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Tech Industry May Face H-1B Visa Shortage

The recession has dampened demand for H-1B visas as companies scale back headcounts, including overseas workers. But experts warn that a recovery within the next one or two years could see businesses--from bootstrapped social media startups to tech giants like IBM and Microsoft--competing with each other for the visas required to import skilled IT labor from abroad.

Currently fewer than half of the 65,000 H-1B visas available from U.S. Citizenship and Immigration Services (USCIS) for the upcoming federal fiscal year, which starts Oct. 1, have been applied for, even though the application window opened April 1. That's down 30% from the application rate at the same time last year. But some observers believe that, if past turnarounds are any indication, the moderate demand won't last when the economy picks up.

"Until the recession hit you had the craziness of all the H-1B numbers being used up and then some on the very first day of filing," said Ted Ruthizer, co-chair of the business immigration group at New York City-based law firm Kramer Levin Naftalis & Frankel, in an interview.

Congress has lowered the number of available H-1B visas from about 200,000 in the last decade to the current 65,000, plus an additional 20,000 reserved for foreign nationals who hold a graduate degree from a U.S. university. Ruthizer said the new number "is terribly inadequate" to meet the needs of U.S. corporations that rely on computer science and engineering graduates from India, China, and other tech hotspots to supplement their domestic workforces.

Even with demand off from previous years, Ruthizer said he expects all of the H-1B visas for the next fiscal year to be gone by March 2012, well before the fiscal year ends.

"The market really determines what the usage ought to be and the quotas are really artificial. When hiring picks up we'll definitely see a crunch," said Ruthizer, who is a former chair of the New York State Bar Association's immigration law committee.

Microsoft recently lobbied Congress for an increase in the H-1B cap, claiming it's got thousands of open positions it can't fill because it's unable to find enough U.S. workers with the skills in crucial areas like cloud and mobility. "Filling our talent need remains a serious challenge," said Microsoft general counsel Brad Smith, in testimony in July before the Senate judiciary committee's subcommittee on immigration, refugees, and border security.

For its part, groups that represent U.S. tech workers claim companies are misusing the H-1B program to import cheap IT labor, rather than highly skilled workers.

"Loopholes in these programs have made it too easy to bring in cheaper foreign workers, with ordinary skills, who directly substitute for, rather than complement, workers already in America," said Rochester Institute of Technology professor Ron Hira, who also testified before the Senate judiciary committee.

An H-1B visa allows an individual to work in the U.S. for three years, and can be renewed for one additional three-year term.