Microsoft’s Ballmer on H1-B Visas, Immigration

The Detroit Free Press recently interviewed Microsoft CEO Steve Ballmer who asked him why Microsoft in 2007 built a research and development facility in Canada–over the border in Vancouver–not that far from Microsoft’s quarters in Redmond, Wash.

Why not build it in the United States? Ballmer’s response:

While the Canadian R&D credit may have been a factor, it wasn’t the deciding one, Ballmer said. That would be immigration policy…

“We opened the lab in Vancouver,” Ballmer said, “because we were having trouble getting visas for the best and the brightest to come to Seattle. The Canadian government said, ‘We’re happy to have those people.’ “

“It’s a bit goofy,” he said, “because for every person we hire to be an engineer, there’s probably another four or five people who we employ at Microsoft. There’s another set of people employed in the community in construction and housing and retail, a bunch of different industries.”

In 2008, Microsoft employed more than 78,000 individuals. According to Fortune, Microsoft employs 47,645 in the United States and 30,920 in other countries. Microsoft has said publicly that less than 15 percent of its U.S. work force are H1-B visa holders–which would put the total number of visa holders in the 6,000 to 7,000 range.

The United States has a cap on visa holders at less than 15 percent, so Microsoft is maximizing its use of visas, but consistently lobbies the government for more. The claim? It just can’t find enough talent in this country. Ballmer appears to be beating on that visa drum again in this DFP story. Again, from the article:

“”I don’t care whether they’re American-born or Indian-born or Russian-born. I want to pay them to work in the U.S. That’s why I’m trying to get ‘em a visa…. I’m not trying to ship the job to India.”

But Microsoft will locate the job in India, or Canada or wherever it can get the best talent.

Canada is well known for its generous R&D tax credit poilicies and the U.S. wavers on it frequently. From a Scitax Advisory Partners report entitled “North American Politicians Recognize R&D Tax Credits as a Useful Economic Fix”:

The low priority afforded this issue is witnessed by the fact that Washington has let its Research & Experimentation (“R&E”) tax credit expire no less than 13 times since it was originally enacted into law in 1981. In Canada – and most other countries with similar credits – R&D tax credits are fixed in legislation. But in the US, congress must vote on renewing the R&E tax credit every year. And frequently they vote against renewing it, which means technology companies can’t really count on it.

Canada’s R&D tax credits may be more significant than Ballmer wants the public and U.S. government to believe.

IT Park will provide jobs to 10,000 people

Poongothai Aladi Aruna

CHENNAI: A formal notification for the setting up of an Information Technology Special Economic Zone by ELCOT at Viswanathapuram in Hosur has been issued by the Central government.

Information Technology Minister Poongothai Aladi Aruna on Monday told reporters at Hosur that the IT-SEZ would be spread over 177 acres and ELCOT would construct a Rs.14-crore complex measuring 50,000 sq ft.

Tenders to erect the building and other basic infrastructure have been floated and construction would start in a couple of months. Expressions of interest would be invited from IT majors for land allotment.

“Once the IT park comes into being, around 10,000 educated people will get employment in the region. As there is a huge demand for software and IT-enabled services, the State government is developing eight IT parks in Tier-II and Tier-III towns in the State,” she said.

Accompanied by officials of NASSCOM, and ELCOT, Dr. Aruna visited the State’s first Panchayat Business Process Outsourcing-cum-call centre at Sanasandiram in Krishnagiri district and inspected the functioning of the Tamil Nadu State Wide Area Network at the Collectorate.

Dr. Aruna also inaugurated the Recruitment Processing Outsourcing unit at Uthangarai with 60 seats. Currently it employs around 30 persons.

This centre, functioning in association FOSTeRA, will undertake resume mining and reverse process outsourcing functions and inform U.S.-based firms about the availability of skilled workers.

The IT Minister visited a couple of rural Common Service Centres in the district that are offering Business to Citizen (B2C) services, such as railway ticket booking and airline booking.

Government to Citizen services will be introduced in the next 25 days.

The U.S. government, at least the part that is fighting H-1B visa fraud, is looking to prove a point about the program: that fraud in H-1B visa program and the number of visa holders in U.S. tech jobs are putting current struggling American technology workers out of work.

Unemployment for the technology industry is up, just as every industry’s numbers are up. But are companies going out of their way to replace Americans with H-1B workers? That’s what the feds appear to be out to prove.

The company that sparked the debate, according to a Computerworld article, is New Jersey-based Vision Systems Group, which is accused of paying wages for H-1B visa holders working in New Jersey based on Iowa rates (since the company had an office there). Salaries for technology workers in those two states are very different, and so fraud has been charged and criminal arrests have taken place. The government also claims Vision only hired H-1B holders for IT positions.

Vision Systems isn’t the only case of alleged fraud and abuse. Now, the feds are trying to broaden their argument by looking at IT unemployment as a whole and connecting the dots to the H-1B visa program.

From the Computerworld article:

The U.S. said it is “prepared to demonstrate to the court the manner in which the defendant’s schemes, along with similar schemes by similar companies have substantially deprived U.S. citizens of employment.” The government then points out that “in January of 2009, the total number of workers employed in the information technology occupation under the H-1B program substantially exceeded the 241,000 unemployed U.S. citizen workers within the same occupation.”

The problem is that while there appears to be a strong case for fraud and abuse relating to the visa program, it is harder to substantiate the full impact on American workers and all the layoffs and unemployment occurring. The two are not dependent on each other. Layoffs would be happening regardless of whether there was an H-1B visa program or not.

As the Computerworld article points out, the “U.S. government’s brief doesn’t explain to what extent fraud is responsible for tech worker unemployment, or cite sources for its data.”

That’s an issue the courts will undoubtedly need to examine more closely.