The Trump administration has taken a hammer to a key route for Indian IT service professionals to settle permanently in the US.
It has blocked eight top Indian and US companies from seeking permanent residency for international workers employed through the H-1B visa programme, accusing the firms of employing “indentured servants”.
The companies hit by the ban include Indian IT giants TCS, Infosys, HCL and Wipro, as well as Cognizant. Other foreign technology giants targeted include Microsoft, Adobe and Capgemini. The decision affects a key talent-recruiting pathway for the companies.
The move to bar the companies from the US employer scheme known as PERM strikes at one of the main attractions of the US market for India’s vast software-services industry: the chance for engineers and IT professionals to move to America on temporary work visas, build their careers and remain permanently.
“The H-1B visa is how the people get into the United States in the first place, and then a PERM program is how those employees stay,” US Vice President JD Vance told a news conference on Thursday.
“Stop defrauding the American worker. Stop importing an indentured servant to do a job that an American worker would happily do,” Vance said.
Vance lashed out at the way technology companies use the H-1B visa programme to bring foreign workers into the US, saying it “was rife with fraud” and was “a fundamental insult to the American worker and the American way of life”.
“It’s over, bro,” says Pareekh Jain, chief executive of Pareekh Consulting. Jain says the relatively low salaries offered by Indian service providers in India were offset by the prospect of eventually working in the US.
“The service providers salaries were lower but the US opportunity was the main attraction. Now they will have to look in the EU and other countries,” Jain said.
Vance claimed that “no company in the US has abused this system more than Microsoft”, hitting out also at the other companies affected by the ban. The US vice president said the administration’s decision was about “putting American workers first”.
The action by the Trump administration, whose popularity has sunk in the opinion polls, comes in the lead-up to crucial US midterm elections later this month.
The government will not process any new or pending Permanent Labor Certification Program (PERM) applications from the eight companies to sponsor a foreign worker in the US under the H-1B plan to become a legal permanent resident, a key step towards becoming a citizen, secretary of labor Keith Sonderling told the same news conference.
At the same press conference, Vance announced that the government was investigating nine top universities, including Harvard, Yale, Stanford and the Massachusetts Institute of Technology, over their use of J-1 student visas.
Sonderling said the software companies and US universities have turned into “visa mills” that are “flooding” the US with foreign workers.
The H-1B programme allows US companies to employ foreign workers in specialist occupations, particularly in technology. India is by far the largest source of H-1B workers, accounting for roughly 70 per cent of visas issued each year.
An H-1B visa allows a foreign worker to remain in the US for a maximum of six years, although it can be extended while a green card application is pending.
For Indian IT professionals who enter the US on an H-1B visa and then want to remain there permanently, the next crucial step is what is known as PERM, or Permanent Labor Certification.
The process is started by the company employing the foreign worker, which has to show the US government that hiring the foreign employee will not displace a qualified American worker.
Amazon is the largest user of H-1B visas, but it was not singled out by Vance. Instead, the vice-president took aim at Microsoft, saying it had “laid off last year 6,000 American workers at the same time the company benefited from 6,300 H-1B visas and almost 3,000 green cards.”
Vance added: “For every worker that Microsoft laid off, they replaced that worker with one and a half foreign indentured servants.”
Indian outsourcing companies have traditionally used the H-1B system to move employees from India to work on projects for US clients, with some later seeking permanent residency.
Pareekh Consulting’s Jain says, “There will be opportunities in different countries [for Indian tech workers] but nothing like the scale of the US.”
“PERM suspension impacts both new applications and those already in process. This will impact the career plans of many IT professionals who are already in the US,” Jain says.
“The normal career progression of junior professionals to go onsite on H-1B and stay there is gone for now,” he says.
Microsoft strongly rejected Vance’s accusations of hiring foreign workers as cheap labour. “We pay our employees some of the highest compensation in the tech sector, and our wages are among the highest of all H-1B filings,” Microsoft said. “We pay our H-1B employees the same as any other employees doing comparable work.”
Estimates suggest that about 85,000 H-1B visas were approved in 2024. A portion is reserved for citizens of countries like Singapore, while Indians are estimated to receive roughly 70 per cent of the annual allocation.
TCS receives the second-largest number of H-1B visas after Amazon, while Infosys is third. Apple and Microsoft are fourth and fifth, followed by Cognizant, Google and Meta. JPMorgan Chase is also a major user of the programme.
The restrictions come as Indian IT-services companies are already adapting their US operations to reduce their dependence on moving employees from India. TCS, for example, has said it is increasing local recruitment in the US, which means it will need to send fewer workers from India.
At the same time, the companies have increasingly turned to subcontractors, both in the US and India, to provide workers for projects rather than relying entirely on their own employees on H-1B visas.
That trend is already visible in TCS’s costs. The company, which announced its quarterly results on Thursday, said its subcontractor costs rose 14 per cent during the quarter and 40 per cent year on year.
This is the latest assault by the Trump administration on foreign workers. US President Donald Trump announced last year that he was hiking the fee for the H-1B visa application to $100,000.
Silicon Valley, which is reliant on the programme to recruit highly skilled workers from overseas, reacted with alarm and a federal judge blocked the administration from imposing the fee in June. But the Department of Homeland Security proposed a new $103,265 fee on H-1B visas in August.
Source: www.telegraphindia.com
