The Trump Administration’s H1B Hike Is Pushing Mid-Level Roles Nearshore And Changing Global Outsourcing

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Welcome to another episode of the Nearshore Cafe Podcast.
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I'm your host, Brian Sampson, and I am a veteran of the Nearshore world, and today we are going to talk about a big topic in the world of current events.
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This is what the Trump administration is doing to the H1B.
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Before I get into the details, let me thank our sponsor.
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That's Plug Technologies, P-L-U-G-G.
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Great way to connect talent from all over Latin America with growing U.S.
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companies.
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Well, let's get into it.
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You're listening because you want to know what's going on with this H1B, the Trump administration, and we can talk about the impact to say India, China, and Latin America.
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If you haven't heard already, the Trump administration is in process.
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Some of this has been rolled out, some of this is in process, some of this might may or may not be blocked by the courts.
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So there's a lot of in-flight things that are happening.
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But the intent is to increase the sponsorship fee for a brand new H1B from roughly$3,000 to$100,000.
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I mean, this is a crazy increase, right?
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This isn't like a 10% increase,$3,000 to$3,300.
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This is$3,000 to$100,000.
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Now, why on earth is the Trump administration doing it?
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From my understanding, I think there's a couple key reasons.
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One of which is it's a little bit punitive.
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India has had a 25% tariff, you know, on uh goods that they export to the US.
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And recently the US has made a reciprocal tariff.
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So the U.S.
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is trying to counter what India is doing.
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But what they're also, you know, what is also in play is you have uh you know things like um like energy, right?
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So there's um it's hard for the US to do business in India, US companies to do business in India.
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Um you have uh India continuing to import Russian oil.
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So this is a way of the U.S.
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kind of doing like a backdoor sanction on India.
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Um India is siding more with China recently.
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So this is all like geopolitical driven uh countries are friends, countries are enemies, who's in charge, who benefits, things like that.
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So this is in my eyes, you know, India being penalized for siding with Russia, China, having high tariffs, being hard to do business with for US companies.
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Um on the other side, you know, India is also uh part of BRICS, right?
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Brazil, Russia, India, China, South Africa, and then more and more countries are joining this, looking at a potential alternative currency.
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And the US doesn't want this.
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The US has been the reserve currency for a long time, you know, really coming out of World War I when it replaced uh England as the hegemon to the world.
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All right, so that's that's the geopolitical piece of it.
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Um, but let's talk about uh who's affected.
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You've got some major, call them H1B shops, companies based out of India that are doing thousands and thousands of new H1B applications every year.
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And these are Indian companies, not American companies.
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Tata, Infosys, Cognizant, tens of thousands.
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And you know, the the cap uh years ago was about 65,000 new H1B visas every year were issued.
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Massive percentage were going to non-American companies.
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And then you also look at the types of roles that were filled by those engineers.
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Now, granted, uh some of these engineers are top talent, you know, they went to IIT, Indian Institute of Technology, similar to like an MIT or a Stanford.
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Um, and you know, all the power to them, that's the kind of talent that uh companies are looking for, is like the 10x engineers.
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Now, the vast majority of these technical roles were done by um mid-level engineers.
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Think about integration work, testing work, your run-of-the-mill, Java developer,.NET developer, uh QA, um, some SAP, you know, technical, you know, functional roles.
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There's a lot of um a lot of like just kind of mid-level cog in the wheel type of positions.
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So it's one thing for a wealthy company like OpenAI, Google, Meta, to pay a hundred K posting fee, that's basically what it is, to get access to these 10x engineers, data scientists, uh, researchers, RD, uh, AI engineers.
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These are game-changing engineers.
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And just look a few months ago, some of these pay packages were well into the millions, even tens of millions of dollars.
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So a hundred K posting fee for that kind of talent, drop in the bucket, especially when you're a rich company.
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But how about those average engineering roles that you know would have normally gone to uh a cognizant or Tata engineer, you know, uh sponsored, build out to a US company?
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That's really going away.
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Um, you're not gonna pay that kind of money for an average engineer.
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Well, where are you gonna look to alternatively?
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Uh unfortunately, the US, everybody I talked to, that ship is kind of sailed.
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There's not a lot of those uh kind of run-of-the-mill developers anymore.
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Um, maybe 20, 25 years ago there was, but those are going away.
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Now you are getting these like 10x, React, Angular, Python, AI data engineers, the game changing engineers that are working at these early stage, mid-stage, high hiring bar technical startups.
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But you know, middle market enterprise, they just need a lot of decent developers.
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And again, they're not worth a hundred K posting fee plus their salary, you know, plus the visa implications and their ability to travel.
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So they're turning to Latin America.
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We've already seen this big rise in Latin America eating the market share of global outsourcing.
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So India's kind of been flat for a long time, where Latin America's share of the pie keeps growing and growing.
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Even if IT outsourcing spend is flat, Latin America, that piece of the pie has got to come from somewhere.
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So Latin America is kind of eating the pie that India used to have.
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But in the case of a rising tide lifts all boats, more of that work is going to Latin America than it is India.
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In a baseball term, you know, you think of like Shohei Otani, you know, and his team had a posting fee.
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Or more recently, Roki Suzaki.
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Uh, the Dodgers had to pay a posting fee, and then they could have access and negotiate directly with that talent.
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Those middle-of-the-road engineers, you know, they're not Otani, they're not Roki Suzaki, they're not superstars.
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So near shore is already being validated, Latin America's validated, same time zone, easy travel visas, but again, you're near shore because you don't necessarily need that.
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You're already comfortable with distributed teams.
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Pay rates are kind of right there.
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Um, where again, if you were to load up all the visa fees, all of a sudden that's way more expensive than you know just the easy hourly, monthly fees you're working with with Latin America talent.
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So summing all this up, I think this is gonna be very detrimental to engineers, especially in India and China, where the relationship that the US has is it's going south.
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But just like politics, you know, there's winners and losers, the loser is gonna be India and China talent.
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The winner is gonna be Latin America talent.
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Um, we're gonna expect to see a bigger surplus of demand for a big surge of demand for U.S.
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interest in Latin America talent.
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Again, same time zone, less visa restrictions, easy travel, um, it's already been validated.
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Google, Meta, Oracle, MuleSoft, Salesforce, all big players already in Latin America.
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So the talent's there, and it's uh it's a friendly region for America right now.
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If you have any more questions about this trending hot topic, uh please drop a link in our comments.
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I'll be happy to answer.
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And uh you can always check out Plug Technologies for more information.
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P L U G G dot tech.
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That's our sponsor.
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Thanks for listening.