New H-1B Visa Rules – Good or Bad for Jobs After MBA in USA?

Pursuing MBA in the United States is quite an expensive endeavor. It can cost between USD 150,000-200,000 for the entire course and this is a huge financial burden for any average international student.

Therefore, students who go to the United States for their MBA also plan to work there so that they can repay their loan and ensure a good life for their family and themselves.

However, in the recent years, students are deciding against pursuing MBA in the United States as there are negative sentiments regarding H1-B visa approvals. The reality is quite the opposite!

However bad the new H1-B Visa approval rate may turn out for IT outsourcing companies, it could mean the precise opposite for MBA aspirants, especially for those who are aiming for the top 20-30 business schools in the US.

Why New H1-B Rules Could Be a Good for MBA Aspirants

In 2016, The H1-B visa program was oversubscribed and the chances of securing a visa for an MBA student even with a job offer was just 40%. However the scenario has changed.

With the higher rejection rates of upto 50% for Indian IT companies, MBA students with job offers now have significantly higher chance of securing a H1-B visa.

The center for immigration studies, an independent, non-partisan, non-profit research organization on immigration has provided the data illustrated in the table given below:

Table 1: Visa approval rates of IT outsourcing companies and US companies

We can see that the approval rate of the H1-B visa has reduced since fiscal year 2015. This, however, is due to the reduction in the H-1B approval rates of IT companies who typically outsource their employees holding Bachelor’s degrees from India.

Since the approval rates have decreased significantly for these IT companies, more visa opportunities have opened up for international MBA graduates in the US. We can also see from the table that the H1-B approval rates of US companies has been increasing since 2014. These companies are the ones which predominantly hire MBA graduates and therefore, it supports the fact that visa opportunities for MBA graduates have significantly increased in recent times.

The new visa policy is in favor of people with advanced degrees. Companies like Microsoft, Amazon, and Apple which typically employs more MBA graduates have an H-1B approval rate of 98-99%. The following table shows the H1-B visa approval rates of the top 15 companies in the Fiscal Year 2018:

The department of homeland security also announced a change in rule regarding the 85,000 H1-B visas granted to for-profit companies each year which was to be implemented from 1^st April, 2019. This change bolstered the chances of those who have advanced degrees, i.e. Master’s degree or doctorate, from the United States.

Prior to this change, the H-1B lottery process was divided into two phases. In the first phase, 20,000 visas were granted to only those holding an advanced degree from a US institution and in the second phase, the remaining 65,000 visas were granted to all qualified candidates. However, with the implementation of the new visa rule, the order has been reversed. Now, in the first phase, the lottery will grant 65,000 visas to all eligible candidates and the second phase will grant the remaining 20,000 visas to candidates with advanced degrees only. The implication of this reversal will result in companies favoring international workers with advanced degrees. The figure below illustrates the comparison between the old and new H1-B visa lottery process:

To get a more clear insight about the implication of the change in the process, a simple calculation is explained below:

Let us assume a total of 200,000 application of the H1-B visa out of which 120,000 are IT outsourcing employees and 80,000 are US graduates with advanced degrees.

According to the old lottery process 20,000 graduates will get H-1B visas in the first phase from a dedicated lottery. In the second phase, 120,000 outsourcing employees and 60,000 graduates will compete for remaining 65,000 visas. Assuming that both groups receive visas in a similar proportion, IT companies will receive 43,334 H-1B visas and US graduates will receive 21,666 visas. So, the total visas received by the graduates are 41,666 and the total visas received by IT outsourcing employees are 43,334.

According to the new H-1B lottery process, the phases have been reversed and all 200,000 applicants will compete for 65,000 visas. Assuming both groups receive visas in a similar proportion, graduates will receive 26,000 H1-B visas and IT companies will receive 39,000 visas. In the second phase, the remaining 20,000 visas will go to graduates. So, the total visas received by the graduates becomes 46,000 and the total visas received by IT outsourcing employees becomes 39000.

As we can see, this increases the chance for US graduates with advanced degrees to get more than 4000 additional visas. According to the department of homeland security, an increase of 16% will be seen in the approval of H1-B visa for US graduates with advanced degree with the implementation of the new visa lottery process. Which means 5300 additional works with advanced degree will get their visas approved.

The director of United States Citizenship and Immigration Services,Francis Cissna, said, “Everyone wants to hire the most qualified candidate they can. But if I’m an employer and I have two candidates who are equally qualified for a position, and both require me to sponsor them for a visa, I’m probably going to want to file for the one with the master’s degree because now, mathematically, I have a better chance of getting them picked.”

According to Mercury News, in April 2019, USCIS drew lottery for 201,000 visa applications from various employers for the 85,000 H1-B visas. Candidates having Master’s or a higher degree from a US school received 63% of the 65,000 H-1B visas projected for this year. The same for the previous year was 56%. Which means an increase of 4,550 visas.

The hiring of MBA graduates by leading Consulting and technology companies such as Amazon, Microsoft, Deloitte, McKinsey, etc. from top business schools of the US have increased tremendously in the last couple of years. 

Consulting and technology companies end up hiring the majority of the graduates from top business schools. They are also the ones who provide the most opportunities to international students. In fact, 75% of the graduating class is hired by the industries which sponsor the most H1-B visas to MBAs. The following table shows the percentage of graduates hired by consulting, technology and financial services from top business schools of the United States.

As per the GMAC’s year end employment poll report of 2018, consulting, finance, healthcare, and technology companies plan to hire more international candidates in the coming years. It is also seen that there is an increasing trend towards hiring more international MBA students by these companies. The highest jump comes from the technology industry where 14% more companies plan to hire international MBAs in 2019 followed by financial services companies at 12%.

When it comes to the share of industries in sponsoring H1-B visas to MBA graduates, while the acceptance rate for Indian IT companies is low, the acceptance rate for most companies that hire MBA students is higher than 98%.

A table showing the percentage of international students graduating from top business schools of the US who found employment within 3 months of their graduation is given below:

More than 90% international MBA graduates have been successfully finding employment in the US and the new H-1B visa rules have significantly reinforced this trend. But the reason to pursue an MBA from a US business school doesn’t end here.

One of the key attraction of international MBA aspirants to study in the United States is the abundance of scholarships. According to a report published by GMAC, the percentage of students receiving scholarships increased from a 41% to 61% in a span of 4 years since 2014. A GMAT score of 740 or higher blended with a neat profile gives an excellent chance of securing a scholarship. The Harvard Business School offered a sum of USD 36 million in scholarships to MBA students in 2017 which is approximately USD 40,000 per year or USD 80,000 in total per candidate. The Darden School of Business offered a sum of USD 30 million in 2018 as a scholarship to MBA students to attend additional courses for free. Nearly half of the class studying in Stanford GSB receives some kind of scholarship. There are also schemes like the Stanford Reliance Dhirubhai Fellowship which aims at Indian students who want to pursue an MBA from Stanford GSB.

Taking into account, all the factors given above, barring the impact of Covid-19, 2020-21 may be one of the best years for international students to apply to a business school in the USA.

The H-1B visa lottery process now favors MBAs, Consulting and Technology companies have increased interest in hiring international MBA graduates and business schools are offering more scholarships than ever. It is therefore logical to look forward and start the preparations to study in one of the top business schools in the United States.