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Time of India
17 hours ago
- Business
- Time of India
How there has been a shift in companies that use H-1B visas in the US, they are no longer technology companies
Representative Image Silicon Valley's drive for innovation has long relied on the H-1B visa program to attract top-tier global talent in science and engineering. However, new data obtained by Bloomberg News reveals that a wider range of industries, including banks and telecommunications companies, are among the largest users of the programme -- often through staffing and outsourcing companies that secure nearly half of the 85,000 new H-1B visas issued annually. These companies, acting as visa middlemen, are reshaping the programme's purpose, raising questions about its impact on wages and U.S. workers. According to Bloomberg's analysis, covering new H-1B hires from May 2020 to May 2024, Citigroup Inc. added 3,000 H-1B workers, outpacing tech giants like Nvidia, Oracle, and Qualcomm. However, unlike the high-skill researchers and engineers typically associated with tech companies, about two-thirds of Citi's H-1B workers were IT contractors sourced through staffing and outsourcing agencies. These workers, often reportedly paid significantly less than direct hires, highlight a growing trend where non-tech companies leverage the visa program for lower-cost labor. 'This is the tip of the iceberg,' said Susan Houseman, a senior economist at the W.E. Upjohn Institute for Employment Research, in an interview with Bloomberg. 'While there's been a national debate about the U.S. reliance on imported goods, not enough attention has been paid to the offshoring of service jobs -- not because it doesn't happen or isn't important, but because we don't have good data on it.' Lottery fraud in H-1B visas by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Sharp Design, Smoother Drives. Toyota Glanza Learn More Undo The H-1B visa, established by Congress in 1990 to bolster U.S. competitiveness in emerging tech industries, has become oversubscribed, leading to annual lotteries for the limited visas available. Staffing and outsourcing firms, functioning as visa middlemen, have exploited this system. These firms provide corporations with lower-level IT workers or facilitate the offshoring of back-office functions. Bloomberg's data, obtained via a Freedom of Information Act lawsuit against the Department of Homeland Security, identifies major U.S. companies like Capital One Financial Corp., Verizon Communications Inc., AT&T Inc., and Walmart Inc. as heavy users of these visa middlemen. Until recently, some middlemen manipulated the visa lottery through a practice known as 'multiple registration,' where they submitted numerous applications for the same worker to increase their odds. The U.S. Citizenship and Immigration Services (USCIS) labeled this practice fraudulent in a 2023 report and implemented rule changes last year to curb it. Bloomberg's investigation also identified 13 staffing firms flagged by USCIS for such tactics, with at least six supplying workers to Capital One. Over half of Capital One's 905 H-1B contract workers during the four-year period were linked to multiple registrations, the highest proportion among the top 10 companies analyzed. Capital One relied on 429 staffing firms, 361 of which used multiple registrations. In response, a Capital One spokesperson told Bloomberg that the company was unaware of any government accusations of visa fraud by its vendors but would 'take appropriate action' if such issues arose. Verizon and Capital One emphasized that they require suppliers to comply with applicable laws, while AT&T, Walmart, and USAA declined to comment. What the shift in H-1B visas mean for salaries The data also reveals significant pay disparities. H-1B contractors are often paid far less than direct hires, even for similar roles. Bloomberg's analysis of the top 10 end-clients shows that among nearly 5,300 H-1B 'software developers' hired from 2020 to 2024, over 75% were contractors, earning roughly $48,000 less on average than direct hires, even when controlling for education and age. One in three contractors received the minimum salary required by the Department of Labor. Steve Hall, Chief AI Officer at Information Services Group Inc., told Bloomberg that part of the pay gap reflects contractors performing less technical roles, such as liaising between U.S. clients and offshore teams. However, critics argue that the reliance on visa middlemen distorts the H-1B program's original intent. Labor advocates contend that it undercuts U.S. workers, creates a vulnerable workforce with fewer protections, and tilts the labor market in favor of employers. The lack of comprehensive data on pre-existing H-1B contractors and offshored jobs complicates efforts to assess the program's full impact. As Houseman noted, the offshoring of service jobs remains understudied, yet its implications for the U.S. labor market are significant. With companies across industries increasingly turning to visa middlemen, the H-1B program's role in shaping the workforce continues to spark debate. AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Bloomberg
2 days ago
- Business
- Bloomberg
H-1B Middlemen Bring Cheap Labor to Citi, Capital One
