H-1B Visa Cap Big Hurdle For International MBAs to Land US Jobs

A controversial lottery-based work-visa regime is proving to be a major obstacle for International MBAs to get jobs in the US forcing them to leave as soon as their student visas expire.

It also discourages American firms from hiring them, given the hassles associated with securing the H-1B Visa that allows non-US nationals to work in the country.

Critics of the visa regime point out that it puts international MBAs in the same category as foreign mid-level IT workers accused of taking jobs from Americans.

Forbes reports on the case of Sudhanshu Shekhar at Northwestern University’s Kellogg School of Management. On the dean’s list, He was elected partner in the school’s consulting club, selected as vice president of the operations management club, and held membership in four other student groups.

He won a Best Buy marketing strategy challenge and presented his recommendations to the firm’s C-suite. He managed to turn a summer internship with Booz & Company into a post-graduation job with Pricewaterhouse Coopers after PwC acquired Booz and turned it into Strategy&.

The 28-year-old had aimed at securing an MBA from a top school, secure a high-level consulting job and make an impact on global business practices.

As many as 47% of the companies said they would not employ international graduates on the grounds that the costs are high, time consuming paperwork and documentation, limited number of visas and language barriers

However, failing to win the H-1B visa lottery that had 233,000 applications this year out of which only 85,000 got the ‘speciality occupation’ visas for foreign nationals with bachelor’s degrees or higher, he is left with no option but to wait for his Dutch visa. He would then join Strategy& at Amsterdam.

He says applicants should be aware of visa related problems as US business schools do not highlight such issues at admission time.

While the exact number of MBA international students who end up unable to work in the US due to visa related issues is unavailable, the careers office of a prominent business school, admitted that it is “a considerable percentage.”

Applicants should be aware of visa related problems as US business schools do not highlight such issues at admission time

A recent GMAC (Graduate Management Admission Council) report of MBA employers shows the visa problem is made worse by the limited availability of jobs for foreigners.  Among the employers, only 28% propose to get international candidates, according to a study. Another 25% , while having no objections to foreign hires had no specific plans to make an offer to anyone from outside the US.

As many as 47% of the companies said they would not employ international graduates on the grounds that the costs are high, time consuming paperwork and documentation, limited number of visas and language barriers. Security clearances and cultural differences were also reasons cited by companies for their refusal to hire international MBAs.

European business schools fare badly too. The GMAC study found that fewer firms that hire MBAs—just 23%—plan to offer a job to an international graduate.

The H-1B, the work visa used by the majority of international MBA graduates from US schools, provides work authorization for up to three years, and can be renewed for another three.

Employers apply on behalf of employees, and applications have risen sharply over the past three years, but the number of available visas has remained the same.

European business schools fare badly too. The GMAC study found that fewer firms that hire MBAs—just 23%—plan to offer a job to an international graduate

With US business schools enrolling larger number of students from outside to “increase diversity and bring more of a global mindset into the classroom” the problem is only getting bigger.

GMAC research shows that 87% of all foreign students studying in American graduate management programs intended to seek work in the US.

Meanwhile, Canada is inviting failed H-1B visa applicants to move in there. However, for Stanford MBA entrepreneurs Pierre-Jean Cobut from Belgium and Elad Ferber from Israel, who had launched a medical device company while at the Graduate School of Business it would mean considerable dislocation.

They had raised $1.6 million in seed funding, developed fully functioning prototypes, and were eyeing several attractive markets. But they may have to move to Canada. Cobut received an H-1B visa in this year’s lottery but Ferber did not.

The only choice left for Ferber is to apply for two other visas, the 0-1 and EB-1, which are issued to people with proven “extraordinary” potential – not necessarily a verifiable quality for a new entrepreneur, no matter how bright and talented.

Canada has put in place a ‘startup visa’ and aggressively promoted it to failed U.S. H-1B applicants – most dramatically by putting up a billboard ad along the freeway between the San Francisco airport and Silicon Valley in 2013. “H-1B Problems?,“PIVOT to CANADA.”, the billboard read. 

It may seem a no-brainer that talented foreign MBAs should be welcomed into the U.S. economy. “Denying companies access to the skilled workers they need is like asking them to work with one hand tied behind their backs,” Robert Atkinson, president of the Information Technology and Innovation Foundation, argued last month in a Gannett op-ed calling for a higher cap on H-1B visas.

Microsoft executive VP Brad Smith in 2013 told a Senate committee that the limited number of visas had a deterrent effect on foreign talent. “Some potential hires are unwilling to jump over all of the hurdles presented by the H-1B cap and will simply walk away from the offer of employment in the U.S., opting to instead pursue alternative options in their home countries,” Smith testified.

But critics of the H-1B argue that it has led companies to lay off U.S. science, technology, engineering, and mathematics (STEM) workers and replace them with lower-cost immigrants.

In the latest round of H-1B visas, awarded by lottery, U.S. immigration services received 233,000 applications from companies for the Congressionally mandated 85,000 visas. Last year, 172,500 applications were submitted, up significantly from 124,000 a year earlier.

H-1B applications for MBA students at first go through a sub-lottery in which 20,000 visas are given to master’s students and master’s graduates. If an MBA doesn’t get a visa in that initial round, their application goes into the main lottery that awards 65,000 visas.

GMAC research shows which industries are most and least likely to hire international MBAs, and also reveals that on this issue, size matters. GMAC’s 2015 Corporate Recruiters Survey found that 36% of consulting companies said they planned to hire international business grads, and 38% of finance/accounting firms planned such hires.

Less likely to hire internationals were technology companies, with 43% saying they wouldn’t hire any foreign citizens requiring visas, and products/services firms, of which 58% said they wouldn’t hire workers needing visas.

Larger companies also expressed more willingness to hire international workers, with 34% of companies with 5,000 to 24,999 and 35% of companies with 25,000 or more employees saying they planned those hires.

Most unlikely to hire internationals were companies with 100 to 999 workers: 54% said they would not, and only 19% said they would.

“The availability of legal staff, defined company policies and financial resources, as well as a global demand for talent may explain the willingness of larger companies to hire candidates requiring legal documentation,” GMAC reports.

The H-1B problem can affect foreign MBA candidates’ internships as well as their future job prospects, says Elizabeth Chominski, associate director of MBA advising at the University of Illinois College of Business. Firms often use internships as a step toward hiring, and they may not want to hire a foreign intern because a later full-time hire would be complicated by the H-1B process, and made risky by the uncertainty that comes from the lottery system for allocating visas, he says. (Image courtesy AIH)