INTRODUCTION FROM OUR CEO
CEO and President
Every day at Envoy, we experience how vital foreign talent is to the success of employers. In our previous Immigration Trends Reports, we have conveyed how the strength of this sentiment withstood challenges as dramatic as the Trump administration and as unexpected as COVID. This year, we specifically spotlight a persistent – but rapidly encroaching – challenge for employers: the bleak consequences of dwindling access to foreign talent in the U.S.
We surveyed over 300 HR professionals across the country and found that demand for foreign talent is at an all-time high in the wake of a severe labor shortage. Yet, the flow of accessible foreign talent to the U.S. remains obstructed by enduring regulatory barriers imposed by the federal government. In our report, we explore how employers are reacting to the constricting access to foreign talent along with other pressing challenges.
Recently, the rapidly increasing demand for foreign talent was highlighted in this year's H-1B lottery. There was a drastic 56% increase in registrations from employers. With the yearly allotment of H-1B visas capped, nearly 400,000 foreign nationals will be unable to secure a visa to work for the company in need of their talent. On top of this dilemma, our report illustrates the consequences of a declining flow of foreign students coming to the U.S. Historically, employers could rely on hiring from a large pool of educated foreign graduates and then retaining them through H-1B sponsorship. This key facet of talent sourcing for employers is now at risk of withering.
These trends are damaging not just for employers who rely on foreign talent, but for the entire country which benefits immensely from immigration. Facing an unparalleled labor crisis, the restricted ability of U.S. employers to hire and retain foreign talent significantly stifles opportunities for economic growth.1
Despite the decreasing access to foreign talent, employers have reason to be optimistic. In the past year, we saw the Biden administration take action to relieve some of the pressures placed on the U.S. immigration system. The government has also taken successful initial steps to digitize key facets of the immigration process, such as the H-1B electronic registration system, which in its third year, saved employers and foreign nationals time and money.
Nevertheless, the need for essential reforms to increase the efficiency and capacity of the U.S. immigration system remains. As spotlighted in our report, the lack of reform, combined with increased competition for foreign talent, is already causing the U.S. to lose valuable talent to countries with more favorable immigration policies.
We release this year's report with the hopes that it will allow HR managers, talent acquisition teams, CHROs and CEOs alike to benchmark and strengthen their immigration and mobility strategies. We look forward to hearing your own thoughts and experiences and stand by ready to help your organization succeed.
1. Employer demand for foreign talent remains high, but declining levels of immigration to the U.S., combined with restrictive visa caps and stalled government reforms, may diminish employer access to key sources of foreign talent in the U.S. and lead to more outsourcing of work abroad.
As seen in previous Immigration Trends Reports, employers continue to express a high demand to sponsor foreign talent for U.S. roles in this year's survey. Fifty percent of respondents said they expect their company's foreign national headcount to somewhat increase (37%) or significantly increase (13%) in the next year versus only 15% indicating they expect any decrease. (Figure 1)
The relative importance of sourcing foreign national employees in employers' overall talent acquisition strategy also remains high, with 55% of respondents indicating that sourcing foreign talent is very important (36%) or extremely important (19%) to meeting their goals for candidate recruitment. (Figure 5) To acquire this talent, employers continue to primarily target recent foreign national graduates and foreign national students attending U.S.-based universities and graduate schools. In the next year, employer reliance on recruiting foreign talent from universities will continue, as 40% of respondents expect to become more reliant on universities and exchange programs as sources of talent through F-1 and J-1 visas. (Figure 8)
While employer demand for foreign talent trends upwards, the supply coming to the U.S. is consistently trending downwards. An important stream of foreign talent to the U.S. comes from students on F-1 visas. However, there has been a gradual decrease of foreign students coming to the U.S. to attend universities. According to the U.S. State Department, about 644,000 foreign students were issued F-1 visas in 20152, but only about 358,000 visas were issued in 2021. Given that foreign graduates with F-1 status are eligible for up to one to three years of employment eligibility through OPT and STEM OPT programs, the decrease in foreign students coming to the U.S. means employers will encounter a smaller pool of foreign graduates to hire. This decrease, combined with a significant deceleration of overall immigration to the U.S., presents concerning shifts for employers already stifled by the restrictive cap on H-1B visas and the excessive backlog for employment-based green cards.
2. After nearly two years of variability due to pandemic-related border closures, green card sponsorship is stabilizing and remains a key strategy for employers to retain foreign talent.
Significant changes to the visa bulletin, combined with pandemic-related uncertainty, caused variability in employers sponsoring foreign national employees for green cards in the past two years. However, this year's survey indicates that employers are returning to implementing green card policies focused on retaining foreign national employees.
When given a selection of options and asked in what ways their company changed its green card policy over the past year, 22% of respondents said they are now starting the green card process sooner, and 16% said they are sponsoring more green cards. Fifteen percent of respondents said they started sponsoring green cards for the first time in the past year. As employers focus more on green card sponsorship as a strategy to retain foreign talent, it is becoming a larger part of their immigration program's budget, with 19% of respondents indicating that their company paid more for the green card process over the past year. (Figure 10)
While employers that are expanding their green card sponsorships are doing so in an effort to retain foreign talent, the employers that are scaling down their green card programs are reacting to outside factors aside from their need for foreign talent.
