H1Bs are as far as I understand for people with at least a BSc (with higher quote for people with MSc). I dare say that one does become a scientist by being trained in the industry. Granted one doesn't need to understand automatons, grammars, push-down automatons, Turing machines and how these are used to prove membership of computability and complexity classes... But you will never learn these things, or how to read/write scientific papers, or how to formally prove theorems by working in the industry.
You can certainly replace some MSc positions with less qualified developers. But developing with inexperienced developers can be very expensive (even if the developers are cheap). Learning to code in the industry doesn't compare to an MSc; it different - not useless.