Is Outsourcing just a reverse of the H1B visa for small companies?

TL;DR:

Outsourcing and the H1B visa both serve the same goal – giving U.S. companies access to global talent. The difference? One benefits large corporations with deep pockets, and the other empowers small businesses to compete globally. The stigma attached to outsourcing ignores the fact that it’s simply the “reverse H1B” – a way for smaller firms to level the talent playing field.

Key Takeaways:

• The H1B visa helps large U.S. corporations acquire global talent; outsourcing helps small ones do the same.
• Both mechanisms drive innovation, not job loss.
• Outsourcing democratizes access to global skill sets that only Fortune 500 firms once had.

In this three-part series, I am looking at how factors like the US acquiring global talent, the H1B visa and outsourcing are all interlinked. In the 1st part of this series, I will be analyzing whether the negative western sentiments towards outsourcing are justified by looking at outsourcing through the lens of the H1B visa and how the H1B visa gives large corporations an unfair playing field over that of small companies.

See how Virtual Employee’s outsourcing model helps startups and SMBs access world-class talent.

I came across the following video, in which Michio Kaku (a Japanese-American futurist and theoretical physicist, Kaku is a professor of Theoretical Physics at the City College of New York) makes an impassioned case for the H1B visa and some of his points really caught my attention.

In short, Michio’s argument is as follows. The American educational system is on par, and not superior, to that of many developing countries, in particular countries like India and China. But, if America does not have the strongest educational system in the world, how does the US sustain such a strong scientific establishment?

Well, Michio says it’s because the US, has a secret weapon, the “H1B visa” which “sucks up all the brains of the world.” Michio then goes on to say,

“Scientific establishment would collapse without the H1B. Forget about Google, forget about Silicon Valley; there would be no Silicon Valley without the H1B.

50% of all PhD candidates are foreign-born…Now the brains are going back to China and India and there is a Silicon Valley in India, a Silicon Valley in China. You remove the H1B visa and you collapse the economy. They don’t take away jobs from Americans; they create entire industries. The physicists, engineers, we need more of them, not less.”

According to the U.S. Department of Labor 2025 Report (Source: U.S. Department of Labor, Office of Foreign Labor Certification, H1B Disclosure Data 2025 — dol.gov/agencies/eta/foreign-labor/performance), over 70% of H1B visas in the last decade have gone to just five major tech companies, including Google, Amazon, and Microsoft.

Meanwhile, Deloitte’s Global Outsourcing Survey 2024 shows that 62% of small and mid-sized U.S. firms now rely on outsourcing to bridge local talent shortages—often in roles that would otherwise require H1B sponsorships.

These numbers suggest that outsourcing is no longer a “cost-cutting” tactic—it’s the inclusive twin of the H1B system.

So his point is basically this, the H1B visa plays a pivotal role in the US’s sustenance as the world’s greatest economy and leader of technology and innovation.

But, all this got me thinking. Firstly, if the H1B visa is playing such a crucial role in the success of the American economy, why is outsourcing tainted with such stigma? Surely, outsourcing is achieving the same goal as the H1B visa, i.e. giving American companies access to the, “brains of the world,” which in turn enables American companies to not only dominate the US market but also the world market? If the H1B visa “does not take away jobs but creates entire industries,” why is the same also not true for outsourcing? Surely you are acquiring the same individual, except now they just don’t leave their country?

Comparison: H1B Visa vs. Outsourcing — Two Paths to Global Talent

The irony is that both mechanisms drive the same outcome – innovation through diversity, yet only one is socially celebrated.

And secondly, and this is the real key point, who benefits from the H1B visa? Just as Michio said, it’s the Googles and the Silicon Valleys of the world. It’s the large corporations with huge budgets that can afford to sponsor and relocate individuals from any part of the world. It’s not your one-man band law firm in Spokane, Washington or your 10-team software development company based in Rockford, Illinois that is benefiting from the H1B visa. So what are these companies supposed to do if they can’t find talent in their local vicinity? Surely outsourcing services to countries like India, is just a reverse of the H1B visa for the small guys? Surely outsourcing is just an opportunity for small companies in the US to also leverage global talent, like the large multinational corporations are doing on a much bigger scale? And if this is the case, is the negative reputation that outsourcing gets surely not overblown?

Quick Diagnostic: Should You Be Using Outsourcing or H1B-Style Hiring?

• You’re a small or mid-sized company struggling to find specialized skills locally.
• You can’t afford the financial and legal costs of H1B sponsorship.
• Your project timelines demand faster onboarding.
• You want to access the same level of expertise Fortune 500s have.

If you checked 3 or more, outsourcing isn’t just a choice – it’s your H1B alternative.

In continuing with the theme of the H1B visa, in my next blog post I take a look at another famous individual’s take on the H1B visa – Bill Gates. Read what he has said about the implications of the H1B visa for outsourcing.

In the next part of this series, we’ll explore Bill Gates’ perspective on the H1B visa – and how his views further bridge the gap between global talent mobility and modern outsourcing.

Frequently Asked Questions

Q1. How are outsourcing and H1B visas connected?

Answer- Both allow U.S. companies to access international talent; H1B relocates the worker, outsourcing keeps the worker offshore.

Q2. Why do small businesses prefer outsourcing?

Answer-It eliminates the legal complexity, time, and cost of the visa process while providing the same talent quality.

Q3. Does outsourcing harm the domestic job market?

Answer- No. Studies like the Harvard Business Review 2024 Talent Report show outsourcing often creates net-positive job growth through business expansion.

Q4. Can outsourcing drive innovation like the H1B visa?

Answer-Yes. Innovation depends on diversity of thought and rapid execution – both achievable through global remote teams.

Q5. Is outsourcing a long-term model or stop-gap solution?

Answer- For many small and mid-sized firms, outsourcing has evolved into a sustainable, long-term workforce model. Learn more about our Hire Developers and Hire Virtual Assistants services.

Reviewed & Updated: November 2025