Projected Impact of COVID-19 on H-1B Visa Applications

     Crosly & Associates, the leading executive search firm in the analytics and data science industry, has conducted its 7th annual analysis to forecast this year's H-1B visa application volume.

         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 the year 2017 there was a decrease in the application volume for the first time since 2010, at the peak of the recession. The application volume in 2018 and 2019 remained relatively constant, with the level holding between 190K and 202K applications. In each of the last seven years, the volume of applications was greater than the number of available visas, leading to a lottery.

         With last year’s application volume of 201,011, 58% 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?

Impact From COVID-19:

         The COVID-19 coronavirus pandemic has ripped through the world, shutting down countries and economies, resulting in an imminent recession in the near future. Jobs are already being lost, with initial jobless claims spiking 1068% last week to 3.3M people, heavily resulting from the shelter-in-place orders forcing non-essential businesses to close their doors. While we've already seen a large impact to the job market, nobody knows exactly how many more millions of jobs will be lost or how long this lock-down period will last. The loss of millions of jobs would certainly cause a drop in the number of H-1B visa applications. During the great recession, the H-1B visa application volume bottomed out at 19,100, as very few companies were hiring new employees. This recessionary period is very different, as it is dis-proportionally impacting companies in the entertainment, travel, tourism, energy and restaurant industries. Industries such as technology, e-commerce, banking, and consulting, which are the largest sponsors of H-1B visas, have thus far weathered the storm fairly well. Additionally, because this pandemic is happening so close to the application deadline, it remains to be seen if companies will continue with all of the applications that were on the radar the prior month when the world looked like a different place.

Other Influential Factors:

Demand From Employers:

         The economy is the largest factor contributing to the demand for H-1B visas. Up until this month, job growth had been steady and was higher than the job growth levels seen the last 3 years. Furthermore, job growth in STEM [science, technology, engineering and math] fields, where companies rely heavily on H-1Bs visas for employment, remained positive.

Supply From Foreign Students:

         During the 2018-2019 academic year, the number of international students enrolled in higher education programs in the United States decreased for the second consecutive year, after over 2 decades of increasing. The numbers of seniors and graduate students, the most likely pool of new H-1B visa applicants, decreased by 0.5% from the previous year.

         Despite the decrease in the total international student population, the number of international students enrolled in STEM degree programs increased by 3.7%. 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 59.1%, up from 55.8% 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.

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 116,000 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. The number of F1 students during the 2018-2019 academic year who were on their OPT was 223,000, which was a 9.6% increase over the prior year and the highest ever recorded.

Pre-Registration

         In December 2019, UCSIS announced that it was implementing an electronic registration process for the H-1B lottery starting this year. Employers seeking to file H-1B cap-subject petitions, including those eligible for the advanced degree exemption, would first be required to electronically register and pay the associated $10 registration fee. Under this new process, employers seeking H-1B workers subject to the cap would complete a registration process that requires only basic information about their company and each requested worker. USCIS opened this registration period starting on March 1 and it was open through March 20. The H-1B lottery process would then be run on those electronic registrations. Only those with selected registrations would then be eligible to file H-1B cap-subject petitions. This new rule makes it easier for companies to register more foreign national employees for purposes of participating in the cap, and should result in an increase in applications this year. However, because the filing deadline is essentially moved up by 12 days from April 1 to March 20, any employees hired in late March would miss the cutoff for this year, while they would have made the deadline in prior years. This timing change should slightly lower the application volume.

Visa Abuse Crackdown on Off-shoring Firms

         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 Cognizant, Wipro, Infosys, and Tata) are some of the largest sponsors of H-1B visas (4 of the top 10 companies), this is causing a drop in their visa applications. Infosys, the company that had the most H-1B visa applications every year in the past, saw their application volume decline by 44% last year, dropping them to number 4 on this list. Wipro and Tata had slight increases in their visa application volume. Cognizant, which was not previously  in the top 10 employers for visa applications, took over the number 2 spot with 13K applications, surging up 383% year-over-year. It's fascinating to see how these different firms are approaching their talent acquisition when it comes to hiring employees that require new H-1B visas.

Major Employer Trends

         There have been some interesting trends in H-1B visa applications at the big consulting firms. Deloitte had been consistent in their application volumes over the past few years, averaging around 7,500 visa applications per year. But last year they surged to being the top employer with visa applications at over 16,000. Compare this to other big consulting firms like Accenture and EY, whose visa application volumes remained more constant year-over-year in the 6,000 - 7,000 application range. As with the off-shoring firms, these rival consulting firms are differing in their talent strategies when it comes to hiring foreign nationals requiring new H-1B visa sponsorships. It remains to be seen if these trends will continue this year.

Potential Impacts in the Future:

Changes to the H-1B Visa Program

         Over the past few years, there have been numerous discussions in Washington about potential changes to the H-1B visa program. These changes have included:

1) The Immigration Innovation (“I-Squared”) Act that would look to increase the visa cap above 85,000.

2) Eliminating the lottery system and giving priority for H-1B visas to those individuals who received their college degrees in the U.S.

3) Eliminate the lottery system and giving priority for H-1B visas to those individuals with the highest salaries.

4) Increasing the salary requirements for H-1B visa holders to be over $100K.

5) 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.

6) Overturning the rule that allows 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.

         All of these proposals, some of which would have a positive impact and others a negative impact on foreign nationals, have been on the discussion table by our government for years. As we are in an election year, and facing a pandemic unlike anything seen in our lifetimes, we don't expect the government to make any significant changes to the H-1B visa system this year.

Conclusion:

         So what should we expect come April 1, 2020?  Major factors like the number of international students in STEM degrees, total job growth in the economy, number of international students currently on OPT, and carryover applicants from last year all remained high and increased from the last year, which would point to an increase in H-1B visa applications. The new pre-registration process should also yield an increase in applications. However, the dominating factor, which is still very much a wild card, is the impact of COVID-19. With the timing of this pandemic coming right before the visa application period, and the surge in jobless claims overlapping with the pre-registration filing period, it's difficult to gauge the impact. We know a recession is coming and jobs will be lost. But the timing and severity are still unknown. However, we feel that the impact of the pandemic will more than offset any of the increases that we would have otherwise expected to see. Based on these factors, we are forecasting a decrease in application volume. Without COVID-19, we would have expected to see the total application volume to be between 210,000 - 230,000. But now we predict a total application volume in the range of 160,000 - 190,000.