Wednesday, June 11, 2008

Heads Up, Megafilers, Ze Jig EEZ up...

This from DHS: a pending regulation will prohibit employers from filing multiple H-1b petitions for a foreign national.  My prediction: this will very adversely affect the leaders of the IT sector.  Why? Glad you asked...

Not many folks sit around pondering the unponderable as much as I do, and it is for this reason that I am such a font of useful and useless information.  This one is useful, but first a question:

Q: How do the big, foreign-based H-1B mega-users manage to staff so well despite the fact that 4 out of 5 new H-1Bs filed in April don't make the 65,000 cap?

A:  They file multiple petitions.

That is correct, even with filing fees as astronomical as they are, the profits are even MORE astronomical, so the filing of 2,3, or even five petitions for the SAME new H-1B prospect can make economic sense.  With in house visa processing mostly handled offshore, it works.  Look at the numbers:


  • Tab Hunter is an IT grad from Nepal and Co. X wants to bring him to California.  Tab has accepted an offer of $75,000 per year plus benefits and is a happy Nepalese camper.

  • Knowing that Tab is a prize hire and that he has a 20% chance of capturing an elusive H-1B, the company files FIVE H-1B petitions, all identical...let's just say that with filing fees and all the hassle, each filing runs the company $3000, a total of $15,000 (and let's assume further that filing fees are lost on the four which do NOT make it.)

  • Tab will travel as a consultant and he'll be invoiced out at a solid hourly, grossing his company $250,000 while costing them $100,000.


Okay, this next part is kind of like in Jurassic Park, when Jeff Goldblum is in the helicopter hitting on the blond paleontologist and explaining chaos theory:

-Let's assume that one out of five Tabs for company X gets the H-1B for every four that doesn't.  The total cost of filing those 25 petitions -- five for each of the five applicants - is $75,000, right?  Well, it doesn't take a math whiz to realize that even with this massive overhead, Co. X is making money:

TAB'S GROSS BILLING = $250,000
TAB'S Cost to Co. X      = $100.000
COST of all the filings   =  $75,000
CO. X Profit                 =   $75,000

Not bad, huh?  I figured all this out last year when I was researching the IT sector and found that some of the top H-1B companies had filed about 4 times as many petitions as had been approved.

If you are from one of those companies and are as freaked out as you should be after reading this, talk to me.  We still have time to structure an L-1 offshore seed program and get the folks you need here BEFORE the 2009 October crop of H-1Bs is ready for harvest.

Don't just think outside the box, guys.  Smash it to smithereens.






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