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H-1B Visa Cap: The Imminent Threat to US Tech Innovation

America is the Mecca for tech innovators worldwide, but it won’t stay this way if Congress doesn’t loosen the cap on H-1B visas. Immigration lawmakers should realize that U.S. is currently in the midst of a fortuitous, golden era. Thousands of skilled tech professionals from all over the world want to restart their lives in Silicon Valley just to help create innovative technology.
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Employers’ demand for highly skilled foreign workers has shot up over the past few years to help fill the shortage of technical talent and keep up with the pace of tech advancements. The number of petitions filed was nearly twice the 65,000 H-1B quota last year. Last year, most of the petitions were from programmers or software engineers. When you have 65% of H-1B visa holders in computer-related professions, who actually want to help fill a talent shortage, how can we turn away eager, hard-working and highly skilled engineers and programmers?
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Last year, the US turned away over 87,500 immigrants who applied for an H-1B visa. That number is up to a record-breaking number of 148,000 people for fiscal year 2016, according to recent data from USCIS. The 65,000 petitioners who were accepted per the current H-1B visa cap, and 20,000 advanced degree exemption petitioners, were chosen randomly with the lottery system. We are making it far too difficult for smart, driven and educated technical talent to help build great tech in America. With the current cap and arbitrary lottery system, the H-1B visa cap is draining America of its alluring charm and nucleus of innovation 50 years in the making.

Immigrants are a Big Force in Driving American Innovation  
Immigrants have been behind the screens of some of America’s groundbreaking tech innovations spurring out of companies both small and large. Take a look at the highest valued tech startups as of April 9, 2015. We found that at least one founder of at least 40% of the companies in the Wall Street Journal’s Billion Dollar Startup Club database was not born in the US. This is in line with Google’s Laszlo Bock’s point when he says: “Immigrants have founded *40% of companies in the tech sector that were financed by venture capital and went on to become public in the US, among them Yahoo, eBay, Intel and Google.” The current WSJ database, however, doesn’t even factor in immigrants’ high-valued startups acquired by bigger companies, like Instagram and What’s App. Instagram’s founder Mike Krieger recently said: “Getting a visa took longer than building Instagram.”
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In order to nurture and grow the nucleus of innovation in the U.S., American lawmakers need to think generations ahead. 45% of all the high-tech firms in the Fortune 500 were founded by an immigrant or the child of an immigrant in 2010 — including companies like Qualcomm and Harris. Plus, the widely quoted study by the Partnership for New American Economy, finds that the top 7 out 10 most valuable brands in the world come from American companies founded by either immigrants or children of immigrants, including the great Steve Jobs.
Inviting More Tech Immigrants Gives the US Economy a Strong Competitive Edge
John F. Kennedy once said: “Every aspect of the American economy has profited from the contributions of immigrants.”
There are two main ways in which inviting more immigrants would boost, not hurt, the economy. One, skilled immigrants have always been and will continue to be a strong competitive advantage for America in the global economy. Immigrant founders have a longstanding reputation for launching companies that are not only valuable (Re: Chart 4) but also act as both job and revenue engines. Recent U.S. tech history shows us that immigrants have been a big part in helping America grow its nucleus of innovation.
The Kauffman Foundation found that nearly 25% of the engineering and tech companies founded between 2006 and 2012 had at least one immigrant founder, producing $63 billion in sales and jobs employment for 560,000 American workers.Today, the 24 billion dollar startups with immigrant founders, alone, employ over 12,000 people collectively. Such emerging, revolutionary tech companies put thousands of people to work and improve lives, from medical technologies, like ZocDoc for scheduling appointments, to fuel cell technologies, like Bloom for clean power-generation.
It’s not easy to pick up your life and start anew in a foreign place. By taking a huge, calculated risk, immigrants inherently come equipped with characteristics of strong work ethic, drive and determination to achieve great heights.
Two, the government would actually earn more money from charging companies to sponsor H-1B visas. Currently, it costs around $5,000, including government fees, for each H-1B visa. If Congress raises the cap from 65,000 to 115,000, as proposed by the Innovation Bill, the government would create an additional $250 million per year.
There are Early Signs of the Nucleus Shifting Away from Silicon Valley

