SAP Watch

May 24 2007   7:02PM GMT

SAP and H1B visas: What an H1B increase would mean

JackDanahy Jack Danahy Profile: JackDanahy

As you may have seen in the news, there’s a movement afoot to boost the number of H1B visas next year, from 65,000 to 115,000, plus the continuation of 20,000 visas for highly educated foreigners. It doesn’t take a genius to see why this idea isn’t received with open arms by American IT workers, especially not independent SAP consultants and others who would see a direct impact on both opportunities and compensation levels. Some, like the Washington Alliance of Technology Workers, are determined to put up a fight to save their jobs.

But then again, the hiring company always benefits from more options, more competition and lower rates, so it’s not a clean-cut situation. We asked veteran SAP career guru Jon Reed for a quick comment on the matter. True to form, he replied with a guest column:

The proposed increase in H1B visas would have an immediate impact on the SAP consulting market by expanding the availability of experienced SAP consultants. The compelling question is whether this is good or bad news. It all depends on where you land in the market. For SAP hiring managers and SAP customers, this is good news. Additional consultants means more choices and lower rates. For consultants trying to make a living in North America, anything that affects the supply and demand curve by increasing the supply of qualified consultants is decidedly bad news. More consultants on the market means lower rates and less opportunities. For those who believe strongly in fostering “American jobs for American workers,” any increase in H1B visa limits is also bad news.

On the other hand, there are quality H1 professionals from many different countries who will do a great job on projects when given the opportunity. Increases in visa limits is a good thing from their vantage point. As for where I stand, I can appreciate the validity of all of these different takes on the pros and cons of H1s. It’s also good to remember that some major areas of the SAP market, such as many Public Sector projects, cannot hire H1s for legal reasons, so an increase in the supply of H1 consultants does not affect all sectors.

The one thing I feel strongly about is that I don’t believe the H1B visa controversy should take on the tone of ethnic backlash. It’s important to remember that there are SAP professionals of all ethnicities who are U.S. citizens and permanent residents who are also impacted by the increase in the supply of H1B consultants. So it’s good to dial down the anger-filled ethnic angle and look at this from a calmer vantage point of whether an increase in H1s is really necessary to satisfy the demand for experienced SAP and IT professionals. That in itself is a worthy debate.

In the past years, I would have said that there are enough SAP consultants and that it would be better in the long run to preserve higher rates for good consultants and limit H1s. But with all the upgrade projects going on right now, you could make a serious argument that more senior SAP consultants are needed, and that companies would surely be glad to have the option to hire more H1B consultants also. This is a serious debate without any easy answers so I won’t attempt to provide one here.

Jon Reed is the author of the SAP Consultant Handbook and has been publishing SAP career and market analysis for more than a decade. Most recently, he served as the vice president and founding editor of SAPtips.

