I’ve spent the equivalent of the last four full presidential terms stuck in the tech recruiting trenches. For the manifold changes manifesting themselves in the talent acquisition and technology sectors in the decade and a half since Gore v Bush (back when technology was so archaic, it couldn’t even properly tabulate election results), one constant, consistent fact hasn’t changed.
Recruiting the right people is really, really hard.
Recruiting the right people, with the right coding, engineering or developing skills, well, that’s one challenge that seems as pervasive and persistent as it’s ever been – and one that, no matter how experienced I get at it, seems largely to defy experience in lieu, largely, of luck.
It doesn’t matter if you’re hiring for a Java shop, a LAMP stack, or that holiest of holies, a Ruby on Rails platform, if you’re talking to a candidate that’s even halfway interested in talking to you, you can bet the house on the fact that they’re also talking to every single one of your competitors (and likely, all of your colleagues, too).
Once a tech candidate leaves the proverbial recruiting door open, no matter how little ajar it actually is, there’s going to be a crapload of competitors out there chomping at your heels, waiting for you to screw up – that is, assuming you found the candidate first, that is. It’s just this weird natural phenomenon – you actually direct source any tech candidate, boom, suddenly your company has company – and chances are that company can match or beat any offer you throw out there.
A little ambulance chasing is required when there are hardly ever any sirens to respond to, anyway – and the fact that the pool of available, qualified and recruitable tech talent seems to grow smaller, and more selective, each and every year points to a problem that’s bigger than the normally niched nuances that generally dominate the recruiting conversation.
This is bigger than agency vs. corporate, public sector or private enterprise, software or services companies (or software as a service companies, too). It’s a problem whose immediate impact is already being felt throughout talent acquisition, but whose imminent impact on the overall workforce is only beginning.
And if we don’t figure out a solution soon, it just might be the end of business as we know it. Quite literally.
The Conversation About Immigration.
I know that even saying this term, for some reason, carries some sort of subconscious stigma, but immigration has rightly become one of the hottest of hot button issues confronting the world today, both in terms of policy and politics – issues at the heart of human capital management and talent acquisition, considering these are the framework for the compliance and regulations so important in shaping the way HR and recruiting works.
Here in the US, the immigration issue is incredibly polarizing, with one side of the spectrum advocating for logical, long-term reforms within parameters that are actually substantive and not selectively enforced, much like our Schengen counterparts across the pond.
On the other side of the debate, of course, there are the whack jobs who think the answer to immigration involves turning the Mexican border into some new iteration of the Berlin Wall meets the Great Wall of China – with enough heavy armament amassed at the 38th Parallel to play Checkpoint Charlie and pick off the few who actually manage to make it over alive. Now, I’m not here to debate which of these points of view is correct, but I’m compelled to point out that the answer, like everything else in life, lies somewhere squarely in the middle of these extremes.
Not so recruiting, where the problems with immigration reform aren’t necessarily aligned with the greater immigration public policy and public conversation painting the larger picture debate around this issue. Instead, in talent acquisition, immigration reform requires all of us to work to figure out a way for qualified, highly educated immigrants who want to live and work in the US a chance to put their unique expertise and experience to work at our workplaces.
These skilled workers, governed by an arcane lottery system of visa allocation known as the H1B, simply can’t be allowed to leave and create a brain drain that our organizations are ill prepared to handle, and one that’s largely going unaddressed by a STEM deficient education and vocational training system ostensibly designed to prepare future workers with the skills requisite for the future of work. But since that’s not really being done, a more drastic, pragmatic and imminently implementable solution must be put into place, immediately.
Of course, that’s easier said than done. And, before we go about finding a fix for this issue, let’s take a step back and try to understand how the hell, exactly, we ended up here in the first place.
Just A Bill: Where HR Laws Come From.
Well, here’s your first hint into how H1Bs got so screwed up: each and every year, no less august a body than the United States Congress gets together and determines by proclamation, how many H1B visas they intend to make available to employers over the course of the coming year (aka: “the cap”) for what they term “highly skilled workers.” Which, let’s face it, is not exactly Congress’ wheelhouse, really.
