Let’s just ban offshore outsourcing…

As a newly minted US immigrant (I got my green card last year), I have had some interesting experiences in the immigration realm. I’ve also developed some insights into immigration and the impact of offshore labour outsourcing on the US economy.

In case you have been sleeping under a rock for the past 3 years, Silicon Valley, with it’s deep well of engineering talent, is flat out of [decent] developers – which is creating wage inflation (source of infographic unknown) and startup inflation (I’ll write on this topic later).

Between Facebook, Google, Zynga, LinkedIn and some of the other behemoths, all the top engineering talent has been gobbled up and startups are find it hard to recruit. Luckily, with my background in founding technology companies in South Africa (Clicks2Customers, Yola) (now headquartered in San Francisco), we’ve been fortunate enough to able to source some of the top engineering talent in the country to work on building Gyft, which launches next month. It’s a common thread in Silicon Valley – most startups have at least a couple of offshore developers helping build their technology platforms.

Now, try bringing those developers into Silicon Valley to work and live – that’s a whole new discussion. While there are no legal restrictions on outsourcing, there are major restrictions on sponsoring work permits and visa’s for engineers to bring them here and let them live and work amongst us. There is a cap on H1B Visa’s which are routinely hit. Yes – none of this is news – so what’s my point?

My point is – as a startup & technology community in Silicon Valley – we spend billions of dollars outsourcing work to developers who live outside the USA – that money leaves the US economy. In most cases, these salaries are comparable with what we pay the local US developers (perhaps a slight discount here or there). The engineer gets paid in the foreign country, and then spends that money at their local grocer, takeaway, doctor, dentist, plumber, landlord, etc. Instead of allowing us to bring those employees to the USA to live and work, whilst allowing the money can circulate in the local economy and create more (non-tech) jobs here, we’re helping “train the competition” (to paraphrase President Obama – who is pushing for immigration reform in a big way), and building the foreign economies. Apart from the frustration that it’s creating for the Silicon Valley startup companies who are desperately trying to get the right skills to build their companies, there is a clear economic reason why we should allow uncapped immigration of people with specialized skills, provided there are companies here that need them and would rather pay the salary to a worker who could spend the money locally.

If you want to make the argument that no H1B cap would precipitate a decline in American jobs, then you also need to block outsourcing of any kind to offshore developers in order to facilitate that argument – what’s the point of not letting them work here, but then allowing us to send the dollars offshore which has no benefit to local businesses. Instead of bringing the engineers here and paying their salaries (and taxes!!) here and letting it recirculate in the local economy, we’re forcing them to continue to work offshore and build their local economies. So this is all a bit tongue in cheek – I’m really arguing about the merits of limiting H1B’s but then allowing offshore hiring – it does.not.make.sense.to.me. (although the airline and travel industry are probably enjoying the frequent trips that these engineers have to make to ensure sufficient face time with the local US teams on a regular basis).

That said, there are people who are doing a lot to try and spur on immigration reform in the US – and you can help them by signing this petition. So, although I’m not particularly interested in getting involved in the politics behind how these decisions and systems are put into place, I will say that someone needs to seriously rethink why things are the way they are. Either ban offshore development outright [terrible idea], or figure out how to get those dollars back onshore (along with much needed skills) – but let’s not create fake realities by trying to convince ourselves that a cap on US work visa’s for a highly specialized industry is going to create much needed jobs in the US and put the economy back on track!