H-1B Staffing: Trust, but Verify

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As my good friend and staffing industry luminary Chuck Young recently posted on LinkedIn: “There is no greater fear for IT staffing companies than a contractor starting with a client only to find out that they are not the same person as the candidate that interviewed.” This is a big issue facing IT staffing firms, and it’s only gotten worse since Covid-19 increased remote work.

Fuse Cooperative’s partner Terrific specializes in detecting candidate fraud and conducting reference verifications. CEO Emmanuel Toutain believes that up to 30% of IT job applications are from entirely false identities, and 10% of candidates who reach reference checking are falsifying them.

What is at the root of this growing problem, and how do we solve it?

Earlier this year Fuse Cooperative acquired Gustav VMS, a sub-vendor marketplace and partnering platform which has 6,000 staffing firms sharing jobs and candidates with each other.

The partnering in Gustav is mostly between prime vendors, who get contract IT jobs from clients, with sub-vendors who have sponsored technical candidates on an H-1B work visa.

Some estimate that there are over 500,000 IT H-1Bs who are sponsored by a whopping 20,000 different staffing firms. Most of these firms are small and have only sponsored a handful of H-1B employees.

The US has hundreds of thousands of IT specialists who can only legally work in a contract role through an end client’s contingent workforce program. But their sponsoring staffing firm likely doesn’t have direct access to these jobs unless they partner with another prime vendor staffing firm who does. See the problem here?

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The H-1B staffing disconnect is driving fraud.

This partnering disconnect within contingent programs is a major driver of IT candidate misrepresentation. These H-1Bs come to the US for greater economic opportunity, but they can’t get permanent placements. They can only get hard-to-find contract jobs through other staffing firms who will then only compare their resumes against a client’s job.

Many H-1Bs change their resumes to fit the job requirements and, in some cases, even ask someone to take an interview or test for them. They’re frustrated and desperate — can you blame them?

I have talked with countless IT staffing leaders about the H-1B market. The prime vendors call it a “necessary evil” and warn that you need to closely vet every sub-vendor and every candidate, or else you’re bound to get burned. The sub-vendors are frustrated by being assumed guilty until proven innocent and are struggling with the thin margins and payment terms that prime vendors often require.

Everyone seems to agree that the H-1B market is broken, and there is a real danger that it could collapse, as more and more clients are no longer allowing sub-vendors.

The solution is to trust but verify.

The way to redeem the H-1B staffing market is to proactively repair the broken trust between prime and sub-vendors.

Many people have told me that it this chaotic H-1B market “is too far gone” for any partnering solution to work. But Fuse’s Cooperative Network members are succeeding because we are using a proven framework for trust and cooperation.

Fuse is guided by the work of Prosocial World, which applies Elinor Ostrom’s Nobel prize-winning “Core Design Principles,” which guide people in how to work together to achieve common goals. Implementing these eight principles and verifying all vendors as members of Fuse ensures effective cooperation.

Another principle that is key for navigating the H-1B space: “Trust, but verify.” It’s critical for prime vendors to verify the authenticity credentials of every sub-vendor and candidate. For example, Fuse has created a Verified H-1B Program for our members, which verifies the business registration, W-9 and COI of vendors. Then each H-1B candidate has their identity and work history verified by Terrific and the H-1B visa verified via a digital ID and selfie scan.

Trust between staffing agencies is generally low, and in the H-1B space trust couldn’t be lower. But it’s not too late to change that. Ostrom proved that anyone can trust each other and thrive together, provided they follow some basic principles of cooperation.

All we need to do is agree on how we’ll work together, and then trust, but verify.