Matt Danielsson
Editor

16  Comments on this Post

 
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  • JackDanahy
    Hi, this is a very interesting article, John reed has a 360 view and has commented. Hmm... According to me, the rates are going to come down for the SAP Consultants. One more aspect that needs to be taken care is, Yes there are a lot of people flocking in the H1, how many of them can really contribute significantly in the more experienced slots that are already occupied.... Well, the senior consultanst should not be worried and their expertise will always be counted. The more worried ones should be the one who are in the lower level of the value chain of the SAP Jobs and I feel that the increase in the cap will affect them a great deal.
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  • JackDanahy
    Just wanted to add: Not all H1 people that come here work on SAP\ERP projects. Do not forget the main reason for the increase, which is the obvious shortage of skilled labor in this country. Most importantly a H1 worker cannot work for the U.S govt related projects, and most of them complete their projects and leave the country, even though some of them stay back as more work is given to them because of their skill level. To me competition makes me better, not worse.
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  • JackDanahy
    A point that is not being mentioned is that by increasing the number of well qualified lower cost competitors for each job, it decreases the opportunities for citizens to get their first opportunity to work in the field and to become experienced and well qualified candidates. This merely increases the need for more foreign workers because the local supply is not growing as the demand increases. When the govenment chose to increase the number of H1B visas in the past, this decision lead to lower entry-level wages in our field, and now fewer people in the US are entering the field in the first place. A further increase in the number of visas will seal the doom of the US IT industry because there will be no incentive to enter this field in the future. Few college graduates who understand the demands of this field will be (and are) willing to put forth the effort required when they will be rewarded with wages well below that of their counterparts in other fields. Without home-grown talent, there will be no incentive to companies to remain focused on the US, and more and more the leading edge techonolgy and research companies will move their research and development facilities to locations outside of the US where there is a large talented workforce to supply their needs, and much lower costs. An increase in H1B visas to address a short-term need will only lead to a long-term problem and the loss of America's skilled workers and jobs.
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  • JackDanahy
    Couldn't agree more with the previous poster. I read somewhere that computer science enrollments are down 45% in this country and this is directly attributable to the increase in foreign workers. There has never been a program more abused than the H1B visa program.
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  • JackDanahy
    A few comments re the above. Re: H1 Visas: First up I'm English and one of those 'foreign' workers some of you would like not to have over there allegedly taking your jobs. I am not a US resident, do not wish to be nor do I work there currently. However, I would not mind coming over to oh Boston or the Carolinas for a year, maybe 2 at the most. I don't believe I'd want to stay there forever. Yes, I know you are all wonderful people but, like most 'foreigners', I have family over here and that's a big pond to get across to see them. Especially if someone falls ill. So I don't see a 'long term problem' with giving out h1 visas. If there were any to be had, which of course, there isn't. I don't believe that 115,000 visas in total would have a significant impact given the huge size and scope of the US workplace. As has already been pointed out, not all the skilled workers would be SAP professionals. I suspect very few would be. I'm not for example, I'm an RFID specialist. I also do not believe that any US company would go to the hassle of bringing in a foreign worker in preference to a US citizen when available. Regarding Computer Science Enrollments: Suggesting that the influx of foreign workers creates low numbers of computer science students doesn't make sense. Computer science enrollments are not only down in the US. Ireland, for those of you who may be unaware was, for many years, the largest producer of software outside of the USA. Microsoft, Sun, Motorolla and other large IT houses set up here decades ago so that can't be the reason. You would expect the number of computing students here to be fairly constant given the availability of work in Dublin. But computing student enrollment numbers have been reducing continually since about 2000 over here. And that has nothing to do with 'foreign' workers coming in taking the jobs. It would be an interesting study to see if the drop in computing students is actually global. Computing for young people may simply no longer be seen as 'cool' or worthwhile areas to work in. Are the school careers guidance officers simply telling teenagers there are more or better options out there? After the millenium bug issue, nearly every job here in IT was taken by 2000. Then, when the bubble burst and the jobs dried up, the career guidance people promptly encouraged students to go into business or tourism. Perhaps not realizing that, in 4 or 5 years when they graduated, there would be work available again. So now we have a shortage again. Also thanks to the minimum wage law here in Ireland, entry level salaries in other fields have risen considerably over the past few years, making other courses attractive to many students. Nursing student numbers have rocketed in recent years while IT students have continued to decline in the same period. Have the salaries in other non-computing fields in the US risen enough to create the low enrollment of computing students? RE: increasing the number of well qualified lower cost competitors for each job, it decreases the opportunities etc Would not increased numbers of 'home-grown' skilled workers not do exactly the same thing? Increase competition and give more choice to the employer who can still reduce salaries and thus reduce the number who want to go into the field? Just my two pennies worth.
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  • JackDanahy
