Outsourcing Companies Top List of Firms Applying for H-1B Visas

It’s the top complaint of one of the city’s fastest growing industries: tech companies can’t find enough engineers and computer programmers for their growing businesses.

But the companies that take greatest advantage of a government program to import foreign talent to fill those roles are also the ones in the business of taking jobs out of the country.

“What we’ve got basically is an immigration system here that’s speeding up the off-shoring of jobs,” said Ron Hira, a professor at the Rochester Institute of Technology and leading critic of the program.

The H-1B visa allows employers to sponsor immigrants who are qualified in specialized fields to come work in the U.S. for up to six years. It also covers fashion models.

Of the top-10 businesses approved by the Labor Department in the first step of the H-1B process last year, eight had outsourcing operations.

Critics contend that these outsourcing firms use the H1-B to bring cheaper labor into the country for the fraction of their work that needs to be done on-site in the U.S. But those in favor say it takes the best minds from around the world, and adds them to the U.S. workforce, growing both the companies and the economy.

There are only a limited number of H--B visas, total, available every year—85,000. They are first come, first serve. And, they run out fast.

Next year’s supply ran out just 10 weeks after becoming available. That means companies that want to bring in workers after the cap has been filled must wait until the next application period, when the next 85,000 visas become available.

The program also allows immigrants to apply for permanent residence, while on the visa.

The ‘New Arms Race’

“The new arms race is the brain race, for the 21st century,” said Rey Ramsey, the president of the tech lobbying organization TechNet. “And it’s about racing to bring that brain power into America, and then hopefully, roll out the welcome wagon and have many of these individuals become Americanized and become U.S. citizens.”

Politicians are taking up the call, including both President Barack Obama and his GOP challenger Mitt Romney. Both have called to raise the cap for specialty worker visas.

Mayor Michael Bloomberg wants to go farther.

“This is just absurd to deny American companies access to the workers they need,” Bloomberg said at the Chamber of Commerce last year. “The government doesn’t know how many skilled workers are needed each year—only the market does. So let the markets work. And you can do that by eliminating the cap on H1 visas.”

Few lawmakers advocating for an increased cap have addressed the outsourcing issue, though. Obama was confronted with it during an online town hall in January.

Jennifer Wedel, the wife of an unemployed semiconductor engineer, asked the president: “My question to you is why does the government continue to issue and extend H-1B visas when there are tons of Americans just like my husband with no job?”

“I'd be interested in finding out exactly what's happening right there because the word we're getting is that somebody in that kind of high-tech field, that kind of engineer, should be able to find something right away,” Obama said. “And the H-1Bs should be reserved only for those companies who say they cannot find somebody in that particular field.”

The H-1B program does not have any requirement that companies search publicly for a U.S. worker before turning to the visa program.

A Program With Loopholes

Hira, the professor and program critic, thinks the lack of a job search requirement is one of a number of loopholes in the program, the most prominent being loose wage requirements.

“Because they can legally pay below market wages to those H1-B workers, there’s a strong financial incentive to substitute American workers with H1-B workers,” Hira said.

In last year’s applications, New Jersey-based outsourcer Cognizant Technologies offered to pay about $61,000 for computer systems analysts—$16,000 lower than the national average.

In a 2011 Government Accountability Office report, companies reported the full H1-B process costs from about $2,500 to above $7,500 for each application.

Spokesmen for several of the top outsourcers either did not respond to requests or declined to comment, including Cognizant, Tata Consultancy Services and Accenture. But, they’re all part of NASSCOM, the trade organization representing the Indian IT sector.

NASSCOM vice president Ameet Nivsarkar echoed a familiar theme: it’s not about money, but rather companies finding talent that doesn’t exist locally.

“For them, there is no option but to move talent from overseas. And that talent is extremely expensive,” he said. “You have to pay for insurance, you have to pay for health; you have to pay for travel; you have to pay for relocation. So, all of those expenses get added to the company.”

For several of these firms, the vast majority of their U.S. employees are on H-1Bs and other temporary work visas—as many as 90 percent, according to an analysis by CLSA, a brokerage firm that tracks the Asian market.

“It’s annoying but I don’t think it’s unfair,” said Rick Webb, a tech entrepreneur who currently consults for Tumblr and has worked for a company that applied for the visas. “I think that’s a market that’s grown to adapt to the inefficiencies of the system.”


Correction:  An earlier version of this story mislabeled the H-1B visa as H1-B.


*Data from applications submitted by employers and approved by the Department of Labor . Includes both renewals and initial requests. This is the first step in the H1-B process, not the final number of workers employed by the companies.
Company H1-B Workers
Offers Outsourcing
Wipro Limited 97,555 Yes
Infosys Technologies Limited 59,218 Yes
Cognizant Technologies Solutions 51,618 Yes
PricewaterhouseCoopers 15,208 No
Mphasis Corporation 12,360 Yes
Syntel 10,265 Yes
Itelligence 9,840 Yes
HCL America 8,712 Yes
Accenture 7,921 Yes
Oracle 7,735