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

Monday, July 16, 2012

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
Approved*
Offers Outsourcing
Services?
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

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Comments [23]

smellslikerubbish from Los Angeles, CA

If you would like to speak out against the increase in H-1B visas, there is now a White House petition available at http://wh.gov/vDc0. Thank you for your support!

Feb. 22 2013 03:46 AM
Immigration Business Plan from USA

Your article has been very inspiring on outsourcing companies. I have never bored to read this article. <a href="http://immigrationbusinessplan.com/">Immigration Business Plan/<a>

Jan. 18 2013 02:44 AM
MIKE BRENNAN from WASHINGTON DC


ALL,
PLEASE KEEP IN MIND THAT WHATEVER NEW NUMBER OF VISAS THEY GIVE OUT EVERY YEAR COMPOUNDS THE PROBLEM EVERY YEAR. SOME OF THESE VISAS ARE 10 YEAR VISAS. THEY BRING THE WHOLE FAMILY OVER AND PACK OUR SCHOOLS WITH THE KIDS AND EMERGENCY ROOMS WITH ALL OF THE UNINSURED RELATIVES. THERE ARE SEVERAL TYPES OF H1B VISAS SO THERE REALLY IS NOT A "CAP". SIMPLE MATH IF 200,000 ARE ALLOWED IN EVERY YEAR WITH 10 YEAR VISAS FOR 10 YEARS. YOU THEN HAVE TWO MILLION WORKERS AND MAYBE LETS SAY 6 MILLION RELATIVES. ALL OF THE KIDS PACKING THE SCHOOLS AND RELATIVES PACKING THE EMERGENCY ROOMS. THE GOV IS NOT TRACKING THESE PEOPLE. THESE BLOGS DO NOTHING AS THE POWER HOUSES LOBBY FOR CONTROL AND WANT THE LOW COST LABOR. THE SAD THING IS THAT I HAVE SEEN FIRST HAND THE CUBE FARMS AS FAR AS THE EYE CAN SEE LOADED WITH H1B WORKERS (HERE IN USA)--------THAT ARE US GOVERNMENT JOBS SUBCONTRACTED!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!PATHETIC ----------ENJOY YOUR UNEMPLOYMENT RATE AND YOUR SLUMBER WHILE PAYING FOR THE H1B KIDS SCHOOLING AND RELATIVES HOSPITAL BILLS AT THE SAME TIME.

Nov. 26 2012 04:03 PM
Clint

I just started a petition on this issue on the White House Petitions site, We the
People. Will you sign it? http://wh.gov/X3hV

Nov. 16 2012 12:59 PM

My job for over twenty five years has been a low tech job of contract Machine Drafting/3D CAD. Making up detail drawings of custom machine parts used to manufacture them. This not a high tech job, however the visa's increase has stepped on my job field too.
Once a booming field, there are no available drafting jobs. Most jobs in this field have been outsourced. People who came here on visa's with engineering degree's via outsourcing companies are here to learn our American drafting standards. They returns to their country, trains the lesser educated. The only time I see work is when a job is screwed and they need someone quick.
Our economy was doing great, unemployment was at an all time low, until May of 1998 when congress requested an increase of visa’s to 65,000. President Clinton agreed to pass the American Competitiveness Act-S1723 only if a clause was added to protect the American worker from being replaced by immigrated visa workers. This process continued to increase over the the Bush administration, then we hit an all time economic system crash. You do the math, if the current cap of 85,000 per year runs a six year term, that would equal 510,000 American jobs lost to visa workers. This number does not included the people that have converted and are now residences here.
“Rep. Louis Stokes – D of the state of Ohio said in September 1998: Mr. Speaker, I rise in strong opposition to the ``Workforce Improvement and Protection Act of 1998,'' H.R. 3736, which is designed to increase the number of H-1B visas. This bill is especially detrimental to American workers in the computer programming, engineering and other skilled worker fields. This negative jobs bill takes critical jobs out of the hands of American workers and compromises the economic stability of American families.”
A little history here:http://capitolwords.org/date/1998/09/28/E1841_workforce-improvement-and-protection-act-of-1998/
The only money makers in our country are corporations, and they pay a lower tax rate. Many American workers are not paying taxes because like me, they are not working or collecting unemployment. The immigrated workers are sourcing work back to their country, those workers don’t pay taxes to the US. Maybe we should ask, why such a large deficit? That’s right; it is the guy in the Whitehouse’s fault.. maybe but for not noticing or for letting lobbyist run our country.
Congress needs a first choice law. Corporations must advertise a position for sixty days, the best qualified American worker to apply is chosen over a worker with a visa. Corporations that outsource work should be taxed at a higher rate to off set the loss of income to the government. Income that would have otherwise been paid in by an American worker, it is the only fair choice an equal choice. If this process continues, it is only a matter of time before we in America become that 3rd world country.