Not only that, “highly skilled workers” sounds like some sort of field they made my grandparents from Ireland and Germany fill out when they were at Ellis Island, somewhat more demoralizing and dehumanizing than being deloused, quarantined or given an Anglicized last name.
Give me your tired, your poor, your highly skilled workers, yearning to be free! Or something like that.
Good news for my grandparents – they got in while the getting was good, because getting in these days means beating some pretty daunting odds and miles of red tape, mountains of paperwork and all the crap that comes with dealing with what’s more or less HR documentation.
This year, Congress allotted 65,000 visas for the general cap, with an additional allotment of 20,000 visas made available explicitly for “highly skilled workers” with graduate degrees in STEM-related disciplines.
Which, in laymen’s terms, is a drop in a bucket that’s all but run dry – a total of 85,000 visas available for all employers across all industries for such disparate (and desperately needed) disciplines as software, electrical and mechanical engineers, data scientists or computational analysts, anyone in the hard sciences or similarly specialized scientific disciplines.
At a glance, 85,000, at first, might seem like a fairly reasonable number. If you share this viewpoint, I’m going to bet everything I have on the fact that you haven’t ever had to do any actual hands on tech recruiting in your entire career, because if you had, you’d know how busted this cap really is. For those of us who hire tech talent in order to pay our bills, and work our asses off to do it, it’s a punch in the gut – in fact, the 11th consecutive annual punch in the gut, to be precise.
That’s right: Congress or the White House have failed to raise the H1B cap since 2004. And while you might have the best opportunity money and company culture can provide, but it doesn’t make a bit of difference as long as the status quo continues to erode our collective competitive advantage in the global economy – and within our global recruiting organizations, too.
Look back even more than those dozen years, and the creation of our byzantine system can be traced more or less directly to a single piece of draconian legislation: The Immigration Reform Act of 1990. This bill effectively created a system with 5 different, distinct visa classifications, with 5 different visa types allocated for, you guessed it, highly skilled workers.
Under Bush 41 (or HW, if you like), FY 1990, the first after the bill became the law of the land, the total visa allotment as mandated by the Immigration Act was…65,000 visas. These would, of course, later flex a bit to reality, adding another 20,000 for candidates with advanced degrees, but other than that, there’s been really no progress made since that simpler world before search engines, social networks or smart phones.
Of course, at the time, the Internet was still in its infancy, and in these nascent years, this was likely a sufficient number given the overall workforce need at the time. Hell if I know, though – I was 15, and didn’t care about any job in the workforce except pushing around carts for a few bucks an hour at the local supermarket.
Fast forward a few years, and you have the internet bubble – Pets.com, Lycos and Netscape – just before it burst. Those were fun times, and for once, legislation kept up with actual workforce demand: in 1998, as part of the American Competitiveness and Workforce Improvement Act, the cap was finally upped to 115,000 for FY 1999 and 2000. Good sign for the economy, good move by Congress, and we could all go back to focusing on what really mattered on Capitol Hill, namely who our President had and hadn’t slept with.
This trend of visa cap expansion, though, actually continued into the first few years of his predecessor’s administration, with the amount of available visas rising in 2001, 2002 and 2003, respectively, with an astonishing 195,000 visas for highly skilled workers available by the last of these years – and additional exemptions, such as those for research students, put the overall total of available visas well north of 200,000.
While this might sound crazy to all you Millennials out there, this still wasn’t enough to satiate the tech sector’s rampant hiring needs – back in the late 90s and early 2000s, the economy was booming, and employers couldn’t hire people fast enough to keep pace with demand – and the already limited pool of resources available for continued expansion was already starting to dry up even when the cap was at its historic high.
Given these trends, it would probably have been a safe assumption to make that, given the pervasive shortage of new workers and growing demand for that limited talent pool, any skills gap would ultimately be remedied and easily resolved simply through importing foreign workers by raising the number of visas available to them.
The Golden Age Of Staffing.
