Silicon Valley: Visas Down, Job Exports Up
The converse to the old Wall Street saw about a rising economic tide lifting all boats is that when the tide goes out, it leaves exposed to view, like wreckage in a drained harbor, embarrassing reminders of the optimism, hubris and sheer exuberance (irrational and otherwise) that once bobbed atop the high water.
This elemental cycle came to mind the other day when I noticed that thanks to an ebbing of demand, the government’s annual limit on H1B temporary work visas, which rose as high as 195,000 starting in late 2000, this year lapsed back to its traditional level of 65,000.
H1B visas, as followers of boom and bust lore may recall, allowed the high-tech industry to import squadrons of electrical engineers and computer programmers for up to six years each from such places as India and China. The industry’s argument was that demand was so ferocious that American universities couldn’t turn out enough workers to meet it.
“It was called ‘body shopping,’ ” Sandip Roy says. “In the early ‘90s, I started seeing a lot of my old classmates from India coming here in groups, on arrangements with Indian consulting firms that had contracts with American companies to provide workers.”
Roy, 37, is an editor at New California Media and the Pacific News Service who originally came to the U.S. in 1989 to study for his master’s degree in computer science at the University of Southern Illinois and spent much of the boom working for Symantec Corp. and other Silicon Valley tech firms. I had called him after hearing him deliver a commentary on the radio about the rise and fall of demand in the high-tech industry for foreign engineers and on the impact that hundreds of thousands of young Indian workers have had on Silicon Valley.
Roy told me that although he holds a green card, he hasn’t been working very hard toward gaining American citizenship. On the other hand, he doesn’t seem to be in a hurry to return to India. That sets him apart from many of his old friends, who returned home after the tech crash to find their native country transformed into a place where, for the first time, employment in high tech pays enough to allow engineers to own a home and a car and to settle into a middle-class lifestyle as comfortable as -- maybe more comfortable than -- the one they lived in the United States.
In part that’s because many of the skilled computer jobs that have vanished from these shores have been exported to India and China via outsourcing by American companies, some of which have even established satellite labs and factories abroad. The job opportunities and wealth that once brought these young people to the U.S. now keep them at home.
“I remember muggy summer afternoons in Calcutta when my friends and I practiced taking the GRE exams to get into American grad schools,” Roy said in his radio piece. “Now 2,000 people show up at a career fair in the heart of Silicon Valley held by companies setting up shop in India -- 2,000 people thinking that maybe Bangalore isn’t that bad a place to live.”
Returning home wasn’t much of an option when Roy, armed with his master’s, started looking for employment in 1991. Instead he moved to California, although opportunities weren’t exactly blossoming here, either. This was still the pre-boom era, and demand for computer pros was slow.
“The economy was not that great,” Roy told me. “It was hard to find a company willing to go through the H1B process to hire someone. There just wasn’t enough demand.”
It took him months to finally hook up with Eikon Systems, which made utility software for personal computers and was eventually absorbed, through a couple of steps, by Symantec.
One indication of the meager interest in foreign employees of the time was the complicated procedure necessary to hire any.
“Getting an H1B was paperwork-intensive,” Roy says. To justify hiring a foreign national over an American worker, “the company had to certify that you were uniquely qualified for the job. But often what you had studied in school was irrelevant to what you were doing on the job because the industry had moved on. In school I had studied mainframes, but Eikon was already working on Windows 3.1.” (That was Microsoft’s first truly mass-market version of Windows, which remained the PC standard until its introduction of Windows 95.)
Within a few years, the atmosphere had changed. As the high-tech boom took hold, American companies pressured Congress to raise the ceiling on H1Bs by arguing that a shortage of qualified engineers would throttle growth. Congress acquiesced, raising the limit from 65,000 to 115,000 in 1999 and 195,000 in following years.
Roy soon noticed a whole Indian subculture taking root in Silicon Valley communities such as Mountain View. Indian employment firms would offer to provide workers for American companies, sign up engineers at home and ship them here en masse, housing them in apartment complexes they had rented in bulk.
For the U.S. employers, this was a sort of on-shore offshore outsourcing. For many foreign workers, it was a form of indentured servitude: Under their contracts with the employment agencies, those who quit before their terms were up might have to pay a penalty sizable enough to discourage job hunting.
Still, the dream of great wealth attracted workers by the thousands, even if once they arrived they weren’t always assigned to the most glamorous jobs.
“The boom was just starting,” Roy says. “The companies definitely needed the people, but there was also a sense that companies were using H1B holders to do the kinds of jobs that American programmers were not keen to do.”
This included working on what was euphemistically called “legacy” software, including business- or math-oriented programming languages such as COBOL and Fortran that dated back to pre-PC times and that American graduates openly derided as beneath them.
The imported workers, meanwhile, worked lasting changes on the region. Indian groceries sprouted in the valley, as did home-cooking services that provided Indian engineers with familiar dishes.
But when the bubble deflated, H1B openings were among the first to go. Last year about half of the visa quota went unclaimed. The reduced limit went into effect automatically and without much objection from industry. Among the reasons was that major American companies had discovered the efficiency of employing foreign workers by establishing plants in foreign lands.
Does this mean that Silicon Valley will become depopulated and all the opportunities move to China and India? Roy doesn’t think so, at least not for the most challenging jobs and the most innovative projects.
“The cutting edge is still in Silicon Valley. That’s where ideas begin,” he says. “But many of those ideas have matured, and other places can keep them maintained. Silicon Valley is probably not the best place to take a program and do version 6.”
Meanwhile, as H1B opportunities ebbed in the U.S., he says, many visa holders are happy to go home.
“People thought they would come here for a few years and make a lot of money. But a lot didn’t find it was the golden opportunity they expected. They jumped from company to company looking for the next Yahoo and the IPO that would make them rich, and that didn’t happen.
“Working in America looked very glamorous from the outside, but they didn’t realize that you earned your salary in dollars and spent it in dollars, too.”
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Golden State appears every Monday and Thursday. Michael Hiltzik can be reached at
