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If You Want Less Outsourcing, Then Increase Immigration

20 Jun

by Stuart Anderson

The more Congress and executive branch agencies restrict immigration, particularly the use of H-1B and L-1 temporary visas, the more likely companies are to increase their investments outside the United States, both in their own offices and affiliates, and through contracting out to other companies. That is common sense and it reflects reality: We live in a global economy.

Nearly every major company in America, and many mid-sized companies, already has increased its presence outside the United States in response to immigration restrictions and other U.S. government policies, as well as to be closer to customers. Further increasing these investments may be a second best option for companies but it seems unwise to predict such investments will not happen.

Economists understand the dynamic between outsourcing and immigration. “If you’re worried about outsourcing, you should probably have a more liberal rather than a less liberal attitude toward immigration,” writes George Mason University economist Tyler Cowen in his book Average Is Over. “If the United States takes in more immigrants, the areas in which those immigrants work are less likely to see jobs outsourced abroad. Immigration makes it possible to keep those jobs at home. In fact, the bigger a threat outsourcing becomes, the more important immigration is for keeping us competitive and for keeping other complementary jobs in place.”

In public forums, I’ve heard human resources specialists of major tech companies say that when they recruit off college campuses, they find U.S. students, of course, but also many international students. This is understandable. At U.S. universities, 77% of the full-time graduate students in electrical engineering and 71% in computer science are international students. If an international student works for a year or so in Optional Practical Training (OPT) and a company is unable to gain an H-1B visa for that individual — the annual supply has run out for 15 consecutive years — the company usually sends the student out of the country to work at one of the company’s overseas offices.