Immigration change could affect FedEx, other Memphis companies

The new presidency of Donald Trump means uncertainty for the H-1B immigration program used by major Memphis institutions including AutoZone, St. Jude and FedEx to hire skilled foreign workers, many of them from India.

So far, Trump's administration hasn't issued any executive orders on the program. A draft of an executive order reviewed by The Associated Press included few specifics. It calls for reports on harm to U.S. workers and for policies  ensuring visas go to "the best and the brightest," the wire service reported.

And before Trump's inauguration, the publication Computerworld said Trump's statements signaled an intention to “put the H-1B visa in his crosshairs.”

Any change to the program could impact the Memphis labor market and influence the way major companies hire scientists, software developers and other specialized employees.

“FedEx, like all global companies, is monitoring this situation closely, and we are actively working to seek clarification as quickly as possible,” company spokeswoman Maury Donahue said in a statement Thursday.

The modern H-1B program was created in 1990 amid a backdrop of anticipated shortages in scientific and technical brainpower. Companies use the H-1B program in two distinct ways. In the first method, they use it to hire skilled foreign workers directly.

In the second, more controversial method, companies hire H-1B workers through contractors such as India-based Wipro.

Critics argue Wipro and other staffing companies game the H-1B system to bring in workers who aren’t especially skilled, but merely willing to work for lower wages than their U.S. counterparts. Among the program's most vocal opponents is Jeff Sessions,  the former Alabama senator just sworn in as U.S. Attorney General.

In a speech in Iowa last year, Sessions said the country might be better off without the H-1B program. "We shouldn't be bringing in people where we've got workers. There are a number of ways to fix it. I don't think the republic would collapse if it was totally eliminated."

H-1B employees of staffing companies often work from the U.S. and coordinate computer projects with colleagues at data centers in India, where wages are much lower. U.S. workers at companies such as Walt Disney World have filed lawsuits saying they were replaced with H-1B contract workers.

Representatives of Wipro and several other staffing companies either declined to comment on the criticism or couldn't be reached.

Though some argue the H-1B program hurts job opportunities for U.S. workers, it’s not clear this is happening in the Memphis area. At any given time, between 1,200 and 1,500 information technology jobs go unfilled in the Memphis market, Kevin Woods, executive director for Workforce Investment Network, said last year.

FedEx, the largest employer in the Memphis area, hires H-1B employees directly and also works with staffing agencies that supply them. FedEx spokesman Patrick Fitzgerald last year acknowledged business relationships with four staffing companies: Wipro, Syntel, HCL and Mphasis.

Firings of American workers in favor of contract workers have been reported at some companies, though not at FedEx, which said it wrapped up a voluntary buyout program for fulltime employees in 2014.

Staffing company Syntel Inc. describes FedEx as its third-largest client, after American Express and State Street Bank. In the first nine months of 2016, Syntel reported revenues from FedEx of $89.5 million.

Based in Troy, Michigan, Syntel operates computer centers in Indian cities including Pune, Mumbai, Gurgaon and Chennai.

Last year, Fitzgerald wouldn’t say how many people from Syntel and other staffing companies  work for FedEx in the United States or India.

He said the company had 400 contractors  at its World Technology Center in Collierville, along with more than 2,700 full-time FedEx staffers.

“In fewer than 20 years since we opened the FedEx World Technology Center in Collierville in 1998, FedEx has evolved and grown, invested millions into the local economy, and created thousands of new jobs,” Fitzgerald wrote.

FedEx is one of the top companies using the H-1B program in Tennessee, according to a database released by U.S. Citizenship and Immigration Services.

About 87 petitions for H-1B direct hire visas were approved for Tennessee FedEx workers between January 1, 2015 and April 2016. Most were for the World Headquarters Office on Hacks Cross Road in Memphis or for the World Technology Center in Collierville.

The database does not include hires through staffing companies like Wipro.

Among the other Memphis-area companies hiring H-1B workers directly is AutoZone Inc.

