Wow. That's a mean acronym (whoever came up with it).
FWIW - these companies add tremendous value to enterprises in the US and yes, they do that by paying lower wages to folks flying in from India (compared to American counterparts), but it's still a upgrade for these engineers (plus a chance to experience America).
I understand the whole "but they are circumventing the spirit of the Visa" angle, but they are operating in an environment where FAANGs spend a lot of money lobbying for favorable regulations.
I don't see a big ethical difference between 'I will pay millions to lobby and get laws written in my favor' and 'I will exploit loopholes in the system to better my business'
> FWIW - these companies add tremendous value to enterprises in the US
The 1619 project made waves domestically for questioning and highlighting the speciousness of such arguments. It is because these companies are able to pay labor below market rate (by restricting mobility and creating indentured servitude conditions) that they are able to add "tremendous value" to enterprises in the first place. But of course, I question even that.
To those who have ever been in the unfortunate position of the counterparty in either inheriting a codebase or making the argument against them internally, the code produced by these kinds of body shops is frequently ROI negative -- they're the "high interest credit card" of engineering orgs. That is baked into the profit structure internally of these consulting companies. Your loss is their gain. They will promise whatever they need to secure the contract upfront, and fail to deliver results. They are incentivized to do so, because they are incentivized to think short term rather than long term as owners.
You pay less upfront, but the hidden risks and maintenance burdens continue to stack over time. And so from a discounted cash flow analysis, there is a strong argument to be made that they contribute negative enterprise value and serve only to extract cashflow through a sleight of hand. Of course, on a quarter to quarter basis, they provide an easy way for an enterprising management consultant (or corporate financier) to cut costs and increase apparent profit to expenses. But if it was so easy to achieve technical outcomes this way, why wouldn't everyone do it?
> they are operating in an environment where FAANGs spend a lot of money lobbying for favorable regulations
There are certainly myriad issues with how FAANGs operate. One only needs to look at their previous settlements with the DoJ for wage collusion to see they are no angels; far from it, they often behave in an anticompetitive manner reminiscent of Gilded Age robber barons. With that said, they are still able to create some kind of a long term incentive alignment by generally setting the market price for top talent quite high -- we need look no further than levels.fyi to see evidence of that. And the proof is in the pudding -- FAANGs have continued to capture a larger and larger percentage of the SP500, managing to create growth in market cap at scales that are scarcely possible in other sectors. Their P/E ratios reflect this, and it derives from their ability to turn technology into leverage over the market and a sustainable competitive advantage with network effects. That is a far cry from consulting body shops where technology is viewed as a cost center to be minimized rather than profit center to be fully exploited.
Wait, are you in good faith comparing H1B workers to slavery? I am not an expert on American history, but if you did, that escalated quickly :). The only rebuttal I have is, that no employee on Infosys is forced on a Lufthansa economy class seat to Newark airport. They do it by choice.
The whole "their code is horrible" is shifting of a goalpost. If that's true (and it might well be), then stop hiring them. If businesses see the point you are making, they'll stop hiring them.
On FAANGs adding value - I 100% agree. FAANGs add way more value than any Indian consulting company and that's reflected in the market cap of these companies. But surely,one can appreciate that FAANGs add value and that they lobby to have laws created in their favor. My limited point is that I don't think these American companies (which benefit from the new H1B rule) have any higher moral ground to claim with respect to their stance on immigration laws.
Also, A higher wage is an odd way to restrict hiring. A FAANG company can pay much higher wages for low-end coding job than Indian consulting companies ever can. So, if a FAANG hires the same Indian kid, at 120K/yr and have him/her do the same shitty job that the consulting company does, there's nothing here that stops it (please correct me if I am mistaken)
> Wait, are you in good faith comparing H1B workers to slavery?
Yes. Now I will pre-emptively call out that there is a wide step function gap between slavery and indentured servitude, and indentured servitude and H1B workers. H1B workers can always leave and return back to their country of origin. In this sense they are neither slaves nor bonded serfs. You are well within your rights to question the comparison.
But the question is if we have a binary classification, should it be between slave and non-slave, or should be between free and not free? The historical context of this country post abolitionism implies through the civil rights movement that it should be the latter. And that is why I made the comparison, clumsily hyperbolic or not. When some residents are not free, there is a chilling effect for citizens nationwide. Wages are depressed for all workers. The space is made for a culture of "I'd rather hire an H1B than not because they'll be more loyal because they have no choice." This culture corrodes national freedom.
> So, if a FAANG hires the same Indian kid, at 120K/yr and have him/her do the same shitty job that the consulting company does, there's nothing here that stops it (please correct me if I am mistaken)
The difference is the incentive structure. The consulting company is based on essentially ripping off the customer by selling a high interest loan to them. It runs on services with razor thin margins which are predominantly returned to the owners rather than reinvested in the firm. Fundamentally, the firm owns no proprietary IP, and is not structured to accrete nor reward the long-term strategic thinking that FAANGs do.
The FAANG may pay that same kid 120k a year but that share grant could easily result in 300k a year with appreciation over the long-term. Because they are giving the employee long term incentivization, they are going to want to see long term results or else that employee will get PIPped. Beyond that, if that employee can hack it at 1 FAANG and is underpaid, they'll just go to another one which pays them market. But the gulf between WITCH body shops and FAANG is wide because the employee gains the skills which give them mobility at the latter and not the former.
All of which is a long way to say that body shops dilute the labor pool by exploiting an externality and creating a market for lemons by flooding it with low quality product. I think they create a situation where no one wins but the proprietors of the body shop, at the expense of the rest of society.
You make many of leaps of faiths to get to your conclusion. Let's for a second assume that's all accurate, are you in favour of government solving this problem by an executive decision?
Note that the same State refuses to regulate FAANGs which have stood by as their platforms were exploited to influence elections.
The double standards are staggering
> You make many of leaps of faiths to get to your conclusion.
Not really. It's just the history of the equal rights amendment.
> Let's for a second assume that's all accurate, are you in favour of government solving this problem by an executive decision? Note that the same State refuses to regulate FAANGs which have stood by as their platforms were exploited to influence elections. The double standards are staggering
I am neither in favor of it nor against it. I think it is a PR tactic that will not hold up to the scrutiny of the court. True, lasting change will obviously have to originate from the legislature -- I'd love to see something comprehensive come from there. But these PR "tactics", while not truly standalone policies, nonetheless spark, influence and shape public discourse. In this case, I think that vigorous discourse (and sunlight on the corruption of H1B abuse) is a good thing for everyone.
So, even when thousands of employees of these companies could not travel to the US, their profits soared. Anecdotally, it appears (need more data) that if these companies cannot send someone on an H1B, the job does not always go to an American national, it probably goes back offshore to Bangalore (good for us, we get those tax Rupees).