IT consulting started becoming popular in 1970 but was staffed mostly by Locals. Foreign IT consultants came to USA for shorter periods on business visitor visas. George H. W. Bush authorized the H-1B visa through the Immigration Act of 1990 on November 29, 1990 and opened the doors for foreign H-1B professionals.
1995 to 2001
From 2001 -2008
In 2001 the H-1B cap was increased from 115,000 to 195,000. In 2005 the H-1B cap was decreased from 195,000 to 65,000 for regular quota and 20,000 for master’s Quota. STEM OPT was introduced in 2008. This lead to OPT students getting a significant share of H-1B visas.
This was the revival period of IT consulting. International opt students were joining IT consultancies at a higher rate and consultants from India were coming to USA in large numbers. The H-1B petition fee also increased to $2325. The recession hit USA in 2008 in a sudden move. Many consulting owners again closed or sold their IT consultancies between 2008-2011.
2008 - 2016
Indian implementation partners also started grabbing a larger market share of end clients by 2012. The end client-implementation partner-prime vendor- consultancy started becoming popular. The Public Law 114-113 increased the fee by $4000 to the existing $ 2325.
2017 - present
The premium fee was increased to $1225, the base fee was increased to $460. Attorneys also started increasing their H-1B fees to $2000 due to volume of information requested in the RFE. So, the petition cost ballooned to $9685 per employee (Base filing fee $460, AICWA Fee $1500, Fraud Fee – $500 Public Law – 114-113 – $4000, Premium processing fee – $1,225, Attorney Fees – $2000) for employers with 50 employers or more.
The Level 2 wages are in the range of $85,000 to $125,000 per year depending on the geographic region. Payroll taxes are additional 10 -12% depending on the state. Benefits like health insurance are another $6000 to $12,000. This is putting a lot of pressure on the employers to terminate H-1B employees with low billing rates like QA, BA, Data Warehousing and many tools.
Shrinking profit margins
Many IT company owners have ventured into vendor ships for their company but that did not prove lucrative because end clients are limiting their vendors every year depending on the performance and removing non-performing vendors from the list. Even if an IT consultancy company is an approved vendor for an end client there is no guarantee of a consultant getting an interview after submission of a resume due to vendor management systems (VMS) and lack of human interaction between vendors and managers.
Many IT consultancy owners are in their late forties or mid-fifties and should focus on capital preservation. They should start focusing on IRA retirement plans through which they can start getting fixed payments when they are 59 ½ years old and invest in commercial or residential real estate. Social security payments can be paid when a person is at least 62 years old.
Most business lines of credit and business credit card are secured by the consultancy owners personal guarantee and the owners are liable to pay with their personal funds or personal properties in the event of bankruptcy or default on business line of credit or business credit card. Some entrepreneurs would like to spend their lifetime fighting for their businesses. Some would like to retire or start planning for an exit plan. If you are an IT consultancy owner and would like to retire or seek a working / managing partner or an investor, please send an email to email@example.com