Twenty-six Tennessee petitions for H-1B visas were approved for the company between January 1, 2015 and April 2016.

AutoZone wouldn’t comment on the program’s future. “Don’t want to speculate at this point,” spokesman Ray Pohlman wrote in an email in December.

At St. Jude Children’s Research Hospital, 71 petitions for H-1B workers were approved during the time period studied.

“While we can’t predict the future of the program, we can say that we appreciate that it helps us hire people who might help the hospital achieve breakthrough discoveries that benefit children all over the world, and we hope it continues,” St. Jude spokeswoman Echelle Rutschman said.

Another major direct user of the H-1B program was UT-Battelle LLC, where about 200 petitions were approved during the time period studied. UT-Battelle is a private entity created to manage and operate the Oak Ridge National Laboratory in east Tennessee.

The lab was created during World War II to build the atom bomb but now focuses on basic science as well as energy and defense projects, said its director Thom Mason.

The lab has around 193 staffers on H-1B visas, or roughly 15 percent of the 1,250 or so scientists and engineers it employs, he said.

The lab recruits for highly-specialized fields such as “separations chemistry” and “uncertainty quantification methods for nonlocal mechanics.”

“As much as we seek to hire U.S. citizens, we can’t fill all of the vacancies that we have if we were to restrict ourselves to that pool,” said Mason. He came to the lab as an H-1B visa holder from Canada and later became a U.S. citizen.

By far the biggest Tennessee direct user of the H-1B program during the sample period was Cummins Inc., a maker of engines for trucks, buses and cars, as well as related products.

The company received approval for more than 800 H-1B workers, almost all of them in Nashville.

Spokesman Jon Mills said the program is important to Cummins, and the company opposes a cap on the number of H-1B visas available.

“The cap’s always been an issue for us because the more flexibility we have, the better off we are in terms of recruiting top talent across the globe,” he said.

Cummins also seeks flexibility in the law allowing the company to move immigrant employees from location to location. And the company wants changes making it easier for immigrant students trained in America to stay after graduation.

The company also supports educational initiatives to train U.S. workers in science, technology, engineering and math, he said.

The company discusses the H-1B program in its talks with elected officials, he said.

The U.S. Citizenship and Immigration Services approved about 2,900 petitions for H-1B visas between January 1, 2015 and April 2016 in Tennessee.

India was the country of origin for  roughly 61 percent of the total.

China was the second-largest country of origin, accounting for about 14 percent of the total. Other countries including Korea, Canada, the United Kingdom and Mexico had much smaller numbers.

Among the national critics of the H-1B program is Indian-born software worker Aman Kapoor. He entered the U.S. on an H-1B visa and has  became a citizen. He’s president of the Washington-based organization Immigration Voice, an advocacy group for skilled immigrants.

“The H-1B program is nothing but good intentions gone wrong,” he said, adding the H-1B program   hinders immigrants from changing employers. That makes it harder to negotiate good salaries, harming U.S. workers, too, he said.

“When immigrants coming in have fewer rights - even undocumented immigrants - employers will always hire those workers over American workers,” Kapoor said late last year.

He’d like to see immigrants receive rights to change employers more easily and get faster access to permanent residency. “And H-1B program should not be used to replace American workers.”

The president and Congress would have a hard time ending the H-1B program because it’s governed by GATT, an international treaty, said Greg Siskind, a Memphis immigration attorney.

“They can definitely do more enforcement to go after abusive employers,” he said. “You’re not going to hear a lot of people saying that’s a bad idea.”

He said big staffing companies file lots of applications and take up many of the available H-1B visas.

He also mentioned legislation introduced by Sen. Chuck Grassley R-Iowa, and Sen. Dick Durban, D-Illinois. Instead of having a random lottery for H-1B visas, as is done now, the applications would be ranked. Foreigners who earn advanced science, engineering, and related degrees from U.S. institutions would have top priority for winning H-1B visas - for instance, an Indian computer science graduate from the University of Memphis.

At the bottom of the heap would be the applications filed by big staffing companies.