In mid-2014, Nikhil Aitharaju, the co-founder and chief technology officer of Tint, a social media integration platform in San Francisco, needed to hire a software engineer for his quickly growing, 34-person company.

He’d located the perfect candidate through an online application process, but that person was located in the Netherlands. So Aitharaju tried to sponsor the potential employee by getting an H-1B visa. But by the time he applied, the visas, which are awarded on a lottery basis, were all taken, so he was out of luck. He says he spent an additional four months finding an equivalent U.S. candidate, which significantly slowed down the development of projects.

“We are a startup and our hiring needs are ad hoc, and that makes it very difficult for us to plan ahead,” Aitharaju says, adding that he's competing not just with other startups, but much larger companies with entire divisions devoted to applying for H-1B visas for workers. 

The difficulties that small firms have securing H-1B visas are well-documented, and have been ongoing for years. While the visa system for highly-skilled overseas workers awards 85,000 work visas per year, many smaller companies are saying they're getting shut out by global consultancies, such as Tata, Infosys, and Wipro. These Indian-based companies allegedly flood the application pool with requests for visas for their own workers, as the New York Times recently reported.

Tata and Wipro were unable to respond to a request for comment by deadline. An Infosys spokeswoman said the company only applies for visas for workers that need them, and for the ones it receives, it pays workers prevailing wages in the U.S. In 2015, the spokesman said, Infosys applied for 8,000 H-1B visas through the U.S. lottery, and it received roughly 2,600.

This presents a quandary for smaller companies--in particular, tech firms--which have struggled to find enough qualified workers in the U.S. to fill their needs. Many, like Tint, are forced to delay plans or put projects on the backburner indefinitely as a result, and that's cutting into business growth.

The issue is potentially compounded by a legal exemption that allows such firms to avoid a rule that they first put the work out to bid for U.S. workers. As long as they pay salaries of $60,000 or less, companies--no matter where they're based--can dispense with the requirement. The rub is, U.S.-based companies can hardly get away with paying engineers so little, while the salary is considered good in many developing countries. This means U.S. firms, generally speaking, must first put any H-1B openings out to bid for U.S. workers. That tends to slows down the hiring process.

In 2014, global consultancies reportedly walked with 20,000 H-1Bs, or nearly one third of that year’s allotment. By contrast, even U.S. tech giants have had a hard time: Amazon, Apple, Google, IBM, Intel, and Microsoft between them split 5,000 such visas. That doesn’t leave much left over for smaller companies.

The issue is not necessarily new, says Delisa Bressler, partner at immigration law firm Foster, in Austin. But as the economy has recovered, and in particular as the technology sector has roared ahead of other industries, its need for hiring specialty workers has brought the problem into starker definition.

“Small companies have competitive disadvantages in other areas, like federal and state incentives for doing business, or in the private sector getting volume discounts,” Bressler says. “So put forward in the small business context, the H-1B issue is not that dissimilar.”

So if you’re wondering how to reshuffle the deck in your favor, here are four tips:

1. Be the early bird.

Figure out your hiring needs early, and have your applications ready before April 1, when the lottery for H-1Bs begins, says Bressler.

2. Set your sights high.

While the U.S. awards only 85,000 H-1B visas annually, it sets aside 20,000 for workers with advanced degrees. Try to identify job candidates with Master’s degrees or higher, as they get “two bites at the apple,” says Bressler. If your applicants don’t make the first cut for advanced degrees, they’ll be thrown into the general pool for a second shot.

3. Find workers already here.

Plenty of workers here on H-1Bs, which generally speaking are good for six years, are looking to change jobs, Bressler says. Actively solicit them in your candidate searches, and avoid the lottery process altogether.

4. Hire overseas.

Consider hiring independent contractors overseas if you’re having trouble filling positions in the U.S. Plenty of websites today facilitate distributed workforces. And sites like Upwork, will connect you with potential workers in other countries. The downsides are that they’re not your employees, and you’ll still have to file paperwork with the Internal Revenue Service, proving they’re not U.S. citizens, as well as comply with all overseas labor laws. Tint, for example already has sales people in other countries working as independent contractors, says Aithajaru. And depending on project demands going forward, he says he might consider working with overseas contractors for engineering projects too. “The best solution, however, would be to have more H-1B visas,” Aithajaru says.

Published on: Nov 16, 2015