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News » American H-1B visa system exploited by outsourcing firms, investigation reveals

American H-1B visa system exploited by outsourcing firms, investigation reveals

american-h-1b-visa-system-exploited

NEW YORK, UNITED STATES — A recent investigation by Bloomberg News revealed that some outsourcing and staffing firms are exploiting the H-1B visa system through fraudulent practices. 

These deceptive tactics, including submitting multiple lottery entries for the same worker, are undermining the integrity of the skilled-worker visa program, affecting both U.S. businesses and talented immigrants

Manipulating the H1B visa lottery

New data obtained by Bloomberg News through the Department of Homeland Security has shed light on how thousands of companies are gaming the H-1B visa lottery. The data covers lotteries from 2020 through last year. 

In 2023, 446,000 people applied for H-1B visas. By law, only about 85,000 were available

Bloomberg’s analysis revealed that nearly half of the H-1Bs went to outsourcing or staffing companies. 

More than 11,600 visas were awarded to multinational outsourcing companies, and another 22,600 went to IT staffing firms. These firms often submit multiple entries for the same worker, significantly increasing their chances of winning the lottery. 

This practice, known as “multiple registration,” is considered fraudulent by federal officials.

Concerns over exploitation

Last year, a nonprofit group and lawmakers raised concerns following a report by the Economic Policy Institute (EPI), which claimed U.S. outsourcing companies are exploiting the H-1B visa program to underpay migrant workers and offshore U.S. jobs to other countries. 

EPI revealed that 13 of the top 30 H-1B U.S. visa employers last year were outsourcing agencies. 

The EPI research wrote, “Most employers hire H-1B workers because they can be underpaid and are de facto indentured to the employer.” 

The analysis added that the program could be easily exploited since employers aren’t required to test the U.S. labor market before hiring an H-1B worker or paying their H-1B workers a fair wage.

Cognizant’s H-1B strategy

Cognizant, a New Jersey-based corporation with a workforce predominantly in India, exemplifies how some firms manipulate the system. 

As lottery entries surged and win rates plunged over the past three years, Bloomberg revealed that Cognizant sharply increased the number of visas it sought, allowing it to maintain a steady number of visas received even as its overall U.S. employment declined. 

An internal planning document from 2016 revealed that Cognizant executives anticipated needing fewer than 4,000 new H-1 B workers but recommended applying for almost three times that number to accommodate the lottery selection process.

Impact on the H-1B visa program

The manipulation of the H-1B visa system has several adverse effects:

  • Crowding out genuine applicants: Nearly half of the H-1B visas analyzed by Bloomberg went to outsourcing or staffing companies, crowding out more qualified candidates.
  • Lower wages and expertise: These firms often bring in workers with less impressive resumes and pay them lower wages, potentially undercutting American labor.
  • Economic consequences: A study from the University of Pennsylvania’s Wharton School found that for every 10 H-1Bs lost by top U.S. multinationals, nine jobs are moved abroad. 

Bloomberg said that the result of this manipulation is a system that fails US workers shortchanges the economy, stiff-arms talented immigrants, and enriches a class of middlemen.

New regulations and ongoing challenges

In response to the rampant abuse, the U.S. Citizenship and Immigration Services (USCIS) changed the lottery rules to eliminate multiple registration schemes. 

The new regulation, issued in February, selects from among unique individuals rather than employer entries, giving every worker an equal chance. 

However, the rule encountered flaws as staffing firms continued to game the system. For example, after winning the lottery, staffing firms completed a full application only about half the time, suggesting they often did not have real jobs lined up before the lottery.

The rise of visa middlemen, particularly staffing firms, further complicated the H-1B visa landscape. These firms often function more like visa brokers than employers, selling aspiring migrants tickets to the U.S. 

They charge workers for visa application fees, submit false information to the government, withhold pay, and violate other labor laws. Despite these practices, they continue to operate due to the lack of stringent enforcement.

Calls for regulatory reform

Experts and policymakers are calling for stricter regulations to curb these exploitative practices. 

Ronil Hira, an associate professor of public policy at Howard University, criticized the system, stating, “The sort of manipulation found in the data goes against the stated purpose of the program.” 

The H-1B visa program, designed to help U.S. employers fill high-skill jobs, is being undermined by fraudulent practices from some staffing and outsourcing firms. 

As investigations continue, there is a pressing need for regulatory oversight to ensure the system benefits both American businesses and legitimate foreign talent.

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