With this growing pool of highly skilled foreign workers and insatiable demand for their services by a growing glut of high growth companies, staffing agencies quickly struck perhaps the biggest lode of anyone out there prospecting in the new candidate gold rush created by increased visa caps.
Job orders kept flowing in, primarily because most tech companies hadn’t yet developed a dedicated talent acquisition function in house yet, and the only way to get these jobs filled was by farming them out to the cube farms where cold calling, cold blooded contingency sharks sat dialing for dollars all day.
Back then, it was post, pray and payday in the agency world.
Recruiting, when it did exist in-house, was generally handled by some castaway HR professional without the skills to do something strategic like benefits administration and were consigned to more or less moonlighting as “personnel” or some similarly silly moniker. Even in this boom, however, agencies were going bust just trying to keep up with demand from their clients, and the increased demand those clients suddenly all had for the same few candidates – who, inevitably, were largely foreign workers.
Demand follows supply, staffing follows placement fees, and you couldn’t fill a tech job without a little help from the cottage industry of companies that suddenly sprang up offering access to ample amounts of eligible workers. To US staffing agencies, making deals was as easy as doing a standard “Third Party” arrangement in which they partnered up with another firm to more or less hire one of their bench of employees on H1Bs, whose visas that other agency also held and effectively controlled.
For a few extra bucks in the bill rate, this meant that these H1B farms could help you fill the hardest and most lucrative requisitions, without actually having to sponsor the H1B employee themselves (acting, in effect, as a PEO).
On the surface, this arrangement was some sort of godsend to staffing, because most agencies or employers were unlikely to directly sponsor a candidate’s visa, avoiding the money and risk involved in this arrangement. To try to directly sponsor foreign workers would have been a dicey proposition in the first place, considering that H1B regulations mandate any employee working on one must remain continuously employed by the same company in order to remain legally allowed to work in the US; agencies, conversely, couldn’t guarantee continual employment.
Catch 22, until 3rd party firms caught on and built a billable “bench” ready to be called off to high paying projects and interim engagements as needed; as long as the agency kept them on the payroll, even between these price gouging gigs, then the worker retained eligibility, at least in the eyes of the immigration police.
During this time, staffing agencies were raking in record profits, even while many of their customers went belly up at the same time (I’m looking at YOU, Pets.com). When you add in the aggregate costs of having an agency riding recruitment shotgun, then you realize the cost of talent acquisition had, like the P/E of publicly traded tech companies, spiraled out of control by the height of the bubble.
Even with the prohibitive price point, there were pitfalls confronting anyone doing an agency deal in those days – particularly when you had to peel back the many layers related to whom, exactly, actually owned that greatest asset of all, the H1B of record. Turns out that in most cases, the agency clients were working with were the front for 2-3 tiers of shell games and shell companies that sat between the recruiting money train and a successfully closed requisition.
And everyone was getting paid, but the cost to agencies was that it created a perilous, precarious situation wherein their efficacy was predicated primarily on their ability to control their own candidates, customers and close their own deals (and to do so on their own terms).
When you add in so many layers of intermediaries and remove your agency from the actual decision makers and power brokers in the process (meaning whoever was the ultimate arbiter of a hiring decision and associated placement fee), you’re wading into a whole pile of deep shit.
As an aside, you’ve got to wonder whether there’s a correlation between price point and market value. Just think how many of those Internet 1.0 companies would have survived – and thrived – after their IPOs if only they would have kept their hiring costs (and associated overhead) in check and didn’t build those into the margins they were forced to pass along to their customers.
I bet there’d probably be a Pets.com delivery box waiting at a Post Office near you, frankly.
China Syndrome: Postcards From The New Shanghai.
Of course, where there’s money to be made off of human migration, the usual slimy suspects are ubiquitous – only instead of trafficking in the traditional sense, back in the day, you could just set up a staffing shingle and have pretty much the perfect front for exploitation and corruption.
Of course, this hasn’t changed – but back when H1Bs, and thus, skilled workers’ rights to work in the US, were controlled almost exclusively by third party agencies, these firms became notorious for paying their employees wages and working conditions that would have made Kunte Kinte blush.
