Is H-1B work a bad business deal?

H1-B visas, which allow foreign workers with special hard-to-find skills to work in the United States, have been a political hot potato for years. Conventional wisdom has it that technology workers hate them because it's easy for companies to find foreign workers with "hard-to-find skills," workers who will do the same job that U.S. workers do for less money. Technology employers love them, allegedly, for that same reason.

But now documents leaked to WashTech, a Seattle-based organization of technology workers, suggest that both convictions are wrong: H-1B workers are not cheap, and the big winner in many H-1B deals is neither the Indian worker nor the U.S. company; it's the outsourcing company.

The documents, which date from 2001, describe the pricing structure of contracts between Microsoft Corp. and two large Indian outsourcers, Infosys Technologies Ltd. and Satyam Computer Services Ltd. The hourly rate for a software architect, which WashTech claims is the same for both outsourcers, is US$90, or more than $187,000 a year. The hourly rate for a senior software programmer is $72, or $149,000 a year, and the hourly rate for a software developer is $60, or $124,000 a year. According to the document, overtime pay for work done beyond 40 hours a week, was to be 1.5 times the regular hourly rate. At that rate, just two hours of overtime a week would push the price of a software architect over $200,000 a year--not exactly a bargain for Microsoft, or for Microsoft stockholders.

For a worker accustomed to Indian wages, however, a salary like that would be a king's ransom. But it's not. Because in reality, few, if any, H1-B workers ever earn $200,000 a year.

How much do they earn? Ronil Hira, an assistant professor at the Rochester Institute of Technology, told The New York Times this week that the salaries paid by Indian outsourcers to their workers in the United States top out at about $40,000 a year. That would put the markup for labor contracted to companies like Satyam and Infosys at about 300 percent. It sounds outlandishly high, but it jibes with the markup reported by an unnamed labor arbitrageur who told a WashTech writer that he routinely marks up the price of Indian software programmers by 250 percent or more.

Tell me again: Why are U.S companies doing this? Is it true H1-B workers really possess skills that can't be found in U.S. workers? Or are the wages paid to H1-B workers, even with the outrageous markup, even with the political heat, worth every penny?

Tell us what you think.

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