Are outsourcing firms exploiting H-1B visas?

Tech industry pushing to expand cap to 85,000

Outsourcing firms dominated the list of the top companies receiving new H-1B visas last year, according to a new report.

“Instead of being used to fill genuine labor shortages in skilled occupations without negatively impacting U.S. labor standards, the latest data show that the H-1B’s biggest users are companies that have an outsourcing business model,” said the report by the leftleaning Economic Policy Institute.

The H-1B, intended for jobs requiring specialized skills, is heavily used by Silicon Valley’s technology giants, who hire visa workers directly, and indirectly through staffing and outsourcing firms.

The tech industry pushes to expand the annual 85,000 cap on new H-1B visas, but critics point to abuses by the outsourcing and staffing companies, and charge that firms of all kinds use the visa to supplant U.S. workers, drive down wages and facilitate offshoring of work and jobs.

Changes proposed under the administration of former President Donald Trump, including higher mandated minimum pay, remain under consideration by the administration of President Joe Biden.

According to the institute’s report, more than half the top 30 companies receiving new H-1B visas in 2020 were outsourcers. “Those 17 outsourcing firms alone were issued 20,000 H-1B visas, nearly one-quarter of the total 85,000 annual limit,” said the report by the institute’s director of immigration law and policy research Daniel Costa and Howard University professor Ron Hira, who studies the H-1B.

Of the top five recipients, Amazon led with 4,774 new H-1Bs. Outsourcers Infosys, Tata and Cognizant received 3,528, 2,580 and 2,005 respectively.

Microsoft rounded out the five with 1,791. Google had 1,682; Facebook had 1,184 and Apple had 748.

“The aim of the outsourcing company is ultimately to move as much work as possible abroad to countries where labor costs are lower and profit margins are higher,” the report said. “The H-1B workers serve three purposes in this business model: to facilitate the

transfer of jobs and tasks offshore; to coordinate offshore teams; and to serve as a lower-cost alternative to hiring U.S. workers for on-site jobs.”

Cognizant has 200,000 workers in India, and about 45,000 in the U.S., Hira said.

The report noted that outsourcers have dominated the H-1B program for many years, going back at least as far as 2012 when the top 10 recipients were outsourcing companies.

Stuart Anderson, executive director of the National Foundation for American Policy, which supports expanding the annual H-1B cap, argued that U.S. companies contract with staffing and outsourcing firms because they need the specialized information-technology services those firms’ H-1B workers provide. “If you look at U.S. graduation rates in some of these tech fields they just aren’t that high compared to the demand for these services,” Anderson said.

Anderson noted that H-1B workers — estimated by the federal government last year to number 583,420 — make up a relatively small portion of the country’s 160 million workers.

With about 1 million job vacancies across the country now for computer-related positions, Anderson said, “it’s not clear that (H1B holders) are being hired instead of U.S. workers — they’re being hired in addition to U.S. workers.”

Anderson pointed to research suggesting that restricting the number of available H-1B visas may prompt multinational firms to move jobs outside the U.S.