A small portion of respondents to our survey indicated that their company is sponsoring fewer green cards (13%) or no longer sponsoring green cards (4%). (Figure 10) When this group of respondents was asked why their company made these changes, the top three most important factors were "Border or consular closures due to COVID-19," "Overall business performance resulted in cutbacks" and "Government processes have become too difficult, time consuming or costly." (Figure 11)
3. Employers generally support the direction of employment-based immigration under the current administration. However, the lack of significant reform to the immigration system continues to stifle employers' ability to source sufficient candidates from a gradually diminishing supply of foreign talent in the U.S. and is leading them to seek overseas alternatives.
While 70% of respondents approve of the current administration's handling of employment-based immigration (Figure 14), dissatisfaction remains high with U.S. Citizenship and Immigration Services (USCIS) and other immigration-focused government agencies. When asked to evaluate the importance of a selection of possible improvements to the U.S. immigration system, 95% of respondents indicated that "Quicker processing from USCIS" was important, with 80% selecting very or extremely important. The second most important change for employers would be for USCIS to increase transparency during the process, with 94% of respondents characterizing it as important, including 75% selecting very or extremely. Further digitization of the immigration process is also significant for employers, with 94% of respondents saying it was important, including 75% selecting very or extremely important. (Figure 15) Such digitization would potentially address both of the previous concerns, among many others.
In the backdrop of these regulatory barriers, employers face the coming obstacles caused by a lack of government action to implement transformative reforms that would promote greater immigration to the U.S. This stalled environment will continue to cause diminishing levels of available talent in the U.S., according to the National Immigration Forum's "Room to Grow" report.3 Already, employer dissatisfaction with the continued lack of available talent – and difficulty securing authorization for foreign talent that is available – is causing a shift in hiring and retention strategies. Thirty-one percent of respondents in our survey said their company has outsourced work to third parties or explicitly moved work overseas due to the limitations of the current U.S. immigration system. (Figure 16)
4. Employers are taking a range of approaches to adapt their immigration programs to address the continued mass adoption of remote and hybrid work, while confronting significant challenges around compliance and communication that are exacerbated by a remote work environment.
The impact of remote work on immigration yielded a variety of responses from employers, with 26% of respondents indicating that the adoption of remote work has resulted in their company sponsoring fewer foreign national employees, 31% indicating they are sponsoring more foreign nationals despite the increased recruiting flexibility offered by remote work and 39% indicating that it has caused no impact. (Figure 22) Of the employers that said they sponsored more foreign nationals, 51% said that even by offering the flexibility of remote work and by expanding their search to the domestic talent at a national scale, their company still sponsored more foreign national employees.
Meanwhile, employers in our survey most frequently cited obstacles around compliance and communication as the biggest challenges that remote work exacerbated in their immigration programs. (Figure 25) Forty percent of respondents included "dealing with increased complexity of Labor Condition Application (LCA)/prevailing wage process for distributed employees" in their top three biggest challenges, while 37% included increased issues with "collaboration between attorneys, foreign nationals and HR team."
5. Despite the lingering effects of the pandemic, employers expect to increase outbound immigration and source more foreign talent to work in alternative hubs abroad like Canada, Mexico and the U.K. to bypass stifling regulatory barriers in the U.S.
In the past year, 82% of respondents said that their company resumed global travel and the associated outbound (non-U.S.) immigration work, exhibiting the declining influence of pandemic-era travel restrictions. (Figure 26) Outbound immigration assignments are also more likely to increase year-over-year, with 52% of respondents anticipating an increase, and 23% anticipating at least a return to pre-pandemic travel levels. (Figure 28) The most important factors driving the return of global travel and outbound immigration work were the need to place high-skilled talent unable to secure U.S. work authorization and to support expansion into new locations. (Figure 27)
Moreover, employers are looking outside of the U.S. to hire and retain foreign talent. Seventy-one percent of respondents indicated they have pursued at least one, if not multiple, strategies to retain employees for whom they have been unable to secure work authorizations in the U.S. by moving them to other countries. These strategies include establishing one or multiple entities outside the U.S., exploring the creation of a Global Employment Company and moving employees to other countries using an Employer of Record or a Professional Employer Organization or other contracting method to continue to indirectly work with them. (Figure 29)
As employers look outward, Canada remains an attractive destination for outbound immigration work, with 61% of employers viewing Canada's immigration policy as more favorable than that of the U.S. (Figure 30)
6. Enduring pain points like frequent government policy changes continued to place pressure on immigration programs, leading employers to place a high value on cost efficiency and data security through emerging technologies when assessing immigration providers.
When assessing a new immigration provider or evaluating their current partner, employers place a high value on efficiency and reliability to address their internal pain points and counter the limitations of the U.S. immigration system. Perennial factors, like cost and data security, remained primary reasons for employers to choose a new immigration provider or reassess their current partner. Employers also cited a focus on emerging technologies, customer experience provided to the HR teams and the experience level of the immigration attorneys and partners with nearly identical weight. (Figure 36 & Figure 37)
One sees the emphasis on technology and customer experience as potential ways to mitigate the top enduring pain points with the U.S. immigration application process that respondents cited in our survey: Trouble keeping track of frequent policy changes (including 296 executive actions related to immigration in 2021 according to the Migration Policy Institute4), inefficiency in the immigration process (i.e., spending too much time and budget) and uncertainty of the outcome of immigration petitions. (Figure 34)
Better technology and customer experience are also helpful in dealing with respondents' top pain points in managing their internal immigration programs: The lack of predictability around the government's frequent policy changes and the burden of costly government fees accounted for two of the top three primary pain points. (Figure 35)
To read the full report, please click here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.