Most employers wouldn’t blink at paying out $50 per hour to a company for one of their billable employees, but few realized that employee only got about 50k a year – tops – back in their own pocket once everyone had taken their cut. The conundrum for employers, of course, even if this practice was discovered was inevitably: what the hell are we supposed to do? Neither them nor the agency they were actually working with had any sort of strings (or leverage) to pull to control the situation, and so even attempting to address this issues was deemed an exercise in futility.
Don’t bother – it’s that simple. So when the proverbial Fifth Party decides to arbitrarily yank your candidate from a project you’ve placed them in only a few weeks into the engagement, what can you do? Nothing, except know you’re SOL, and that you knew that was coming.
Easy money always has strings attached, and in this case, why wouldn’t the other agency pull workers from your gig to one where they were willing to pay that worker even incrementally more? Loyalty or relationships? C’mon, man. This was about making money and keeping that stream of revenue flowing out of your pockets and into the corporate coffers of their offshore overlords.
And the employee, what were they going to do? Their visa and work authorization status were the sole purview of some shyster who brought them here like a white collar coyote, and part of the implicit deal with the Devil the workers made for that precious visa was that same shady staffing firm now controlled not only your fate, but that of your entire family. You want your kids in school here, your spouse to stay in the country? Better put up and shut up – or get shipped out.
Then, one Tuesday morning in September, 2001, the game suddenly changed. The Twin Towers fell, and the tech bubble fell with it – the market that created the earliest incarnation of technology IPOs went bust, and our country wasn’t the only thing irrevocably changed. So too were our country’s companies. No longer, in these lean years, were employers willing to pay, say, $110 an hour for a telecom provisioner (which, by the way, WTF was that job?) and started looking for cheaper alternatives.
By now, you had a significant swatch of domestic tech talent used to being paid insane amounts of money and even more insane amounts of stock options not exactly lining up to take a hefty pay cut, particularly after burning up so much of their paper value when their portfolios went bottoms up. For what it’s worth, the only people that were safe, secure and making it rain in the tech market meltdown were the legendary “group of secretaries” from AOL, who by chance circumstances and well timed equity pay outs, were now the elite of the Washington, DC tech scene, cruising the Beltway in their Maseratis with BS license plates which said stuff like, “Thx TED.” We hated them, of course.
The rest of us poor saps in the tech sector, however, were forced to resort to belt tightening, which meant employers now expected staffing agencies to do the same sort of work, but at much lower margins and fee structures considering the plethora of cheap labor still flooding the market and the sudden shortage of demand created by the macroeconomic tailspin of the post 9-11 world.
While siphoning off the supply of said labor seemed like a good stopgap for at least normalizing the market at the time, it was an incredibly myopic decision which, as we will see, created a much more serious set of issues over the coming years – issues that we’re only now fully beginning, as employers and recruiters, to fully realize.
How To Hijack An H1B.
Well, if you’re an agency whose only asset is a bunch of employees whose visas you control, but who have little to no interaction with traditional clients or candidates (and even less face time or influence), you’ve got to look for a new cash cow, which, inevitably, were those staffing agencies who not only needed their services, but who also had a direct conduit to the corporate coffers of their clients.
This left conditions optimal for what became a strategic, opportunistic compliance coup d’etat – and these firms began hoarding H1Bs by the dozens, the labor market equivalent of Doomsday Preppers.
Which isn’t an aphorism that’s too far off – because while we were clearly mired in a recession lasting half a decade or more during the bust years in between boom markets, employers quickly realized that sponsorships and the associated fees for H1Bs just weren’t worth the associated cost, and that homegrown talent could more cheaply offset the knowledge gap than much more expensive imported skilled workers.
With these visas suddenly ceasing to be a commodity on the market, suddenly, employers were in control over H1B allocations again instead of agencies; the assumption was companies who had the need and resources to sponsor usually would (and could), and the quota of available visas would last 3-6 months, by any reasonable estimate or predictive analytics on hiring trends. Laissez faire seemed fair.