    Actually have to agree with Robert, Alan and David's comments....but with additions of course. The H1B visa definitely contributes to the lower computer science enrollments in our US colleges, however to David's point to what extent is the question? Back in the late 90's the H1B visa limit was being abused by more than three fold due to the "perceived" shortage in skilled resources. I however would argue a few points: 1. A US company trying to save money by hiring cheaper labor does not constitute a shortage. To David's point the US company is not going to go through the hassle necessary to hire an H1B visa resource directly, however they will certainly ensure that the majority of their "preferred IT vendors" supply these cheaper resources. 2. The H1B's that I worked alongside back in the 90's were great individuals and some still good friends and/or colleauges. However, most of these "skilled" resources were extremely 'green' when it came to both US business and IT experience. They surely were more experienced than our own current college graduates, but no where near the skill sets of say a 3, 5, or 10 yr US IT resource. 3. The problem with the H1B visa (and currently to a much, much larger extent "outsourcing") is that our own IT college graduates must be able to secure a job in their area of study upon graduation and a job that allows them to earn a decent living in the US. Unfortunately, a recent college graduate will never have enough experience in a specific IT skillset to compete with either the low cost of outsourcing or the more experienced H1B resource. The US college graduate is certainly 'trained' and 'well-rounded', but no competition for the cheaper outsourcing or more experienced H1B. Herein lies the problem with lower numbers of college students enrolling in a computer science major. For now at least, you cannot outsource a nurse!
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  • Mike
    Just a knee jerk reaction, but the problem resides with the large consultancies / corporations that don't "compete" in the market rather lobby the U.S. government for short sighted $$$$$ goals. In the 1990s, I too worked with exceptional H1Bs, but there were many, many more "SAP certified experts" who couldn't spell SAP. These people were everywhere. It had nothing to do with competition and being the best. QUESTION: Why couldn't, in the 1990s, a U.S. college graduate have had the same opportunity to learn on the job and work his or her way up the ladder? ANSWER: American universities and companies didn't offer 2-week courses in SAP that confered "expert certifications" on the graduates despite knowing little to nothing. The corporate and political arguments were hogwash then, as they are now. These consultancies seek near-term profits while dismissing longer-term problems for their own companies and more generally for the United States. After the U.S. is no longer the destination of choice with China and India being the IT hotspots, does anyone really believe the "open" door policy will be reciprocated for American IT workers desiring to work in either of those countries? No chance. Remember in the 1990s when, as an independent contractor, you'd call in response to a U.S.-based lead only to have the other side say: If you are not Indian H1B, you will not consider you for this position. I'm willing to bet that this happened to more than a few of you. The entire H1B process is slightly akin to the U.S. car manufacturers vacating each successive car segment until they only had the truck market - and that too has begun to vanish. The corporate leaders are cashing in and don't really give a damn about the bigger issues beyond the size of their bonuses, two vacations homes, and fat mercedes cruisers. These short-sighted leaders, and the U.S. in general, do not recognize or comprehend the long term consequences of being an oestrich with their collective heads in the sand. U.S. problems are internal and indemic. Where true real skills are needed H1Bs - YES. Otherwise it is time to have "fair" practices in the U.S.labor market for consulting and other IT skills. The old competion is good, the U.S. can't compete, etc, blah, blah, are becoming old and bankrupt. Current practices serve neither the clients, U.S. consultants, the overall market, nor in the long-term the greedy companies. Is it not already happening that U.S. consultancies are being slowly relegated to the government space? The lessons and intelligence gathered by H1Bs in the 1990s has begun to ripen into major problems for our short sighted and greedy American views and goals. Hopefully the complex derivative jobs on Wall Street will start going to China and India. Maybe that will change the mindset!
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  • Mb
    I agree with the viewpoints expressed in general. However lets look at it this way.companies would invest in IT be it upgrade or new software when it has overall short or long term cost benefit of doing so. If companies are investing as they need new software features etc to address their business demands, they surely need more IT personnel. Lack of visas or otherwise causes the consulting rates to go up, and thus makes cost benefit analysis infavorable to new IT investments. This doesnt help anyone in IT business. Secondly from SAP market specifically, if SAP consulting rates go up much higher than its competition, dont you think this would trigger companies considering IT investments into new ERP systems to look for alternatives [ Oracle Apps, Microsoft, Infor etc. ]
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  • JackDanahy
    Ok! What happened to the Michael Jackson world unite song, "Let us come together as one". Visas are great for the short term but create longer term problems locally and abroad and basically boils down to stealing from one another. Developed countries with constant expanding economies should give the up and coming developing countries a chance to grow and must not steal their resources. In fact, they should share in their prosperity instead of trying to beef up and dominate the world. Rather teach a hungry person to fish instead of buying them bread. Look, this is a global problem and I want to suggest that the Governments all over the world embark on a longer term strategy to address the shortage of skilled labor. For instance: 1. A government subsidy for jobs in the private sector for young graduates to gain practical experience. 2. Government aided study bursaries in the field of the labor shortage. 3. More collaboration between the Government and private companies to do succession planning for the experienced older employees nearing retirement. I don't think any economy and company out there have really realized how serious the affect of the lack of succession planning is, when it comes to the losses caused by the retirement of employees. If we really want to maintain an adequate work force, we need to take care of our children after graduation when they enter the jungle out there and implement government aided succession planning programs. Together, we will succeed. Tommy Scholtz (Bachelors in Business Administration) from South Africa
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  • JackDanahy