By Marie Patino Silicon Valley's hunger for innovation has made H-1B visas a pipeline for top global talent in science and engineering. Yet new data obtained by Bloomberg News shows a broader array of businesses, including banks and telecommunication companies, are also among the largest H-1B employers. Unlike large tech firms, however, these companies often use the visa program to hire lower-paid workers — and do so indirectly, through staffing and outsourcing companies that capture about half of the 85,000 new visas allocated each year. Banks, Telecom Firms Were Biggest Users of H-1B Middlemen New H-1B workers hired between May 2020 and 2024 Citigroup Inc. added 3,000 new H-1B workers from May 2020 through May 2024, the data shows. That's more than many tech giants, including Nvidia Corp., Oracle Corp. and Qualcomm Inc., added over that four-year period. Yet few of Citi's H-1B workers were Silicon-Valley-type researchers and engineers; most weren't even actual Citi employees. Instead, about two thirds were IT contractors from staffing and outsourcing agencies that pay their visa-holders substantially less than those whom Citi hired directly. These two types of companies — staffing firms and outsourcers — function in effect as visa middlemen. Staffing firms provide a pool of relatively low-level information-technology workers to corporate clients. And outsourcing companies supply positions with an eye toward helping their clients move back-office functions offshore. Some visa middlemen have been accused of mistreating workers and discriminating against US employees. Citi's largest supplier of H-1B contractors, the outsourcing firm Tata Consultancy Services Ltd., is currently under investigation by the US Equal Employment Opportunity Commission for alleged discrimination against non-Indian workers. There is no indication the investigation involves Citi. In a statement, a TCS spokesperson said: 'Allegations that TCS engages in unlawful discrimination are meritless and misleading. TCS has a strong track record of being an equal opportunity employer in the US, embracing the highest levels of integrity and values in our operations.' A Citi spokesperson said the company supplements its 71,000 US workers with 'highly skilled H-1B visa holders to address specific, timely needs. When we do so, we follow relevant laws and regulations, including anti-discrimination laws.' To be sure, the H-1B contractors Bloomberg identified constitute only a small portion of Citi's workforce, and the data is limited to new H-1Bs issued over the four-year period ending in May 2024. The government does not keep track of how many pre-existing H-1B contractors are working at each company or how many jobs have been moved offshore. So, experts say, Bloomberg's analysis captures only a fraction of the jobs US firms have outsourced. 'This is the tip of the iceberg,' said Susan Houseman, a senior economist at the W.E. Upjohn Institute for Employment Research. While there's been a national debate about the US reliance on imported goods, she said, not enough attention has been paid to the offshoring of service jobs, 'Not because it doesn't happen or isn't important, but because we don't have good data on it.' Congress conceived of the H-1B visa in 1990 as a way to recruit the world's top talent and to help the US dominate the emerging tech industry. The visas became so popular that demand quickly outstripped supply, forcing the government to hold annual lotteries to determine who could apply for the limited number of H-1Bs allotted each year. Visa middlemen soon found ways to manipulate the lottery, giving them an advantage over sponsors seeking a specific worker for a specialized role. H-1B rules require applicants to have a 'bona fide' job offer for each visa they seek. Yet staffing firms used webs of connected companies to submit multiple lottery registrations for the same applicants. The US Citizenship and Immigration Services called this practice, known as 'multiple registration,' fraudulent in a 2023 report and took steps to end it last year. A second strategy – flooding the lottery with thousands of interchangeable applicants – provides a major advantage for large outsourcing firms that tend to have vast overseas workforces. The middlemen who win the lottery then farm out the visa-holders on contract to their business clients and take a portion of each worker's pay. Academics and labor advocates say this practice distorts the H-1B program, resulting in a system that undercuts US workers, creates a kind of second-class workforce with fewer job protections, and tilts the labor market in favor of employers. The new data, obtained through a lawsuit filed against the Department of Homeland Security under the Freedom of Information Act, shows for the first time which US companies, or 'end-clients,' relied most heavily on visa middlemen who used multiple registrations to secure H-1B visas. Companies like Capital One Financial Corp., Verizon Communications Inc., AT&T Inc. and Walmart Inc. top the list. (Capital One and Verizon said in statements that they require suppliers to comply with all applicable laws. AT&T, Walmart and USAA declined to comment.) Top US Firms Used H-1B Contractors With Multiple Entries US officials ended the tactic — known as 'multiple registration' — after changing the lottery rules last year. A Bloomberg investigation last year identified a network of 13 staffing firms that the USCIS had flagged for engaging in multiple registration fraud. The agency did not name the companies, but reporters were able to identify them using federal data. At least six of those firms supplied eight workers to Capital One, the data shows. Overall, more than half of Capital One's 905 H-1B contract workers turned up in multiple registrations over the four-year period reflected in the data. That's the highest ratio among the top-10 end-clients in Bloomberg's analysis. Capital One drew its H-1B contractors mostly from smaller staffing firms that regularly filed multiple registrations. During the four years captured in the data, the company added new H-1B workers from 429 different staffing firms. Of those firms, 361 had used multiple registration. Capital One Drew Heavily from Firms that Gamed H-1B Lottery Capital One used hundreds of small staffing firms that filed multiple registrations. Citi, the largest user of H-1B contractors, relied on them less. Middlemen firms that relied on multiple registrations Other middlemen In response to questions, a spokesperson for Capital One declined to confirm whether the company worked with the six staffing firms reflected in the data, but said Capital One is unaware of any government accusations of visa fraud against its third-party vendors, and that it would 'take appropriate action' if it becomes aware of any investigation. Regardless of how the visas were obtained, the data show that middlemen companies paid workers far less than H-1B holders who didn't go through staffing or outsourcing