Why? Because the salaries of US-based programmers would rise? Because companies would be more motivated to train locals instead of importing foreigners?
Exactly. Salaries in western Europe are about half of US salaries, if you go to the East, while still within EU, a programmer could be paid as little as $15-20k/year.
If you go even more to the East - Ukraine, Russia, China, India, etc. you can get very highly qualified people for even less, happy to work on a project for you.
Software is one of the easiest things to outsource/offshore, unlike manufacturing or services. So protectionism is only going to end up harming US in this regard.
Of course, that doesn't mean that the H1B "indentured servitude" system for importing cheap foreign workers shouldn't be fixed. But imposing minimal salary is not the way to do it, IMO.
I have been part of many outsourcing projects over the last 15 years, and I can count on one hand the number of those that have been acceptable.
Outsourcing requires a completely different style of management than of a local team of developers. I have had better luck outsourcing art and animation tasks. But even there cultural barriers pop up all the time.
Sure it is, most of the problems I've seen described fall squarely in to "we went cost cutting all the way and got shit results - who could have guessed". If you hire cheap devs even by local standards then you get cheap devs, add to that the lack of proper management like you said because it would cost to do it properly and you get crap. Tech giants all have teams all over the world and it works OK, but they pay top rates for local standards and have proper management chain top down.
You can save money by outsourcing, but if you try to minimize expenses at all costs it shows in quality.
> Tech giants all have teams all over the world and it works OK, but they pay top rates for local standards and have proper management chain top down.
Having teams all over the world is a very different cost and business model from outsourcing.
With overseas teams they tend to either be salary matched to market and the quality not so great or good wage even by US (but maybe not SV) standards but getting the very best people.
Outsourcing is much more of a mess because markup is ~3x.
>good wage even by US (but maybe not SV) standards but getting the very best people.
60k$/year easily gets you top talent in places like eastern Europe and Asia - that's like entry level for the US, when you equate for skills I would guess it's almost always a 2x difference even in low cost US places.
The biggest thing about US was that it offers highest wages and it's a center for tech globally so it's really easy to attract skilled immigrants and so top people often emigrate - if you crack down on that well you suddenly made outsourcing better both because cost and the top talent availability.
I am not saying it is easy, only that it is the easiest when compared to e.g. manufacturing or services. You can't exactly outsource a dentist or barber to India and outsourcing manufacturing is a hugely expensive and complicated task, with a ton of logistics involved.
Compared to that moving software development to another country is much simpler. It is difficult to get it right, but it is simpler to move things like specifications and code than containers of raw materials and goods.
> I am not saying it is easy, only that it is the easiest when compared to e.g. manufacturing or services
It is actually the other way around regarding manufacturing and software development.
Software development is high-growth, quickly changing, highly skilled, high levels of communication, transferable, low capital, and doesn't scale well.
Manufacturing for the most part is steady demand, slow rates of change, low-moderate skill, low communication, not very transferable, high capital and scales really well.
This leads to software dev being very difficult to outsource without being out-competed.
E.g. I am making around 35k Euro/annually, before taxes. That is with 15 years of experience, with a university degree & a PHD in comp. science. And that is not at all rare if you are not in finances or machine learning (or whatever is the fad du jour at the moment) where the salaries are very high. But even there 50-70k+ are not that common. And, of course, my living costs are likely quite a bit higher than yours (well, perhaps except for large cities like Moscow).
UK is similar unless you are working for the London City bankers - I have been interviewing few years ago for a position with a big company there and they have actually offered me even less than what I am making now after taking into account higher costs of living in the UK.
Actually the French taxes aren't that high, the killer are the extra expenses that the employer has to pay for each employee - social & health insurance, various solidarity contributions, etc. I am costing my employer about 2x as much as what I am actually taking home. From that I still have to pay taxes, which are about one and a half of my monthly salary in total (the French pay taxes themselves for the previous year, unlike most of Europe where the tax is deducted from salary already and you only get a return if you paid too much).
There are two cases why companies would hire foreigners:
1. Hiring foreign workforce despite big supply of local workforce at certain skill level. It should be mediocre skill level with mediocre salaries because otherwise there would not be big supply of local workforce. The only reason why employer would do this is to reduce expenses for paying salaries. Wages for local workforce will decrease as a result of increased overall supply of workforce (locals + foreigners).
2. Hiring foreign workforce because of very small supply of local workforce at certain skill level. It should be pretty high skill level because demand exceeds supply and employers are willing to go through complicated visa process. Often such companies (like Google) are very hungry for talent and constantly hiring. It means that they would hire both, local and foreigners, anyone who is capable to pass their challenging job interview. Those companies are happy to pay decent salary for those rare talents.
So this is background. Now, I will answer to your questions:
If you cut the cap on highly skilled migrants, then temporarily salaries for highly skilled locals would spike, but in the long term such companies could not grow. As a result of this, some companies would go bankrupt (high tech is risky business, if you can't grow, often it means you will be dead) and some companies would go overseas. So in this case, either locals have less job opportunities in their homeland or they fly abroad to countries who are realized that high quality human capital is everything in global economy of 21th century.
Why? Because the salaries of US-based programmers would rise? Because companies would be more motivated to train locals instead of importing foreigners?