Nov. 02 2012 11:57 AM
David from US

I have noticed that companies hire outside of cities, going nuts with H1-B visas while the locally unemployed who are more than qualified for these positions are left out in the cold. I remember I had an interview with a 25 year old Indian girl, the hiring manager and manager of the dept. I had 15 years of experience and she would manage all of us. She could not write that well, or even speak English fluently. She could certainly tweet though!

I have seen this policy transform entire cultures and cities, and it also acclimates workers to longer hours, worse working conditions, and the constant threat of being replaced. We have had Muslim clothing stores in the city, little asian cities within the city, and a culture so diverse it made no senese. It is not that they cannot find qualified workers locally, it is that companies want these conditions in place and work closely with the government to put them in place.

Bill Gates, Bloomberg, and all these H1b visa hacks, are simply full of it.

You mean Microsoft has to go to India or China to find accountants, financial analysts, computer and IT professionals? Really? They can’t find any of these people locally in one of the most educated cities in the world? Wow! Wow!!

Our government actively offshores jobs and replaces local workers with H1B visa workers, listening to Gates and Bloomberg and getting paid under the table.

What exactly are these local folks supposed to do? I guess they could start a business. Maybe they can open up an Asian or Muslim clothing store! but we need to be more realistic with what is happening in this economy and how the government actively works AGAINST the interests of U.S. taxpayers and workers by listening to Gates and Bloomberg lie about the quality of workers locally to sell local workers out for more profits, longer working hours, and poor working conditions. Gates and Bloomberg would love to see the U.S. become a third world nation of lowly peasant workers while they reap the profits.

Oct. 31 2012 12:47 AM
Alex Jones

We really try to find even basic folks in the U.S. - at least folks who can punch a card or push a few buttons. Most of them, however, cannot seem to find their way out of a paper bag. We need to step up H1b visas from the sheer stupidity of the U.S. population. At least the Indians and the Chinese, many who chooose to marry American women, are able to buy food, homes, and nice things for their nice looking American wives. These dunces in America have been unemployed for so long I don't know if they can even find their way to the city. HA HA HA - losers! You may be able to get me a towel at the country club!!!! HA HA HA HA HA!!!!!!!!!

Oct. 31 2012 12:29 AM
Bob Anderson from Seattle

The chinese are and Indians are superior intellectually and that is why we choose to hire them. We cannot find any accountants, financial people, computer professionals, or consultants in the U.S., specifically the NW. We are stepping up the H1b visas to hire more professionals and bring them here locally for long-term employment. Many of them choose to marry here and raise families and buy homes, so it is win win.

Oct. 30 2012 10:29 PM
Cassey Curtis from Philippines

Visit this site to know more about our current provider.
http://aicomcorp.com

Oct. 05 2012 06:23 PM
mike

Really Nice one.
Thanks for sharing this information.Keep Sharing more and more.
http://www.outsourcegeek.com/

Sep. 20 2012 05:09 PM
Cal from AZ

8.1% unemployment in the US and Bloomberg wants to import foreign labor to take American jobs. Thanks for your support Bloomie!

Sep. 20 2012 02:00 PM
hoapres

Americans as a condition of receiving their severance working proudly together training their Indian H1B replacements to improve corporate profits by exporting jobs to India.

Americans are prerejected from IT employment due to H1B infestation and offshoring.

This should be a no brainer : If you have to choose between importing CHEAP foreign labor versus sending the work overseas then simply send the work overseas and be done with it.

Young Americans should simply avoid the STEM fields due to the extremely grim job prospects due to H1B infestation and offshoring.

