The H1B Visa Program and Outsourcing: What are the Facts?

One of the more controversial issues surrounding the H1B visa program is the high percentage of visas issued to outsourcing companies, based in either the US or in other countries.  As the Trump administration begins to review the H1B visa program for potential reform, this is one area sure to get attention.

Are outsourcing companies really abusing the H1B visa program, and taking advantage of foreign workers?  Or do they play a vital role in the US IT industry by supplying the best qualified foreign workers to US companies at lower wages?

Here are some of the facts:

 

  • 10,000 US company/sponsors filed petitions for H1B visas in 2014
  • Of the total 85,000 H1B visas available, 32,000 visas were given to only 20 companies
  • Many of those 20 companies are outsourcing firms, that contract out temporary foreign workers to US companies
  • Those outsourcing firms are on the bottom of the wage distribution average paid to the foreign workers, averaging $60,000-$70,000 per year.  US tech companies such as Microsoft and Google who hire H1B workers directly pay an average annual wage of $100,000 to $130,000
  • 70% of all H1B visas are given to Indian IT workers each year

 

Source: New York Times

Indian Outsourcing Firms

Well-known outsourcing firms such as Infosys and Wipro are actually Indian companies that have US offices or subsidiaries.  Otherwise, they would not be able to submit petitions for H1B visas as a foreign entity.

So, under the umbrella of their US subsidiary, Indian firms are securing a majority of temporary work visas exclusively for Indian workers, and then making a profit by contracting those workers out to US companies.  Often, the workers are not paid the promised wage between contracted work assignments, further enriching the outsourcing firm’s bottom line.

This effectively limits the number of H1B visas available to domestic US companies with a real need for talented foreign workers.  The large outsourcing companies have the resources to submit many petitions, and as such dominate the annual lottery each year. On a strictly percentage and raw numbers basis, the H1B visa program is effectively ‘owned’ by the outsourcing firms, which has led to the outcry in the US to reform the program.

Trump and the H1B Visa: Targeting Outsourcing Firm’s Abuse of the Program

Outsourcing firms stand to lose the most with any significant H1B visa program reform, but it is unlikely that the incoming Trump administration will be sympathetic to complaints of lost profits from any foreign based companies.  They have been targeted as the culprit behind the replacement of US workers, since their ‘H1B employees’ are paid a lower rate than direct foreign hires.

Naturally, the Indian government and hopeful workers are against any changes to the H1B visa program, since it has the dual effect of employing Indians in the US, and then allowing them to return to India with a wider base of technical experience and valuable knowledge.

But, the H1B visa program is really designed to benefit US companies that cannot fill specialized positions with a US worker.  It is not a foreign worker benefit system, although many seem to view it that way.

The Good News for Foreign Workers

If outsourcing firms are limited in obtaining H1B visas this will several effects:

  • More direct hires of IT and other workers at a much higher wage and guaranteed benefits.
  • Elimination of the practice of ‘benching’ foreign workers between contracts, without pay.
  • Opening up the lottery to more US companies who really wish to hire foreign workers to fill a need for talent

If you are still looking for a US sponsor and position for this year, you still have time.  Please contact us with any questions or if you need assistance.

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  • May 29th, 2019
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