    H1B's have been eating my lunch for years. I'm an experienced I.T. professional. I have 2.5 years of ABAP experience, but have some holes in my ABAP skillset, because companies would rather hire an H1B than invest in growing my skills. I even asked a couple of large high profile companies to let me come onboard and work on ABAP, FOR FREE, so that I could grow my skills and plug the ABAP gaps I do have. Guess what, these companies would rather have / train H1B's than me. I'm a USA citizen, served 4+ years in the US Navy, paid plenty of income taxes over the years, but no company wants to help grow me at a very modest rate of pay. I've worked at large corporate I.T. shops who laid me off and a bunch of other US I.T. workers. On our way out the door, I'd see new H1B's walking in smirking at me, knowing they were taking my job. Bill Gates and his corporate buddies have 'lobbied' DC politicians. Since they want more H1B's they will get them no matter ... not to worry about me and other US I.T. workers that just want a chance to work and grow our skills. I would advise current and future USA college students to flee I.T. careers. Comment by RWS --- June 29, 2007
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  • JackDanahy
    Show me the way to the next whisky bar!! Honestly, I think the increase of H1s seems good for large corporations. Conversely, sucks for the small guys, who need a break. Isn't this how America was founded? I would like to see a study on the American workers (non-military) in the public sector in other countries. Would it even out? I would guess, NO. Well, if I am gonna follow my cheese, it would be out of the way of the rat trap and find a new piece. Off again!!!
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  • JackDanahy
    As a woman, I have another perspective on this issue. IT at one time was a field that was very open to women, and wasn't a "pink collar ghetto" field like teaching or nursing. It still is open in theory, but in fact, the amount of traveling that many IT workers must do to compete in the "global" job market is hard on women at a time when they have families. The IT workers from countries like India for the most part take care of this problem because it is usually the men that work and the women stay home, and at the high salaries that they command this usually works for them. I notice that the contractors I work alongside of are about 90% male. I have a secure job because I work for the state of Florida, but make less than half (and maybe a third) what my contractor co-workers do, for the SAME WORK. My skillset is "hot" but would require my family to move to another city far away to be able to make decent money, something that would be hard to do as my son is in middle school. This is a widespread issue from what I can see of other IT workers, and it creates de facto (if not official) sexual discrimination in the salary level and job opportunities. Another issue to consider from this perspective (touched on by another poster here), are the countries that are so eager to ship their contractors over here as willing to accept U.S. contractors of either sex? Does anyone know the answer? Also, the Asian countries that are participating in the "global" IT economy are not as open to women getting ahead as the US is, but that may be changing (slowly). I mean, suttee is no longer practiced in India the way it used to be. So I would be reluctant as a US contractor (if I was one) to consider working in any such country for a length of time. I suppose I wouldn't mind going to Ireland (I'm part Irish), England, S. Africa or any country in Europe. Anyway, what all this means is that a college co-ed (50% of the possible IT graduates) may consider this when deciding a major. As a 20+ year veteran in the IT field, I would advise any young woman considering IT as a career to take these factors into consideration. I wonder how much such considerations have impacted the rate of American IT collge graduation in the last several years.
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  • JackDanahy
    H1B, increase means low pays for US employees, and people who have outsourced to India, are not very happy, case in point Delphi among others. H1 is like a band aid on a bullet wound which requires surgery ( meaning more tech people in house) no nation in the history reached his full potential by out sourcing, outsourcing is like saying, someone will make money for you, It is good for India but not for USA.
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  • "John
    I do not mind an increase in H1B quota IF we can get QUALIFIED and EXPERIENCED consultants or ABAPpers into the US. My firm has been struggling to hire good people for projects. What I don't want to see is Indian bodyshops bringing in inexperienced consultants, ABAP or SAP technical folks and flood the market with false resumes (you know who you are). These companies should be limited in the number of H1Bs they can apply yearly since they suck up all quota. I have good friends in Singapore and Australia who were trying to come in but was unable to because of companies like this.
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  • JackDanahy
    I am an H1B right now and not even in the IT field. I do hold MSC in manufacturing. From my point of view is all about competition. Which has been promoted by all US presidents open markets, open everything same presidents you vote for. You can not just blame it on the foreigners just like that. A foreigner will come and work (see I am working on a Saturday and I am married ) more time than an American. An american employee is spoiled (where are the good old guys at that use to go the extra mile)so do not complain you want to claim the US is all about capitalism and and competition so be it. We live in a global market specially IT. Do not get me started on the automotive industry you either. Unfortunately when you were 24 and fresh were not able to see the future. Anyway that is my comment.
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  • JackDanahy
    We all know it is a global problem. Unfortunately we live in an era of "use and dispose" mentality with many short-sighted leaders on the rising. Many those that hit the promotion are those that can bring in "green" figures on their profit statement. I work as SAP consulting in Singapore and everyday i see bad busines decision made in system design setup. The only reason they get buy off from management is because it reduce cost ! In this era, Good leader are profit making leader, regardless of how destructive some of the decison are on long term health of the corporation. And the big boys at the top are all singing the same tune. Sad but unfortunately it is happening everywhere, not just in USA. So you are not alone And i am pessimistic that few Governments all over the world are doing much to turn this around.
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