Trump seeks shift in visa allotments key to tech outsourcing

Register now

(Bloomberg) -- President Donald Trump will take aim at information-technology outsourcing companies Tuesday when he orders a review of H-1B visa programs to favor more skilled and highly paid applicants.

An administration official who briefed reporters in advance named Tata Consultancy Services, Cognizant Technology Solutions Corp. and Mphasis Corp. as examples of companies that would likely have fewer visas approved as the administration’s changes are adopted.

Outsourcing companies tend to use the visas to hire less-skilled workers at much lower rates of pay. To the extent any changes in the program cut back on the use of the visas by India-based IT companies, it would benefit Silicon Valley giants that say they’d like to hire more employees on H-1B visas.

Employers seeking H-1B visas for 2018 submitted 199,000 applications this year, far exceeding the 85,000 available visas, which are currently distributed by lottery, according to figures released Monday by the U.S. Citizenship and Immigration Services. But the number of applications for the lottery, conducted earlier this month, declined from 236,000 last year, possibly reflecting concern about new restrictions.

Trump will announce the order Tuesday during a trip to Wisconsin along with instructions to federal agencies to examine their purchasing systems to more effectively favor buying American goods. Two administration officials previewed the executive actions for reporters on condition of anonymity because they didn’t represent the agencies most directly involved in the policies.

Trump campaigned on a promise to use presidential authority to encourage companies to buy American products and hire American workers, and the officials portrayed the order as a step toward fulfilling the pledge. The H-1B visa system has been criticized following high-profile examples of American workers being replaced by lower-paid foreigners through the program.

The new order asks agencies to propose ideas to direct visas to the most skilled and highly paid applicants. It doesn’t dictate any specifics about how to achieve the goal. The administration ultimately would like to get rid of the lottery system, one of the officials said.

How much the president can change the program without Congress’s involvement is a matter of debate. The administration has significant leeway in deciding how to carry out the law. It could, for instance, give priority to employers who rely less heavily on holders of H-1B visas. Several bills have been proposed in Congress to end the lottery system.

One reason the program has been criticized is the rise of the outsourcing industry, a nascent business 30 years ago. Outsourcers take over and manage the technology systems for corporations in the U.S., Europe and Asia.

In the U.S., outsourcers often bring staffers into the country on work visas, train them in the tech departments of leading corporations and then rotate them back to India where pay and living costs are lower.

Outsourcing companies now get far more visas than traditional technology companies, according to data collected through Freedom of Information Act requests by Ron Hira, an associate professor at Howard University who has done extensive research on the H-1B program. Tata Consultancy received 5,650 H-1Bs in 2014 while Amazon, the largest recipient in the latter group, got 877.

About 6 percent of the visas currently go to the Labor Department’s top skill level, while eight in 10 workers on the visa are paid less than the median wage for their fields, the White House said in a fact sheet distributed to reporters.

The Trump administration rolled out policy shifts earlier this month to begin cracking down on the H-1B visa system. They included a promise to pursue more investigations of fraud and abuses and a warning to employers applying for the visas not to discriminate against U.S. workers.

--With assistance from Joshua Brustein, Hannah Dormido, Yue Qiu, Alex McIntyre and Saritha Rai

For reprint and licensing requests for this article, click here.