Sep. 19 2012 11:53 PM
twins.fan

The taxpayers signed up for a $60 million software project called CityTime that was implemented during the administration of Mayor Michael Bloomberg. Bloomberg began the project by giving SAIC a "conflict of interests" waiver to manage the project. Soon thereafter, Bloomberg and SAIC hired two of Bloomberg's crony "foreign entrepreneurs" from India named Padma and Reddy Allen, who owned TechnoDyne, an Indian H1B body shop, to staff the project with recipients of the H1B visa instead of highly qualified, well educated STEM workers from NYC and the US.

After ten years of MASSIVE cost overruns, with which Bloomberg was unaware, a disgruntled contractor spilled the beans on the fraud. Bloomberg was apparently unaware that this project had grown to a staggering $700 million, half the cost of Yankee Stadium.

Soon the US attorney joined the investigation and attempted to indict Bloomberg's crony "foreign entrepreneurs," but was unable to do so because Padma and Reddy Allen had already escaped back to India with somewhere between $90 million and $450 million in cash.

Now Bloomberg preaches to us to allow more foreign entrepreneurs and more H-1B visas.

Sep. 19 2012 10:52 PM
Bob W

The H-1b outsourcing visa is a big scam. But the bigger scam is the L1 outsourcing visa! L1 visa holders are often paid below minimum wage, as the L1 allows the worker to be paid in their home country wage rate. There is an unlimited number of L1 visas and the biggest users of the L1 visa are, surprise surprise, outsourcing companies.

Jul. 21 2012 01:42 PM
Rich from NJ

If Cognizant Technologies is paying $16K below the national avg. you can bet that the difference in the NYC area is significantly higher. How are American citizens supposed to compete with that?

I have never read an article on imported labor where industry didn't claim a shortage of "skilled" talent, regardless of the unemployment rate. This is complete nonsense. I've worked with many H1B developers. Some brighter than others, but none from poorer Indian families. The "best from around the world" argument is cover for cheap labor. It's as simple as that.

This is outsourcing with the added benefit of having the developers conveniently located on the same site. It's a huge loophole for the benefit of companies, not the 99%.

Jul. 16 2012 03:04 PM
John80224

"$2500 - $7500"? So roughly a percent of what you'll pay for that employee over the following three years before renewal?

"...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.” - NASSCOM VP

Travel and relocation, okay. But I'm pretty sure you're going to have to pay for insurance and health regardless. And "no option"? Then how do many smaller companies employ 80-100% citizen while they're getting away with as little as 10%?

Jul. 16 2012 01:33 PM
bob from Mumbai

lies lies and more lies. Companies are best at that.

Jul. 16 2012 11:19 AM
Mark

The so called "shortage" of tech workers is so bogus. They outsourced all the entry level jobs. Then when they go to hire experienced workers there aren't any because all the jobs people get experience from are now overseas. So then they import the overseas workers as indentured servants via the H1B. It's quite a rip-off but programmers have such inflated egos that they can't imagine that they could be on the losing end of class warfare.

Jul. 16 2012 11:17 AM
Bea Dewing from New York

Mr. Bradford could have talked with some American IT workers whose lives have been impacted by the importation of hundreds of thousands of lower-paid foreign IT workers. The H1-B visa program is another example of massive wealth transfer from the middle class to the executive suites. CEOs get big bonuses for reducing labor costs, while skilled US workers get to use up all of their unemployment, savings and retirement accounts while competing for the few jobs that become available when the visa "cap" finally kicks in.

When the annual figure of 85,000 H1-B visas is mentioned, it doesn't address the fact that the total is cumulative. Each visa is issued for six years and many are renewed, or changed to permanent work visas (green cards. So at any one time there are a million or more of these workers here in the US, generally accepting lower wages and a lower standard of living than US workers with similar skills. And no, their skills are neither unique nor scarce. They are simply cheaper. They also become the facilitators of the outsourcing of even more IT jobs outside the US entirely, to countries where wages are far lower and standards of living even worse.

IT workers have been clinging to their individual ethos too long and have yet to recognize that total self-reliance is not effective in this work environment. We need a good union, and we need to demand that the H1-B visa program be suspended entirely until its impact on our own work force has been addressed.

Jul. 16 2012 09:39 AM
RJ from prospect hts

I didn't hear a word about "training" in this story. It would have been a useful followup question from the reporter to ask these companies (who the other commentators here have challenged well) to ask why they are not bringing in the massive number of students scratching and clawing to get into college, vocational, and specialized training programs and investing in the training of these local un- or underemployed to fill their needs.

