Silicon Valley frets over foreign worker crackdown

Trump has warned H-1B visas are being used to bring cheap labour to the US

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Before he was elected to be the next US president, Donald Trump had garnered the support of just one prominent billionaire in Silicon Valley: Peter Thiel, founder of PayPal and Facebook board member.

The US technology industry had been shocked that one veteran from the Valley, which prides itself on liberal values, had supported, funded and even spoken for Mr Trump at his convention — and is now part of the president’s transition team.

This week, Silicon Valley could not disguise its disappointment with the election result — with some venture capitalists and start-up founders even discussing a campaign for an independent California — while chief executives resorted to pledges to work together to make the world a better place, with or without government.

“The flag in Silicon Valley is at half mast,” said Vivek Wadhwa, an entrepreneur and Stanford fellow. Questions flew on how a Trump administration could affect trade and tax, cyber security and net neutrality.

Aaron Levie, chief executive of cloud computing company Box, said seeing Mr Trump win had been “incredibly stressful” and “painful” for many in Silicon Valley who support greater equality.

But amid a feeling of bewildered detachment from the rest of the US, a serious business problem emerged — that Mr Trump’s plan for a wall to keep out illegal Mexican immigrants could end up hurting Silicon Valley’s growth prospects. The industry is worried he could stall their hiring programmes dependent on H-1B visas or make it harder for them to fund foreign start-up founders.

“Given the rate of growth we are seeing in so many different tech companies from Facebook to Uber to Google or a company like Box, there’s simply a shortage of really great talent,” Mr Levie said. “When you have incredible talent that wants to work in your organisation but you are preventing them from doing so, that is disastrous to innovation and competition.”

Amit Kumar, chief executive at Trimian, an app developer with employees in Silicon Valley and India, said a restriction of H-1B visas for skilled guest workers could push tech companies to invest more in overseas offices, like manufacturers who had moved abroad.

“If you can’t hire a certain person and bring them to lead more growth here, what might end up happening is you hire in China and India and Mexico,” he said. “It could be bad for Silicon Valley in terms of jobs.” 

In February, Mr Trump invited former IT workers from Walt Disney, who had claimed they were laid off and replaced by temporary immigrants from India, on stage at a rally, as he argued that the H-1B visa is being used as a cheap labour programme. Disney responded by saying it had hired more than 230 US IT workers since the reorganisation and was recruiting 100 more.

But the president-elect has also said he sees value in highly-skilled immigration and favours keeping talented foreign students in the US after they graduate so they can work in Silicon Valley, a measure supported by many tech companies. 

Brian Kropp, HR practice leader at CEB, who works with human resource officers at tech companies, is urging them to make “plan Bs” to cope with fewer foreign employees.

“It is totally unclear what is going to happen. At different points during the campaign Trump said everything from completely shutting down the H-1B programme to making changes to it,” he said.

The US tech industry has long lobbied for an easier way to recruit talent from abroad — but it could now get harder instead. “It does seem highly likely there will be a set of rules that will dramatically ratchet back immigration overall into the US,” Mr Kropp said.

Companies fear losing out to other nascent Silicon-branded tech hubs which can hire foreign software engineers more easily, start-ups worry talented expats will only be able to work at companies with large legal departments, and immigrants are concerned they may be forced back to their home countries.

Bobby Franklin, chief executive of the US National Venture Capital Association, said the industry had been working with policymakers on both sides of the aisle to ensure foreigners were able to start companies in the US. But he expressed concern that a Trump administration could couple the issue with illegal immigration. 

“This will be a steep challenge, given what Trump said on the campaign trail,” Mr Franklin said. 

Almost half of US start-ups worth more than $1bn have at least one founder or co-founder from another country, including SpaceX, Elon Musk’s rocket-launching start-up, Palantir, the data start-up backed by the CIA’s VC arm, and global ride-sharing app Uber, according to the National Foundation of American Policy think-tank. 

Mr Franklin called on Mr Trump to recognise that making migrating to the US easier would help solve some of the problems of battleground states. “You clearly have some folks that were frustrated that the economy isn’t working for them, they don’t feel Washington is working for them, and the entrepreneurial ecosystem is a great solution, helping create jobs.” 

Larger US tech companies have argued for an expansion of the H-1B visas, which with a limit of 85,000 rapidly run out each year, and for a green card to be stapled to every graduate degree from a US university.

Rob Atkinson, president of the Information Technology and Innovation Foundation, a think-tank, said US technology companies expected Hillary Clinton to expand high-skilled immigration. 

“A Trump administration will be a very different policy environment. I don’t believe graduates will have a green card stapled to their diplomas given who his base is and his rhetoric on immigration,” Mr Atkinson said. 

However, some are optimistic that Mr Trump will not follow through on his rhetoric and that his business sense will prevail. Mr Wadhwa said Silicon Valley has a “dire shortage” of skilled talent, beyond just ordinary software engineers, in emerging areas such as artificial intelligence, sensors and robotics. 

“My hope is that he doesn’t mean the things he says. He’s changing his position all the time, it’s a joke when he’s trying to get elected, but then he goes back to being a businessman,” Mr Wadhwa said. “Ultimately, he’s not going to do anything to hurt the Trump empire here, it would be committing business suicide.” 

If Mr Trump does restrict immigration in the industry, tech companies will find other ways to benefit from foreign expertise. Mr Atkinson said some might expand in countries that make it easier to hire immigrants such as Canada, where Justin Trudeau’s administration is creating an innovation policy that will encourage companies to hire high-skilled software engineers, wherever they are from. Mr Kropp suggested companies could launch more extensive training programmes, for example, taking a group of actuaries and training them to be data scientists.

Steve Perkins, managing director of Grant Thornton’s technology industry practice, said he expected tech companies to increase their lobbying activity further. “They should be advocating for their positions and actively working with the transition teams. I think the argument to make is one about US jobs and economic growth,” he said.

To make their case for highly-skilled immigration, technology companies may end up turning to the one immigrant to Silicon Valley they know has Mr Trump’s ear: German-born Mr Thiel.