firms. Immigration law requires visa sponsors to pay H-1B workers no less than their similarly-situated American colleagues, but because contract workers are not directly employed by the end-client, they can be paid lower salaries than their direct-hire counterparts in the same office. Steve Hall, Chief AI Officer at Information Services Group Inc., a technology research firm that advises clients on IT outsourcing, said at least part of the pay differential can be attributed to contractors working lower-level and less technical jobs. Some H-1B holders serve as liaisons, he explained, connecting US end-clients with the outsourcers' offshore workforces. However, a Bloomberg analysis of the 10 largest end-clients shows that even when job titles are similar, the pay differential persists. Of the nearly 5,300 H-1B 'software developers' hired by those companies from 2020 through 2024, more than 75% were contractors. A typical contractor was paid about $48,000 less, the data show, than a worker employed directly by the company that sponsored her visa – even after accounting for education level and age. One out of every three such contractors was paid the minimum salary required by the Department of Labor. Same Companies, Less Pay H-1B contractors hired as software developers at the 10 largest end-clients were paid less than direct-hires at the same companies H-1B contractors H-1B direct hires 'They're going to pay as little as they can legally,' said Ron Hira, a political scientist at Howard University who has been critical of how the visa program is run. He has testified multiple times before Congress about how the H-1B program undercuts wages for everyone, especially US workers. The new data reinforces that view, Houseman said. 'It's data we haven't seen before,' she said after reviewing Bloomberg's analysis. 'If the whole purpose of this program is to hire the best of the best, then why aren't we seeing higher wages?' It is difficult for H-1B workers to complain about compensation or seek jobs that pay more because the staffing firms sponsor, and thus control, their visa status, according to Daniel Hutchinson, an attorney at Lieff Cabraser Heimann & Bernstein. In 2013, Hutchinson helped 12,000 visa workers win a $29.75 million settlement from TCS after plaintiffs alleged the outsourcer took out illegal deductions from their salaries and required them to sign over their tax refund checks to TCS. Attorneys say they regularly encounter outsourcing firms that impose employment contracts requiring workers to use arbitration, complicating any legal remedies for unfair labor practices. 'There's a lot of fear,' Hutchinson said. 'If they lose their job and lose their status in the US, there may not be any protection against retaliation.' Asked about the settlement, a TCS spokesperson said: 'In 2013, to avoid the cost and expense of further litigation, TCS agreed to settle the litigation. In settling the case, TCS admitted no wrongdoing and none was found by the court.' Congressional Republicans have been mulling legislation to overhaul immigration, but it's unclear if President Donald Trump would return to the H-1B policies of his first term, when he sought to eliminate the program. Months after a public dustup pitting his nativist supporters against his new allies in the tech industry, a separate nasty feud broke out between Trump and Elon Musk, who had been the most prominent advocate for high-skill immigration within the administration. Just before leaving office in January 2021, the first Trump administration issued a Department of Labor guidance that held end-clients accountable for ensuring H-1B contractors are paid the same as their American counterparts. Former President Joe Biden's Labor Department rescinded that guidance on his first day in office without explanation. Regarding any new guidance on pay equity, 'The DOL could reissue this tomorrow,' said Hira, the Howard professor. 'The Fortune 1000 would be up in arms, of course.' Edited by Jason GrottoYue Qiu Methodology Before submitting an H-1B petition, employers must file a Labor Condition Application (LCA) with the Department of Labor, attesting to paying at least the prevailing wage for the position and location as well as certifying that the hiring does not adversely affect US workers. Although LCA data is regularly published, not all LCAs lead to H-1B approvals. By linking H-1B petition data obtained from the USCIS to LCA data publicly released by the DOL, reporters pieced together, for the first time, exactly how many H-1B contractors each staffing firm sent to each end-client. Because visa sponsors manually input end-client names on a government form without standardization, reporters used a machine learning algorithm in conjunction with manual labeling to normalize company name spellings and to identify the top-10 end-clients: Citigroup Inc., Verizon Communications Inc., AT&T Inc., American Express Co., Apple Inc., Johnson & Johnson, Capital One Financial Corp., Cisco Systems Inc., United Services Automobile Association, and Ford Motor Co. To identify staffing firms that likely engaged in multiple-registration, Bloomberg calculated how many H-1B approvals were associated with candidates whose names were submitted multiple times in the same lottery. Since some multiple registrations might reflect legitimate job offers made by more than one company to the same individual, reporters included only staffing firms that had at least 10 lottery registrations per year and multiple-registered individuals in more than 50% of their registrations. When analyzing individual wages in the H-1B petition data, reporters included only H-1B workers who were classified as a 'software developer' by the Bureau of Labor Statistics' Standard Occupational Classification system. Reporters excluded annual salaries that were below $40,000 or above $200,000. The analysis did not include H-1Bs that are awarded to certain university- and government-affiliated research organizations, because they are exempt from the annual H-1B cap. An approved H-1B petition is necessary for, but does not always result in, an H-1B visa, which is a travel document.