Jul. 16 2012 08:33 AM
Dolores from USA

The truth about the so-called shortage of skilled IT labor in America, as noted by Robert Cringely: "When ServiceMaster announced its decision to cancel its contract with IBM and to in-source a new IT team, the company had to find 200 solid IT people immediately. Memphis is a small community and there can’t be that many skilled IT workers there, right? ServiceMaster held a job fair one Saturday and over 1000 people attended. They talked to them all, invited the best back for second interviews, and two weeks later ServiceMaster had a new IT department. The company is reportedly happy with the new department whose workers are probably more skilled and more experienced than the IBMers they are replacing.

Where, again, is that IT labor shortage? Apparently not in Memphis."

http://www.cringely.com/2012/06/14/an-it-labor-economics-lesson-from-memphis-for-ibm/

Jul. 16 2012 07:09 AM


The H-1B program is primarily used to import young, cheaper labor from developing countries for technical and engineering work; displacing many U.S. citizens from their professions or discouraging them from entering their previously-chosen profession. It is NOT typically used to bring in the "best and brightest" minds. According to a January 14 2011 GAO report, most of the H-1B workers are categorized as having entry-level skills. The program is also plagued by rampant fraud, which the government has only recently begun to address. But fraud is not the biggest problem: the loopholes are.

Suggested reading:

BusinessWeek - America's High-Tech Sweatshops:
http://www.businessweek.com/magazine/content/09_41/b4150034732629.htm

BusinessWeek - Work Visas May Work Against the U.S.:
http://www.businessweek.com/bwdaily/dnflash/content/feb2007/db20070208_553356.htm

Economic Policy Institute, October 14, 2010:
The H-1B and L-1 Visa programs: Out of Control
http://www.epi.org/publications/entry/bp280

ComputerWorld - Fed indictments tell how H-1B visas were used to undercut wages:
http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9127943&intsrc=hm_list

ComputerWorld - H-1B visa use cuts U.S. programmer, software engineer wages by up to 6%
http://www.computerworld.com/s/article/9131729/H_1B_visa_use_cuts_U.S._programmer_software_engineer_wages_by_up_to_6_?taxonomyId=10&taxonomyName=Careers

“…new companies out of India have a much better idea for making money. They send the engineers from India to America to fill spots–and get money to do it–and then after the 3 to 6 years, they bring them back to India to work for the companies that are competing with American companies.
They call it their outsourcing visa.
They are sending their talented engineers to learn how Americans do business and then bring them back and compete with those American companies. Is that what we have in mind here?
Is that our goal, to create more opportunities for people to create businesses around the world to compete with us? I think not.”

Senator Dick Durbin
FLOOR STATEMENT: H-1B VISA REFORM
Tuesday, June 5, 2007

http://web.archive.org/web/20110108195825/http://durbin.senate.gov/showRelease.cfm?releaseId=280890

Jul. 16 2012 06:52 AM
Vincenzo from Italy

"But those in favor say it takes the best minds from around the world..."

The latest Government Accountability Office (GAO) report on the H-1B visa discusses at some length the fact that the vast majority of H-1B workers are hired into entry-level positions. In fact, most are at Level I, officially defined by the US Dept of Labor as those who have a “basic understanding of duties and perform routine tasks requiring limited judgment.” This belies the industry lobbyists’ claims that H-1Bs are hired because they are experts that can’t be found among the U.S. workforce.

"The government doesn’t know how many skilled workers are needed each year—only the market does. So let the markets work." --Bloomberg

Tsk, tsk, tsk - poor Mr. Bloomberg shows his utter failure in understanding how markets work. If we were to let markets work, and if there were truly a shortage of workers, then wages would go up, not remain stagnant or declining as they have been. Instead of letting the markets work, Mr. Bloomberg wants government subsidies/handouts to allow businesses to circumvent the market. And if Bloomberg knew how many skilled workers the market was indicating are needed each year, he see that employment levels in these "shortage" occupations are actually going DOWN. Poor, poor Mr. Bloomberg. No wonder the city of New York continues to be haunted by failed and corrupt projects like Mr. Bloomberg's pet project "City Time".

Jul. 16 2012 05:22 AM

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