Area software and biotechnology companies are facing an increasingly severe labor shortage now that a visa program for foreign professionals appears to have reached its annual limit.

Barring new legislation, high-tech companies will have to wait five months before they can again hire workers under the H1-B program, which issues visas for hard-to-fill jobs.

"We're essentially blocked access to critical scientists that we might need to come here to help with projects," said Han Nachtrieb, vice president of human resources at the Fred Hutchinson Cancer Research Center.

The Immigration and Naturalization Service has told its four regional service centers to stop processing the H1-B visa applications while it checks to see how close it is to the limit of 65,000.

"I'm telling clients that the cap has been reached already," said Greg Siskind, publisher of "Siskind's Immigration Bulletin" and a Tennessee-based attorney. Siskind said a "big chunk" of the high-tech shortage stems from the demand for workers to fix the Year 2000 computer problem that threatens to snarl major computing systems.

"I see major disruptions as far as getting the job done in time," he said.

The Information Technology Association of America figures that 10 percent of the jobs in its industry - 346,000 positions - are vacant. Association President Harris Miller has compared this to "running out of iron ore in the middle of the Industrial Revolution."

But the General Accounting Office has questioned those numbers. And critics of the program charge that it is used chiefly to acquire foreign labor at lower wages.

"There really isn't any reason to be looking overseas except to save money for the employer," said Ira Mehlman, media director for FAIR, the Federation for American Immigration Reform, which campaigns to keep immigration at the lowest feasible levels.

Technically, the H1-B program is supposed to pay foreign workers a competitive wage. But Norman Matloff, a professor of computer science at the University of California, Davis, said workers hired under the program are paid 15 to 30 percent less than U.S. workers with similar skills. He said low industry hiring rates suggest that "claims of a shortage are baseless."

Most everyone agrees that the program's 65,000-worker cap was arbitrarily set by Congress in 1990. That didn't matter much when the nation was in a recession.

But then the Information Age blossomed. Fast-growing high-tech companies began to find they didn't have enough workers to crank out software in new and exotic programming languages.

Suddenly, a simple ad in the newspaper wasn't enough to fill a job, said Janice Dilworth, manager of selection and retention for Mosaix, a Redmond-based company that makes software to coordinate high volumes of telephone calls.

Now, she said, software recruiters trolling for talent make cold calls in Redmond's 425 area code and work the four-digit telephone extensions of company development groups.

And companies are turning more than ever to the H1-B program.

"It's not easy," said Dilworth, who said it costs about $4,000 for a company to sponsor a foreign worker. "We don't do it because we prefer to hire foreign nationals. It's just difficult to hire."

And with so many H1-B workers going to software companies, there are fewer that can be hired by universities and nonprofits, said the Hutchinson Center's Nachtrieb.

Some of those workers can be so specialized that there may be only a dozen or two qualified people for a particular job.

"Given that small a cadre of people, it's likely one of them is not from the United States," he said.

Last year, the H1-B program maxed out for the first time, though the effect wasn't too traumatic, as it peaked only one month before the start of the new fiscal year.

At Microsoft, between 6 and 8 percent of the workers are hired under the H1-B program, spokesman Jim Cullinan said.

"This is really an issue about competition, especially in terms of where we already have a shortage of specialized workers," he said. If other countries can bring in as many skilled foreign workers as they like, the U.S. software industry stands to be placed at a disadvantage, he said.

Critics of H1-B say some companies can train more native workers for some of the jobs they're filling with the visa program.

The New York Times noted recently that the company that last year brought in the most foreign labor under the program, Mastech Systems of Pittsburgh, received visas for 1,733 employees - or about 80 percent of its domestic work force. The workers had only bachelor's degrees.

But Mosaix's Dilworth said the industry is too competitive for a company to spend a lot of time training new hires.

"We would love to train people," she said, "but when push comes to shove, our shareholders aren't going to wait."

Mosaix is developing a college internship program as a "mid-term" strategy for developing new workers, she said.

Meanwhile, both houses of Congress are weighing bills to raise the H1-B cap. A Senate bill, the American Competitiveness Act sponsored by Spencer Abraham, R-Mich., could come up for debate as soon as next week when the Senate raises several technology-related issues. But President Clinton's signature is uncertain.

Eric Sorensen's phone message number is 206-464-8253. His e-mail address is: esorensen@seattletimes.com

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