Offshore Firms Took 50% of H-1B Visas in 2013

Data from the U.S. Citizenship and Immigration Services shows clearly that the largest users of H-1B visas are offshore outsourcing firms.

The U.S. today began accepting H-1B visa applications for the next fiscal year, with heavy demand expected. The visas will likely all be claimed by end of this week, and a major share of the H-1B visas will go to firms that use visa holders to displace U.S. workers.

U.S. Citizenship and Immigration Services (USCIS) data, provided to Computerworld, is very clear about who are the largest users of H-1B visas: Offshore outsourcing firms.

The U.S. makes 65,000 H-1B visas available each fiscal year under its base cap, with an additional 20,000 set aside for advanced degree graduates of U.S. universities. On April 1 each year, it accepts visa petitions for the fiscal year that begins Oct. 1.

The IT services firms among the top 20 H-1B users accounted for a little more than 50% of the annual base visa cap of 65,000. This is for initial visas approved in the 2013 fiscal year, not renewals. This percentage excludes some other top 20 H-1B users, such as IBM, Microsoft, Amazon, Intel, Google and Oracle. (See list chart)

The two largest H-1B users are Indian-based, Infosys, with 6,298 visas, and Tata Consultancy Services (TCS), with 6,258. In third place is Cognizant, which is based in New Jersey, but runs large offshore centers. These firms have long dominated the top H-1B list spots.

These numbers represent only the visas approved last year. The H-1B is a six-year visa, and IT services firms have consistently been the largest visa users year after year. (Note: The list also includes H-1B users exempt from the cap, which includes universities and research institutions.)

IT service firms use H-1B workers in offshore outsourcing contracts. IT workers affected by offshoring decision will typically train their replacements as a condition of severance. This has been the situation, for instance, at Northeast Utilities in Connecticut, which late last year announced plans to outsource some its IT work to Infosys and TCS and cut around 200 IT workers.

"The offshore outsourcing firms are once again getting the majority of the visas," said Ron Hira, a public policy professor at the Rochester Institute of Technology in New York. "The program continues to promote the offshoring of high-wage American jobs."

The tech industry, through lobbying organizations such as Compete America, argues that there is a skills shortage in the U.S., which justifies the need for H-1B visas. The claim of a skills shortage is in dispute, however.

Paul Krugman, a New York Times columnist and Nobel Prize-winning economist, argued in a column Monday that the idea of a skills gap is something "that should have been killed by the evidence, but refuses to die."

The IT offshore industry is worried about the prospects of immigration reforms that may restrict access to H-1B visas. These firms have been saying that they are increasing their hiring of U.S. workers, permanent residents or U.S citizens.

Cognizant, in a statement, said it "is committed to attracting and retaining the top talent in the United States and around the world. We create and support thousands of American jobs, including 7,000 U.S. workers hired locally over the past two years and a commitment to hire at least 10,000 more locally over the next three years. Cognizant has a robust campus recruitment process at U.S. colleges and universities, leveraging our proximity to STEM education hubs."

But Cognizant does not disclose data to support its U.S. hiring claims, such as the percent of its U.S. workforce on visas.

In its 2013 annual report, Cognizant said that it had approximately 171,400 employees globally; approximately 133,000 persons in the Asia Pacific region, approximately 31,500 persons in various locations throughout North America and Latin America and approximately 6,900 persons in various locations throughout Europe.

Hira points out that over the last four years, Cognizant has received about 23,000 new H-1B workers with visas valid for up to 6 years, and has a number of workers on L-1s. (L-1 visas are used by multinational firms to transfer employees between countries.) "So, most, if not nearly all, of Cognizant's employees in the US are on some guest-worker visa," said Hira.

[Prior year H-1B data for 2012 and 2011 and for 2010.]

Another major user of the H-1B visa, Infosys, ran into trouble with the government over its use of visitors visas. It agreed to pay a $34 million settlement last year to resolve a U.S. government claim that it ran an unlawful visa scheme. The company does not disclose data on its U.S. workforce, and did not reply to requests for comment.

A TCS spokesman said that the company "is among the top job creators in the U.S. within the IT services industry and has actively recruited more than 5,000 Americans over the past three years, many of whom are working on technologies and systems that support critical client needs and help to drive America's innovation economy."

But without the data from TCS, it is unknown what percentage of its U.S. workforce is on visas, and how that may have changed over the years.

Cargill, a food and agricultural company, is outsourcing IT jobs to TCS, affecting some IT 900 jobs worldwide, including 300 in Minnesota's twin cities, the Minnesota StarTribune reported last week.

In an emailed response to Computerworld, Cargill spokeswoman Gabby Nelson, said the company has been reviewing IT infrastructure services "to determine whether we should continue to do that work internally or whether we should choose a partner who could provide the global infrastructure capabilities Cargill needs today and to support our future growth."

Last week, Cargill "communicated to employees our intention to move this work to TCS. We will begin a detailed transition planning process to determine when and how work will move to TCS. Once the plan is complete, we expect to spend about seven months executing the transition."

The company doesn't know the specific impact on employees, said Nelson. "What we do know is that we expect that some will be retained in Cargill or offered roles with TCS, while others who are not will transition out of the company in the next 6-9 months. Employees will know their individual status by the end of May."

Cargill is based in Minnesota, which is also the home of Sen. Amy Klobuchar (D-Minn.), a sponsor of the bipartisan I-Squared Act of 2013, which would allow H-1B visa caps to rise to a maximum of 300,000 annually.

Patrick Thibodeau covers cloud computing and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed. His e-mail address is pthibodeau@computerworld.com.

See more by Patrick Thibodeau on Computerworld.com.

Sharon Machlis is online managing editor at Computerworld, where she works on data projects and tools in addition to writing and editing. Her tech interests include data visualization and analysis, mobile applications and scripting. She also holds an Extra class amateur radio license. Follow Sharon on Twitter at http://twitter.com/sharon000. You can read her Computerworld blog at blogs.computerworld.com/machlis. Her email address is smachlis@computerworld.com.

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This story, "Offshore Firms Took 50% of H-1B Visas in 2013" was originally published by Computerworld .

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