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

America is the Mecca for tech innovators worldwide, but this can change if Congress sticks with the current H-1B visa cap. Immigration lawmakers should realize that the 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.

H-1B Visa cap
Employers’ demand for highly skilled foreign workers has shot up over the past few years to keep up with the pace of tech advancements. The number of petitions filed was nearly twice the 65,000 H-1B quota last year.

In the previous year, most H-1B petitions were from developers. 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 them away?H-1B Visa cap

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 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 H-1B visa cap and arbitrary lottery system, it wouldn’t be surprising if in the future American is no longer home to the top tech talent.H-1B Visa Cap

Immigrants are a big force in driving American innovation

Immigrants are the people behind some of America’s most groundbreaking tech innovations. Take a look at the highest-valued tech startups as of April 9, 2015.

We found that 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.”

However, the current WSJ database doesn’t even factor in high-valued startups that were founded by immigrants and later acquired by bigger companies such as Instagram and What’s App. Instagram’s founder Mike Krieger recently said: “Getting a visa took longer than building Instagram.”
H-1B Visa cap

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 Partnership for New American Economy study, finds that the top 7 out 10 most valuable brands in the world come from American companies founded by immigrants or children of immigrants. This 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 U.S. economy.

1. Skilled immigrants are 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 played a huge role in helping America earn its innovative title.

The Kauffman Foundation found that nearly 25% of the engineering and tech companies founded between 2006 and 2012 had at least one immigrant founder. These companies have produced $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.

These emerging, revolutionary tech companies create thousands of jobs for people and their products improve lives. It’s not easy to pick up your life and start anew in a foreign country. By taking a huge, calculated risk, immigrants inherently come to the U.S. equipped with a strong work ethic, drive, and determination.

2. 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.

The early signs of the nucleus shifting away from Silicon Valley

Accessing online technology and building new products has never been easier than it is today. 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 other tech hubs.

In just the last few years, we’re already seeing a shift in tech talent to many regions of the world. Countries like China and India, that already have high tech talent populations, are fostering booming tech companies. The European startup scene is also growing. One year ago there were only 2 European startups in the Billion Dollar Startup 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.

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 have gone 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.

Will the H-1B Visa cap compromise the Silicon Valley’s #1 tech hub title?

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 than any other city.
Screen Shot 2015-04-09 at 3.01.43 PM
Top Venture Capital firms have noticed the phenomenon as well, and in response, they’ve built satellite offices in the three of the largest global tech hubs after Silicon Valley: 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 also set up shop in India, China and/or Israel.
Top VCs expanding (2)

Closing thoughts

America’s H-1B visa cap is not supporting the pace of global innovation. 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 tech hub reputation because booming tech companies are an engine for job creation, revenue, and new tech.

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. 

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