But then, a funny thing happened. The economy turned the corner, and so too did the tech industry – and we entered a second boom, very much booming on both coasts – and for these high growth, high tech companies, labor again became a major pain point and obstacle to continued growth and long term business drivers or objectives.
However, having already been fooled once during the Y2K years, employers had wisened up this time, and decided to avoid getting gouged this time by directly employing immigrant workers and sponsoring their visas instead of outsourcing this to some faceless agency. So, the employers suddenly had all the H1B holders, but still needed staffing companies to help them keep up with the frenetic pace demanded by their frenetic hiring plans.
And just like that, the scene was set for an old school showdown.
No Work For You.
By 2008, this divide between H1B workers and prospective employers (and, by extension, recruiters) got very, very real. The entire allotment of visas, that formerly sufficient mandated cap, was exhausted within the FIRST DAY of accepting them. That’s right – that year, those visas went faster than T. Swift tickets, and if you didn’t get them within the first 24 hours, well, you were pretty much SOL. Totally unfair, right?
To combat this problem, a lottery system was subsequently instituted, designed to determine – in all fairness – who would be awarded one of these few coveted visas. The Golden Ticket in the age of globalization. Win the lottery, and you get to stay here on your H1B – and your employer gets to keep you on the payroll. Lose the lottery, and short-term, both you and your employer are screwed.
See, since many employers were hiring candidates on OPT (Optional Practical Training) provisions, this meant that many workers only had 12 months of work authorization, which gave employers the choice of jettisoning employees entirely or reassigning them to foreign offices where they could legally work. This was a costly, time consuming and emotionally fraught pain in the ass, to be very PC about it.
FY 2009 brought little relief, and while it took a few months for the quota to be reached in FY 2010 and FY 2011 – when the recession was at its depths – the last 3 years have seen the H1B cap exhausted in a matter of mere days. And while a few third party companies have, like the heads of the hydra, popped back up, they’re markedly less prevalent than they were a decade ago. Perhaps that’s because we’re all smarter now, a little wiser for the wear and less likely to respond to blast e-mails about how an agency “has consultants available for immediate openings” or can match “any list of open requirements.”
Whatever the reason these firms are no longer at the foreground of the bigger picture about work authorization and immigration, there remains a definite issue (and imbalance) between supply and demand. We have jobs that need to be filled (or at least, many companies claim this to be the case), and not enough people with the right skills to do so.
The bottom line is that most companies are willing to shell out and incur the associated risks of sponsoring skilled workers, and have developed the in house talent acquisition and talent management expertise to properly support these kinds of recruiting and retention efforts – as well as the financial wherewithal to do so.
The problem is that the way our system is designed, you can’t always get what you want, and if you try sometimes, you might find, you won’t get what you need, either – assuming that involves some sort of sponsorship.
The Problem With the SySTEM.
What we need is real talk, and a real solution.
It’s not like our colleges and universities aren’t eager to have more U.S. students pursuing these fields of study, since ostensibly STEM disciplines not only would boost enrollments and endowments, but also research grants, federal and state funds and all that other stuff that offsets the overhead of liberal and fine arts that eat up the majority of postsecondary resources at many institutions, given the disproportionate amount of students who major in these fields.
We can all agree that, no matter what the reason might be, the overwhelming majority of U.S. students are not pursuing STEM related degrees; international students, statistically speaking, are not only doing so in vast numbers, but presumably, are among those hoping to win admission to these disciplines beyond the narrow confines of academia. It’s easier for a foreign national to win a spot in a PhD program at MIT or Harvard than it is for them to simply obtain an H1B. Which is silly, really.
A US News & World Report study shows that even if they graduate with a STEM degree, only 1 in 4 students globally ultimately pursue a job in a STEM related professional field; this number is actually skewed a little high, since it also includes the “soft sciences” in addition to the hardcore quant stuff. You know, degrees in stuff like psych schlubs like me get because we’re trying to simultaneously change the world while figuring out what the hell is wrong with us. Which makes this statistic a little less than representative, frankly.
