Despite layoffs, H-1B work visa demand will stay high

The U.S. government's 85,000 H-1B work visa cap will be exceeded this year, despite the increasing number of tech industry layoffs. That's what history tells us.

In 2009, the Great Recession had increased national unemployment to 9.5%. Tech lost nearly 250,000 jobs that year. H-1B work visa holders who were cut had a 10-day grace period to find a new employer to sponsor their visa or leave the country.

But in 2016, U.S. Citizenship and Immigration Services (USCIS) extended the grace period to 60 days for H-1B workers. Some lawmakers believe the grace period should be twice as long.

"Forcing these talented immigrants to leave our country is harmful to our long-run economic competitiveness," wrote California Reps. Anna Eshoo and Zoe Lofgren; Homeland Security Sec. Alejandro Mayorkas; and Ur Jaddou, director of USCIS, in late December. "Many of these individuals have highly specialized skills and advanced STEM degrees from top U.S. universities," they said.

USCIS is not interested in extending the grace period to 120 days.

"USCIS continues to monitor the U.S. labor market and economy when exploring procedural, policy and regulatory options to address related challenges faced by immigrant communities," a USCIS spokesperson said in an email to TechTarget Editorial about the request to extend the grace period to 120 days.

Unlike in 2009, tech employment is still growing.

Adding workers, not laying off

The national unemployment rate in December was 3.5%, the U.S. Labor Department reported. Technology companies added 17,600 workers in December -- the 25th straight month of growth, according to a CompTIA analysis of U.S. labor data.

The growth in tech employment could change as SAP, IBM and other companies add to the layoff count.

But the companies that might be hiring those with tech skills the most aren't tech companies; they are financial services, defense and consulting firms, according to CompTIA, which based its analysis on job postings. The top technology hiring companies include Capital One, Humana, General Dynamics, Deloitte, Citi and KPMG, among others, it said.

[Tech companies] just hired too many workers in the pandemic run-up.
David FooteChief analyst and research officer, Foote Partners

The tech layoffs "have created a great opportunity for traditional companies," wrote Vijay Govindarajan, a Dartmouth College Tuck School of Business professor, and Anup Srivastava, a professor at the University of Calgary Haskayne School of Business, in Harvard Business Review.

David Foote, chief analyst and research officer at labor market analysis firm Foote Partners, said tech companies "just hired too many workers in the pandemic run-up."

"The tech sector is ridiculously competitive compared to other industries. Speed to market is critical," Foote said. "Hence they go through cycles of hiring and firing in what appears to be exceptionally high numbers. The huge hiring numbers don't get as much press attention as the huge layoff numbers."

Microsoft, for instance, added about 58,000 employees in two years before announcing its recent layoff of 10,000.

Offshore outsourcing visa use

H-1B work visa holders are primarily used to fill technology jobs in two distinct industries.

They are hired by Silicon Valley companies out of U.S. universities, a point made by Lofgren and Eshoo. Visa workers are also hired by outsourcing companies to help facilitate the transfer of work overseas, resulting in job losses of U.S. workers. And these companies are major users of the H-1B visa, according to an Economic Policy Institute (EPI) study last year.

The EPI analyzed the H-1B visa distribution in the 2020 fiscal year and found that almost 20,000 H-1B visas were issued to outsourcing companies. That's nearly 25% of the total 85,000 visas issued in 2020, noted report authors Ron Hira, an associate professor of political science at Howard University, and Daniel Costa, director of immigration law and policy research at EPI.

For H-1B work visa holders who do lose their jobs and are hoping the temporary visa will lead to permanent residency, their options are difficult.

For laid-off workers, the 60-day clock begins when the visa holder is no longer working, said Dennis Hul, an immigration attorney at ImmiPartner in Dallas. Some immigration practitioners argue that the 60-day period begins at the end of the severance, he said, but he noted that the government's language is clear: The clock begins ticking at the "cessation of employment."

Options for H-1B holders

Hul said the best outcome for laid-off H-1B workers is finding another sponsor. If that's not possible, there are some other steps visa holders can take to remain in the U.S. beyond 60 days, including seeking a visitor visa.

A laid-off H-1B visa holder can apply for a B-1 temporary business visitor visa, Hul said. This visa is issued so that the holder can be in the U.S. to attend a conference, negotiate a contract and participate in short-term training, among other activities.

Hul said the H-1B visa holder would need to apply for the B-1 visa during that 60-day grace period. Once this change of visa status is filed with the government, the individual is in something of a "pending status" and allowed to stay physically in the U.S. until that B-1 case is resolved, he said.

The petition for the business visitor could be pending for three to four months, buying the laid-off worker a little more time to be physically present in the U.S. The pending visa status complicates a move to a new employer, but it can still happen, Hul said.

Demand for H-1B will still be high

But the tech employment outlook facing H-1B workers is different from the Great Recession. The hiring of workers with technical skills will likely remain strong because of the broad push across industries to digitize and automate services.

Some analysts, including Foote, believe that the effects of automation, such as HR's adoption of self-service systems, might be underappreciated in the tech industry's cutbacks. Within days of announcing its layoffs, Microsoft said it was investing $10 billion in OpenAI, the maker of ChatGPT, a tool proving effective in automating content generation.

While the tech layoffs might dampen the volume of H-1B applications, the number of visa applications will likely greatly exceed the U.S. H-1B work visa cap of 85,000.

Even during the Great Recession with high unemployment, the U.S. received 163,000 H-1B applications for the 2009 fiscal year. In 2022, the U.S. received 308,000 H-1B applications.

Next Steps

H-1B visa fraud probe follows a move to $10 registrations

As H-1B visa registrations near 1M, odds of a visa decline

Dig Deeper on Talent management

Business Analytics
Content Management
and ESG