Spotlight: Why Labor Restrictions Hurt the Industry

Mark Roberts

CEO, TechServe Alliance

Mark Roberts is Chief Executive Officer of TechServe Alliance, the national trade association for the IT & Engineering Staffing and Solutions industry. He is an authority on both business trends and legal issues impacting the industry. He writes and speaks frequently on topics including what successful firms are doing to drive growth and profitability.

We recently talked with Mark Roberts, CEO of TechServe Alliance about issues relating to the availability of skilled technical talent.  As the “voice of the industry” for the IT and engineering staffing and solutions industry, TechServe Alliance carefully monitors U.S. immigration policies and their potential effects on providers.  Here, he weighs in on concerns expressed by industry leaders about skill shortages and labor movement restrictions.     

In its recently released 2017 North American Staffing & Recruiting Trends Report, Bullhorn uncovered that the number one challenge facing the staffing industry is a talent shortage, far and away. Sixty-one percent of respondents include it in their top three challenges and 38 percent list it as their single biggest challenge.

Perceived Business Implications of Tightened Labor Supply

What’s more, 27 percent anticipate a negative impact if world leaders increase restrictions on the movement of labor. We asked Mark a few questions about what’s in store for the market for skilled technical talent if more restrictive policies are enacted.


Q. What are the most potentially damaging business implications associated with restricting labor sources, such as H-1B visa holders? 

A. Restricting access to talent would be very harmful to the industry.  For example, in IT & Engineering, it is beyond dispute there is a talent shortage.  The unemployment rate in the U.S. in IT is below 3%−and significantly lower in many high-demand skill sets.  If we eliminate access to foreign talent, there are simply not enough U.S. citizens and green card holders in those skill sets to meet client demand.

In many cases, H-1Bs only make up a part of the team.  If the work can’t be done here (domestically), many companies will find other ways to get their projects done, such as pushing that work offshore.  That is clearly harmful to both staffing firms and the U.S.-based talent that would have made up the majority of the team.

Additionally, as a country, the U.S. does not have a coherent national policy to address the shortage of available skilled technical talent.  The talent gap is well known, but we are consistently producing an insufficient number of college graduates with STEM-related degrees.

Most businesses also do not have a well-defined strategy for knowledge transfer or providing new hires with practical, hands-on skills; and no effective strategy, whether corporate or governmental, is in place to address these issues. The net result is that implementing a restrictive immigration policy may well result in an innovation gap that is driven by the lack of skilled talent.


Q. Do restrictive policies only impact technology firms? Why should smaller or generalist firms care about labor restrictions?

A. It is not only about technology.  Many other verticals such as healthcare, life sciences, and financial services to name but a few, rely on foreign talent.  Even if a firm doesn’t sponsor any H-1Bs, the overall talent supply would be adversely impacted.  Fewer H-1Bs mean fewer resources for all firms, regardless of business model.

Additionally, there are currently proposals targeting only staffing firms that would restrict or even outright prohibit them from accessing H-1B talent.  Those types of restrictions should be of concern to all firms in the industry, regardless of size or specialization.  If policies that discriminate against staffing firms in the area of immigration are allowed to go forward unchallenged today, what other areas may be next?  For example, we must carefully monitor tax reform efforts since earlier proposals would have restricted the ability of IT consultants to operate as independent contractors. Staffing is not only a legitimate business model and significant driver to productivity and the overall economy, but it also provides essential flexibility in the modern workforce.  With a consensus that 30-40% of the current workforce is contingent, we should not tolerate any restrictions that single us out as an industry.


Q. What are some of the reasons 21% of staffing leaders think they would benefit from more restrictive labor policies? 

A. Some staffing leaders no doubt believe that a shortage of talent will shift bargaining power and be beneficial to the industry in terms of higher pricing and greater margins.  In IT and many engineering skill sets, demand has long greatly outstripped supply.  While pay rates have gone up, we have not seen a significant increase in margins.

At the end of the day, if you don’t have the talent to meet client needs, there is no deal to be had at any price or margin level.

In the aggregate, we as an industry have far more to lose than to gain by restrictive immigration policies.

Why is all this relevant to the professional staffing industry? Because it highlights the need to constantly innovate, seek ways to differentiate your firm, and be prudently paranoid about potential threats, whether they be competitive or regulatory. With the availability of skilled talent laying at the center of all that we do, as a leader, it is crucial to explore the disruptive forces at play in our industry including threats (and opportunities) presented by the changing landscape.