Accessing online technology and building new product has never been easier than it is today when anyone can start a startup from anywhere in the world. With infinite resources, frameworks and starter kits at our disposal, Silicon Valley doesn’t need to birth the next big innovation. If we don’t make it easier for immigrants to build products in America, immigrants will be drawn to the tech boom elsewhere.
In just the last few years, we’re already seeing a shift in tech talent to many regions of the world. Countries comprised of high population of tech talent, like China and India, are fostering booming tech companies. The European startup scene has been growing. If you rewind just one year ago, there were only 2 European startups in the billion dollar club. Today, that number is up to 7. The Wall Street Journal reports venture capitalists put in a record-breaking amount of money into European startups since 2001.
Even outside of the billion dollar startup club, some nations are producing prominent tech services that overtake US-born innovations. For instance, although Facebook is notorious for disrupting social media worldwide, it still hasn’t beaten Russia’s largest social network, Vkontakte (VK), which was started by international computing olympiad champions. “There are some countries where folks have made such good clones of Facebook, that it has been very hard for us to grow,” Facebook’s Mark Zuckerberg says at Startup School 2013.
“The biggest example is Russia…they also have fewer content laws, so they also have illegal file downloads and we just have not been able to beat them…in 10 years.”
Berlin-based startup Wooga is another example of a thriving startup that rivals with its US counterparts. Wooga has done what few leaders in the gaming industry have done: achieved serial smashing success. It’s only 3rd behind Zynga and EA for Facebook development games and engaging 50 million active users.
What’s even more surprising, however, is that several Silicon Valley immigrants are going back to take leadership positions in their country of origin. Quite a few notable tech engineers, for instance, have been going back to their country to take on leadership roles at fast-growing Asian startups. I can readily name several recent examples:

  • Hoo Ling Tan was the Senior Director, Pricing Intelligence & Monetization at Salesforce in San Francisco, but moved to Singapore to launch Grabtaxi.
  • Wei Zhu was a software engineer at Facebook in San Francisco, but moved back to Singapore to launch Stealth startup and went on to become CTO of Grabtaxi as well.
  • Jim Dai was a cofounder of CalmSeas Inc., but moved to Seoul to become CTO at Coupang.
  • Charles Ng was the principle scientist and senior manager at IBM in Silicon Valley, but he also moved to Seoul to become the chief data scientist at Coupang.
  • Gaurav Agarwal moved from Zynga in SF to become the head of engineering of Healthkart in Gurgaon.
  • Namita Gupta moved from Microsoft in Silicon Valley to become Chief Product Officer at Zomato.

While these are anecdotal examples of top tech engineers in Silicon Valley leaving for leadership positions abroad, LinkedIn’s 2013 study confirms this observation with data. In 2013, LinkedIn analyzed its database of 300 million profiles to pinpoint where the most relocations occurred. Sure enough, more software engineers moved to India’s tech hub in Bangalore more than any other city.
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Top Venture Capital firms have noticed the phenomenon as well, evident by recent satellite offices abroad, most commonly in China, India and Israel. Looking at the top investors in early-stage startups ranked by Entreprenuer.com in 2015, we found that 50% of the top 10 firms (which are all US-based) have set up shop in India, China and/or Israel, three of the largest global tech hubs after Silicon Valley. So you see, the gradual shift of the nucleus of innovation is already apparent.
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America’s H-1B visa regulations are not supporting the pace of global innovation. In fact, it’s making it harder for some of the greatest minds of technology to innovate in America. We are already seeing bursts of  tech innovation worldwide and if we don’t do something to support tech-skilled immigrants, the nucleus of tech innovation will shift. It’s important for America to nurture and grow its nucleus of tech innovation because booming tech companies are an engine for job creation, revenue and new tech is critical to advancing efficiency. So, why put a cap on inviting talented people to America to create world-changing technology? To preserve its ranks as the tech Mecca, the U.S. needs to bridge the disconnect between the rapid pace of tech innovation and the immigration laws implemented decades ago.
*Although Lazslo’s doesn’t cite this statistic in the blog, a study commissioned by the National Venture Capital Association supports this statement.
Note about the Author: Ritika Trikha is a U.S. citizen and passionate about tech innovation in Silicon Valley and its diverse contributions from global citizens. 

Comments (19)

  • A Berkeley’s CS professor take on H1B : http://heather.cs.ucdavis.edu/h1b.html#overview

    • myth17
    • April 15, 2015 at 2:04 am
    • Reply
  • I agree completely that the U.S. benefits from skilled immigration. However, H-1B is the wrong way to do that, it’s a form of indentured service that ties employees to employers, driving wages down. As such it’s an attack on high-tech workers. Better to increase the supply of green cards.

    • Walter Gillett
    • May 14, 2015 at 2:10 pm
    • Reply
  • I believe that body shops like Infosys, Wipro, TCS, etc. bring their employees to the USA on H1-B visas. This practice not only skews the salary statistics for H1-B via holders, but also arguably denies visas to better educated & more talented engineers.

    • Ashok
    • September 6, 2015 at 12:36 am
    • Reply
  • Sorry but most of the H1B program is a sham. There are 2 pay rates: H1B and US citizen. Ask any recruiter. This is blatantly against the rules. Some of these folks exploit their own people earning a big margin on them.
    If these employers truly can’t find skilled citizens then the fee should be $20K or $30K. If it’s truly about the skill gap and not the money then the high fee should not be a problem.
    If the program can be implemented in a fair way, where rules are enforced then I would not have a problem with it.

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