed the legislative assault. Tucked away in Building No. 2 at the hushed Krusewood office park in Lake Oswego is a private family business called Intersoft. Intersoft's founder and president is a 58-year-old Indian immigrant named Varakantham Sreedhar Reddy, who retains his thick Indian accent despite having lived in America for 33 years. A lone gray streak and shiny silver glasses stand out against his black hair. Reddy, who in 1963 earned a master's degree in engineering from the University of Missouri, moved to Oregon with his family 16 years ago to start a software design company. Software design, however, is not Intersoft's only business. Reddy also operates what is known in the business as a "body shop"--a cottage industry that supplies talented workers to high-tech companies for short-term projects. His firm provides Indian workers with H-1B visas to a dozen companies, including Intel, Sequent and Microsoft. "[H-1B] has become a highly significant part of high tech over the last 5 years," Reddy says. "We are filling a niche created by the demand for highly skilled workers." He says consulting companies such as Intersoft are attractive to big firms like Intel because the big companies have "too much overhead to hire on new workers for one-time projects, whereas we have very little overhead." Reddy's company, which brings about 50 H-1B workers to the United States each year, is only one of about 10 body shops in the metro area that provide high-tech companies with H-1B workers on a temporary basis. Others include Technical Solutions, Northwest Software and RPM Systems. "It's very difficult to hire local workers for short-term jobs," Reddy says, partly because of the lack of skilled locals and partly because people who live here permanently are looking for permanent employment. Today, with a 200-person development shop based in India (his Portland office includes 40 support workers), Reddy says business is booming. Body shops create a system in which the high-tech industry can keep overall wages down, says DOL consultant North. Under the provisions of H-1B, companies like Intersoft are supposed to pay foreigners the "prevailing wage." But North says the H-1B program is easy for body shops to abuse. "Companies can easily make up the prevailing wage," he says. "The DOL only looks for obvious inaccuracies," allowing body shops to be creative in defining prevailing wages. Lindsay Lowell, a spokesman for Washington, D.C.'s Commission on Immigration Reform, says there is an obvious reason for this abuse, and that it was created explicitly by the 1990 immigration reform act. He says the temporary work-visa rules established in 1990 made H-1Bs a unique class with looser requirements regarding pay verification. "My recollection," Lowell says, "is that the industry had a lot to do with separating H-1Bs out."Last year, Larry Richards, an angry IBM worker in Texas whose buddies had lost their programming jobs, made headlines when he claimed that the H-1B program was displacing American workers and lowering their wages. To prove his point, Richards sent a phony H-1B application to the Department of Labor listing $5 per hour as the prevailing wage for a highly skilled computer software engineer. The form was returned and approved in nine days. The actual hourly wage for software engineers is more like $30. Portland lawyer Jimmy Go says he thinks the abuses are exaggerated. "The employer must clear the prevailing wage with the Oregon Employment Division," he says. "We must be within 5 percent of the prevailing wage when we file for H-1s. Some people may get away with not paying the right wage, but that's not right."The prominence of H-1Bs in Portland's high-tech workforce highlights an alarming trend for local educators: The workers who can get the job done are increasingly not American. "This may not be politically correct," Matt Chapman, CEO of Portland's CFI Proservices, told a group of local business leaders last May at a round-table discussion of Oregon's high-tech economy, "but I don't think we have made the kinds of investments in our state-system schools, certainly in the Portland area, to be able to support the kind of high-tech education that is necessary. "We just added about 10 or 15 contract software people in our Portland office within the past two months," added Chapmann, whose company designs software for banks. "They are from India, because that's where we had to go to get the skills that we need. We couldn't find them even in the U.S." Huntzicker of the Oregon Graduate Institute says state educators are aware of the challenge and that Portland State University, Oregon State University, University of Oregon and the Oregon Graduate Institute are planning to spend several million dollars to set up a joint software engineering program to meet the needs of Oregon's high-tech industry. "There is general agreement," Huntzicker says, "that Oregon universities, public and private, are not meeting the needs of the high-tech industry."