Solution Providers: Trump H-1B Visa Executive Order Could Raise Salaries, 'Hurt Productivity' -- Resulting In More Jobs Moving Overseas

Solution providers Tuesday said President Donald Trump's executive order making changes to the H-1B visa program ultimately could result in more tech jobs being moved overseas.

Tim Shea, president and senior consultant of Alpha NetSolutions, a $1.7 million Millbury, Mass., solution provider with 12 employees, said he expects the executive order to have a "trickle-down" effect on companies like his -- raising U.S. tech salaries and forcing him to simply not fill job slots or move them to contract workers overseas.

"I guarantee you this will cost America jobs," said Shea. "When you are in the private sectors, costs and salaries matter. I have to show a profit every month or my company dies. What this order could do is take a job slot that is costing $65,000 and turn it into a $180,000 job. That job is just going to go away. I am not going to fill that slot."

Shea, in fact, said he already uses a service called Upwork.com to hire overseas tech workers, and any increase in U.S. salaries resulting from the Trump executive order would cause him to hire more talent through the freelance job site. "The problem with Washington, D.C., is they never think about real-world costs," he said. "If the cost of a toilet goes from $100 to $28,000, they pay it. The rest of us can't afford to do that."

According to the Trump administration, the current random lottery H-1B system has violated the principles of the H-1B visa program by allowing employers to bring in lower-skilled workers at well below market rates to replace American workers.

The executive order from President Trump will shift the H-1B visa program away from a lottery system weighted toward lowest-wage workers to a system that prioritizes higher-skilled, higher-paid workers. That shift would make it much more difficult for outsourcing giants to replace American workers, according to the Trump administration.

Some 80 percent of H-1B workers are paid less than the median wage in their fields, according to the White House, while just 5 percent of H-1B visas go to the workers in the Labor Department's highest wage tier.

A senior Trump administration official briefing reporters on the H-1B visa program singled out IT outsourcing giants Tata, Infosys and Cognizant for allegedly gaming the current H-1B lottery system.

"People, probably in their heads, think most H-1B visas are going to these romanticized, high-skilled firms that are pioneering the technology of the future – [and] not [to] contract workers," the senior Trump administration official said late Monday, according to a transcript of the briefing.

"Companies like Tata, Infosys, Cognizant will apply for a very large number of [H-1B] visas … by putting extra tickets in the lottery raffle," the Trump administration official said. "You have contracting firms that are not skills employers, that often times use workers for entry-level positions, and they capture the lion's share of H-1B visas."

The official told reporters that those three companies have an average wage for H-1B visas of between $60,000 and $65,000, well below the $150,000 earned by the median Silicon Valley software engineer. The remarks weren't intended to be a criticism of Tata, Infosys and Cognizant, the official said, but rather a criticism of the current the H-1B visa program.

Alpha NetSolutions' Shea, for his part, said although the Trump executive order is targeted at the outsourcing giants, he expects it to make it more difficult for him to find affordable tech talent.

"It is already a bear for us to find a tech worker that we can afford," Shea says. "It takes us months. Nobody on my team is making $180,000 -- not even me. If I can't find a way to get it done for $65,000 or less that means I am going to end up outsourcing it to a worker in the Philippines through a service like Upwork.com."

One solution provider CEO, who did not want to be identified, said the executive order will hinder productivity and have a negative effect not only in the technology sector, but various industries nationally that are looking to hire software engineers.

"It will hurt companies if they can't hire the best technical talent that they can globally find – yes, that would be the case," said the executive.

"Look at GE, they're advertising that they want to hire software developers. It's going to hurt all companies as a whole if they can't hire the technology experienced people they need to move their product forward. It's going to hurt productivity," said the executive. "Donald Trump wants to hire Americans, but this is just another excuse to outsource to other countries where they can get the labor less expensively and they can still get the talent."

The CEO said that the Trump administration claims that companies are gaming the system to fill U.S. jobs with lower-paid overseas talent.

"Most of the H-1B visa guys in Silicon Valley are making $150,000-plus," he said. "If they have a technical background and experience, whether it's Silicon Valley or somewhere else, that's the kind of money they're going to be demanding and making."

The average salary associated with an H-1B visa application in California in the U.S. government's 2016 fiscal year was $100,542, according to U.S. Department of Labor data compiled by Myvisajobs.com, with the average salary for H-1B applicants in the California cities of San Francisco, San Jose, Sunnyvale, Santa Clara and Palo Alto coming in between $108,000 and $118,000.

More than 2,900 companies are classified by the U.S. Department of Labor as being H-1B visa dependent, meaning that H-1B visa holders comprise more than 15 percent of their workforce. Eight of the 11 biggest users of the H-1B program are considered to be H-1B dependent, according to Department of Labor data, including Tata, Infosys and Cognizant.

The solution provider said U.S.-based technology companies typically hire Americans, but sometimes need to look abroad to find the specific talent they're looking for.

"This is a way of Trump trying to force companies to hire Americans first. In general, it's a good concept, but these tech companies, they already do the work to hire locally. If they can fulfill all the technology jobs with American workers, they would. But they go international because they have too," said the CEO.

Joe Balsarotti, owner and president of Software To Go, a top solution provider in the St. Louis metropolitan market, said he believes that companies taking advantage of the H-1B visa program should pay prevailing U.S. wages.

"If all of sudden you have the CEOs of these Silicon Valley companies having to pay the prevailing U.S. wage rather than getting a discount on workers outside the U.S., you would quickly find out if there is a shortage of tech people in the U.S. to fill these jobs," he said. "My attitude is put up or shut up."