What is more telling, though, is the amount of international students currently enrolled in U.S. based STEM programs, the overwhelming majority of whom are pursuing post-secondary or terminal degrees. In 2014, this equated, according to one report, of fully 60% of all students in programs offering graduate degrees in STEM related fields of study. Furthermore, graduate Computer Science programs at the same set of schools sampled were consistently comprised of above 90% – that’s NINETY PERCENT – international students.
Here in America, it seems, you can do anything you want, except for learn how to code at a graduate level or get an advanced degree in engineering.
Not that it’s a bad thing for the host of international students who, after matriculating from these programs, return to their home countries with new opportunities, insights and connections to help bring themselves, their families and their home economies further along the path to success, prosperity and economic parity. If we have one great export these days, turns out, it’s STEM graduate students – in fact, about 300,000 of them are enrolled in U.S. based STEM programs at any one time.
If only 1/4 of that talent pool graduate every year and decide to apply for a visa, that would equate to 75 out of the 85,000 total visas available to all workers, EACH YEAR. That doesn’t even factor in people brought in through third party or direct employers for experienced or highly skilled positions – nope, that’s just the Stanford, MIT, Carnegie Mellon and other elite STEM graduates coming from schools with high immigrant populations that employers like Google, Microsoft and every Silicon Valley start-up fight tooth and nail for – only stock options for these students are meaningless without a sponsorship in hand.
At least they can go back to Bangalore or Bangladesh with some sort of tschoke from that career fair before they rolled the visa dice and both they and their potential employers came up snake eyes – and that’s not even mentioning the recruiters caught in the middle of this crazy compliance and candidate conundrum.
Visa Quotas: The Definition of Insanity.
I want to take a minute and reiterate that despite the overwhelming need for “highly skilled workers,” a need that would easily and expediently be met simply by raising the overall allotment of available visas, we have made ZERO changes to the H1B cap since 2004.
And I get it, we’ve been too busy pursuing more worthwhile foreign policy issues like fighting the global war on terror, figuring out how we can build a wall to stop the “rapist” Mexicans from stealing our jobs, booze and women, and that sort of stuff to deal with real problems, but maybe, just maybe, it’s time for a change.
In fact, it’s not only overdue – it’s essential we do so, and do it now. We can continue digging our own long term graves, or come up with a substantive, sensical solution to an absolutely imperative challenge.
Long term, U.S. students aren’t enrolled in STEM programs, and therefore, can’t be counted on to fill these roles outside of academia – unless, of course, you’re hiring a psych major or something. So, we need to find ways to accommodate those who not only want to be here, work in technology, and have the extraordinary ability to contribute to our overall workforce and global economic competitiveness in extraordinarily positive ways.
The influx of foreign students to U.S. graduate programs is a boon for American tech companies – which is to say, the biggest brands and most well established, innovative players in the entire global ecosystem. There’s a reason why this is an attractive destination – it’s where the jobs theoretically are, after all – but while there are certainly enough of those to go around, there aren’t enough visas to support even the shot that a STEM graduate might have at living out that dream – and their potential – without winning a lottery, first.
This is a serious issue, and requires some serious introspection to make sure that we not only stay firmly in the forefront of the technology that inspires and connects today’s world, but that we can remain in the drivers’ seat for the foreseeable future.
That is a roadmap whose destination we can reach only if we bust the caps currently imposed on “highly skilled workers” and realize that if we don’t change our policies, we’re likely to lose our edge. Because where top talent goes, inevitably, jobs surely follow. Better to keep them both here than, well, anywhere else that requires sponsorship. Seriously.
Part 1 of a 2 part series. In the next chapter, we’ll take a look at long term solutions to overcome the long term tech talent shortage currently confronting today’s workforce – and workers.
About the Author: Pete Radloff has 15 years of recruiting experience in both agency and corporate environments, and has worked with such companies as Comscore, exaqueo, National Public Radio and Living Social.
With experience and expertise in using technology and social media to enhance the candidate experience and promote strong employer brands, Pete also serves as lead consultant for exaqueo, a workforce consulting firm.
An active member of the Washington area recruiting community, Pete is currently a VP and sits on the Board of Directors of RecruitDC.