Crosly & Associates Annual H-1B Visa Application Volume Forecast - 2019

     In preparation for the April 1 opening date for H-1B visa applications, Crosly & Associates, the leading executive search firm in the analytics and data science industry, conducted its annual analysis to forecast this year's application volume. Last year we predicted that we would see a year-over-year decrease in applications, somewhere in the range of 170,000 to 195,000 applications. Our forecast was on target, as the number of H-1B visa applications came in at 190,098.

         Each year, the government opens 65,000 new H-1B visas and an additional 20,000 H-1B visas for those specifically with advanced degrees. The visa application period opens on April 1, and remains open until the quota is reached. In the event that more than 85,000 applications are received on the first day, a random lottery determines which applicants will be granted visas.

         From 2010 to 2016, the number of H-1B visa applications had been steadily increasing. In 2017 and 2018 we saw decreases in the application volume for the first time since 2010, at the peak of the recession. In each of the last six years, the volume of applications was greater than the number of available visas, leading to a lottery.

         With last year’s application volume of 190,098, 55% of applicants did not receive a visa. An employee who is unable to obtain a visa will likely return to his or her country of origin. The employer whose visa application is unsuccessful loses the newly hired employee after a short period of service time and, as a result, must—at a high cost—hire and train a new worker.

         So what should we expect to see this year?

Demand From Employers:

         The strong economy is the largest factor contributing to the high demand for H-1B visas. Job growth has been steady, although down slightly from last year, and has been slightly decreasing each year since its peak in 2015. However, job growth in STEM [science, technology, engineering and math] fields, where companies rely heavily on H-1Bs visas for employment, has remained positive.

Supply From Foreign Workers and Students:

         During the 2017-2018 academic year, the number of international students enrolled in higher education programs in the United States decreased for the first time in over 2 decades. The numbers of seniors and graduate students, the most likely pool of new H-1B visa applicants, decreased by 0.8% from the previous year; this was also the first decrease in more than 2 decades.

         Despite the decrease in the total international student population, the number of international students enrolled in STEM degree programs increased by 4.8%. This was the smallest increase since the 2007-2008 academic year. The percentage of these international students enrolled in STEM degree programs also rose to an all-time high, to 55.8%, up from 52.6% the previous year. This record high population of international students is a major portion of the pool from which H-1B visa demand is initiated.

         The decrease in the total number of international students is likely driven by our current administration's anti-immigration policies. Despite that, foreign students are still flocking to the U.S. for STEM degrees.

Other Influential Factors:

Carryover From Previous Years

         In addition to the demand for new employee visas, there is also a significant carryover of applicants who did not receive a visa in the 2018 lottery. There were 105,000 applicants who did not receive a visa last year, and many of those individuals are now on their 24 month STEM OPT extensions and will be applying for a visa again this year.

Additional Carryover Resulting from RFEs

         The Wall Street Journal published an article last month indicating that the Trump administration is demanding supporting evidence (more commonly known as Requests for Evidence, or RFEs) in many more applications for H-1B visas, and as a result is denying more petitions. This is consistent with what we have heard from candidates who were selected in the lottery last year but then received an RFE, and after months of paperwork, had their visa application declined. UCSIS reported that the percentage of H-1B applications that received RFEs in 2016 (October 2016-September 2017) was 21%, in 2017 (October 2017-September 2018) it was 38%. In the first quarter of the current fiscal year (October 2018-December 2018) it was 60%.

         Since these RFE declines were initially part of the 85,000 visa application pool, this will lead to more carryover applicants from last year who will be part of this year's applicant pool. However, that force is counteracted by foreign nationals starting to fear their future stability in this country, which will reduce the application volume.

Recession Readiness Planning

         Even though our economy is still going strong, many people believe that a recession is looming on the horizon. In discussions with hiring managers and human resources professionals, we have reports that some companies have started to scale back on their external hires in advance preparation for what they believe is an impending recession. Since a large portion of external hires are newly minted college graduates who will be seeking new H-1B visas, this may have an impact on the visa application volume this year.

Visa Abuse Crackdown

         UCSIS has continued to crack down on off-shoring firms that they feel are abusing the H-1B visa program. Since these types of employers (such as Wipro, Infosys, and Tata) are some of the largest sponsors of H-1B visas (3 of the top 10 companies), this is causing a drop in their visa applications. Infosys, the company with the most H-1B visa applications, saw their application volume decline by 19% last year, which represented a 4,800 application decrease. Wipro saw their application volume decline by 45% last year, which also represented a 4,800 application decrease. We believe that this decreasing application volume trend for the off-shoring firms will continue this year.

Major Employer Statistics

         There have been some interesting trends in H-1B visa applications at the big consulting firms. Deloitte has been consistent in their application volumes over the past few years, and is the 6th largest company by volume of applications, while rival consulting firm Accenture had a 29% decrease in H-1B visa applications last year. Another Big 4 consulting firm, Ernst & Young (EY) had a 33% increase in their H-1B visa application volume last year, and moved into the top 10 for the first time at number 8. It's very intriguing to see how these rival firms are differing in their talent strategies when it comes to hiring foreign nationals requiring new H-1B visa sponsorships. It will be interesting to see if these trends continue this year.

