Work Visas May Work Against the U.S.

Indian outsourcers file the most applications for temporary H-1B visas. Are they using them to train staff for jobs abroad?

by Peter Elstrom

America's visa program for temporary workers was originally set up to allow U.S. companies to bring skilled workers who are in short supply to the U.S. Microsoft (MSFT), IBM (IBM), Intel (INTC), Oracle (ORCL), and Sun Microsystems (SUNW) have been active participants in the program, hiring foreign workers for specialized computer programming jobs and positions managing projects with overseas staff.

The visas, known as H-1Bs, are popular enough that President George W. Bush is calling for an increase in the cap on the number of workers who can come to the U.S. under the program. "We've got to expand what's called H-1B visas," he said in a January speech. "It makes no sense to say to a young scientist in India, you can't come to America to help this [country] develop technologies that help us deal with our problems."

Outsourcing Conduit…

But a review of new information from the federal government suggests that the companies benefiting most from the temporary worker program aren't U.S. companies at all. Rather, they appear to be Indian outsourcing firms, which often hire workers from India to train in the U.S. before returning home to work. Data for the fiscal year 2006, which ended last September, show that 7 of the top 10 applicants for H-1B visas are Indian companies. Giants Infosys Technologies (INFY) and Wipro (WIT) took the top two spots, with 22,600 and 19,400 applications, respectively. The company with the third most applications is Cognizant Technology Solutions (CTSH), which is based in Teaneck, N.J., but has most of its operations in India. All three companies provide services to U.S. companies from India, including technology support and back-office processing.

The only other U.S. companies among the top 10 are the accounting and consulting firm Deloitte & Touche and consultancy Accenture (ACN). They rank seventh and ninth, with 8,000 and 7,000 applications, respectively.

The dominance of Indian outsourcing companies raises public policy questions about the temporary visa program. Some experts say that while the intent of H-1B visas may be to help U.S. companies hire workers with rare skills, the effect in some cases may be to facilitate moving jobs abroad. The issue has also sparked concern among some prominent U.S. tech companies, which worry that outsourcers could abuse the visa program, harming the tech firms' ability to attract foreign talent.

Ron Hira, a public policy professor at the Rochester Institute of Technology, says it appears that Indian firms may be using their H-1Bs to bring in workers from their home countries to make them more effective at outsourcing jobs in India. "The visa program serves a good purpose when it brings in the best and the brightest," says Hira, who is on leave at the nonprofit Economic Policy Institute and crunched the recently released visa data to compile the list of top applicants. He says that as recently as 1998 eight of the top 10 H-1B visa applicants were U.S. companies. "It serves a bad purpose when it's used to facilitate outsourcing."

Or Competitive Edge?

The Indian outsourcing firms say that's a misinterpretation of the data. They argue that the temporary visa program allows outsourcing firms to help U.S. companies become more flexible and ultimately more competitive in the global economy. Wipro has more than 4,000 employees in the U.S., and roughly 2,500 are on H-1B visas. About 1,000 new temporary workers come to the country each year, while 1,000 rotate back to India, with improved skills to serve clients. "Our goal is to make our customers more competitive," says Laxman Badiga, Wipro's chief information officer. An Infosys spokeswoman said executives from that company were not available for comment.

The government visa data cover only the number of applications for visas, not the number actually awarded. U.S. Citizenship & Immigration Services releases the identities of companies that apply for H-1B visas, not those that receive them. A spokesman for USCIS, which is part of the Homeland Security Dept., says it won't discuss individual companies because of privacy issues.

Still, the number of visas awarded is likely correlated to the number of applications. Efran Hernandez, chief of business and trade services for USCIS, says H-1B visas are awarded on a "first-come, first-serve" basis and there is no preference given to U.S. companies over non-U.S. companies. "You have to be a U.S. employer," says Hernandez. "That doesn't mean you have to be a U.S. company."