Potential Impacts in the Future:

Changes to the H-1B Visa Program

         There have been numerous business articles that discuss topics that the current government administration is looking to change in the H-1B visa program.

         1 – In the past several years there has been strong bi-partisan support to increase the H-1B visa quota above the current 85,000 mark. The Immigration Innovation (“I-Squared”) Act has been in discussion for several years, and it was once again introduced in 2018, sponsored by 2 Republican Senators (Hatch and Flake). The current I-Squared Act being proposed would increase the total H-1B visa application volume to 195,000. Increasing the visa quota would be very favorable for the analytics community, but given that this topic has been in limbo for years, coupled with the current administration's policies against immigration, this is still far from a done deal. Unfortunately no advancement has been made on this since it was introduced last year.

         2 – Another proposal is to eliminate the lottery system and give priority for H-1B visas to those individuals who received their college degrees in the U.S. This concept is targeting the off-shoring firms that bring individuals from overseas to work in the U.S. This change would significantly reduce the volume of H-1B visa applications, since the companies that apply for the largest numbers of H-1B visas each year are off-shoring firms. This would be a great thing for the analytics community, since the majority of analytics workers in the U.S. are foreign nationals who received their college degrees in the U.S. The off-shoring firms are primarily in the technology sector, not the analytics sector.

         3 – A similar proposal is to eliminate the lottery system and give priority for H-1B visas to those individuals with the highest salaries. This is a partial corollary to item number 2 regarding off-shoring firms, since it is believed that those firms pay below market wages. This proposal aims to ensure that companies are not using H-1B visas to pay sub-market wages to employees. This change would be beneficial to the analytics community, since quant folks tend to have very high salaries.

         4 - Another topic that has been discussed is increasing the salary requirements for H-1B visa holders to be over $100K. This is actually part of the current I-Squared Act that is being proposed. While the idea is to reduce the odds that a worker will be hired at a below market rate, this will ultimately create a huge problem, since the majority of H-1B visa applicants coming out of school (even PhD programs in the US) earn salaries that are less than $100K. This would also disproportionately favor companies and employees in high cost of living cities, such as New York and San Francisco, where salaries are higher, and hurt companies that are in more affordable cost of living cities (like Indianapolis).

         5 – Still another topic that was discussed was not allowing for continued H-1B visa extensions beyond the 6 year limit for people in the green card process who have their I-140 approved. This would be catastrophic for foreign nationals from India and China, as it can easily take a decade or longer for them to get their green card, given the massive backlog of green card applicants from these countries. Fortunately, no action has been taken on this idea yet, and it is unlikely to get enough support to be instituted. The proposed I-Squared Act also attempts to correct his problem, by removing the arbitrary per-country limits on green cards.

         6 - In 2015, The Obama administration introduced a rule that would allow the spouses and children of H-1B visa holders who are waiting for their green cards to accept employment using their H-4 dependent visas. In 2017, the Department of Homeland Security discussed overturning this rule, which would have a significant impact on the families of many H-1B visa holders, essentially forcing some families to become one-income households. While this change has not been adopted yet, this change would be bad, not only for the analytics community, but for the entire foreign national workforce. This policy reversal may deter some individuals from pursuing work in America, which would slightly reduce demand for H-1B visas. Fortunately, no action has been taken yet on overturning this rule, and the proposed I-Squared Bill contains provisions that would solidify the rule allowing the spouses of H-1B visa holders to legally work in the U.S.

         These proposals, some of which would have a positive impact and others a negative impact on foreign nationals, continue to be discussed by our government. The positive changes had been offering hope to the pool of analytics talent, but that hope lessens with each year as these proposals become stale and no executive or legislative action is actually taken. We encounter increasing numbers of candidates who are reluctant to place their personal and career hopes on H-1B visas, instead opting to return to their home countries. For this reason, we discount the impact of these potential policy changes.

Changes to Bank Regulations

         The current administration has been indicating for the past 2 years that they want to repeal or reduce several bank regulations, including Dodd-Frank. The government has started to push for changes in the Dodd-Frank Act that would eliminate or reduce some of these regulatory requirements for small and mid-sized banks in particular. While the banks would welcome this as it would make them more profitable, these regulations have been a huge source of job creation in the analytics industry. Every bank with assets greater than $10 billion has hired dozens of additional analytics people in areas such as model validation, model risk management, AML, stress testing, and capital planning. These tasks are high priority and banks have been paying premium rates to ensure their timely completion. This has drawn talent away from the traditional credit risk modeling talent pool, as well as from other sciences such as physics and engineering. Additionally, there are consulting firms which have hired hundreds of people to consult with the banks in these areas. If some of these regulatory functions are no longer mandated, we should expect a reversal of demand for strong quant folks, with a resulting drop in number of jobs, wages, and requests for H-1B visas.

Conclusion:

         So what should we expect come April 1, 2019? While major factors like the number of international students, total job growth in the economy, and carryover applicants from last year all remained high, all of these numbers decreased slightly from last year. These decreases are offset by increases in the international STEM student population and additional carryover applicants resulting from RFEs last year. Recession readiness planning, crackdown on off-shoring firms, and the current administration's negative attitude toward immigrants are also taken into consideration. Based on these factors, we are forecasting a relatively similar application volume, with a high likelihood of another slight decrease. We predict a total application volume in the range of 170,000 - 195,000.