H-1B visa denials: Outsourcers hammered, Bay Area tech giants unscathed

Outsourcers and IT staffing companies both foreign and domestic are getting hammered with denials of the H-1B visa, according to a new analysis of federal government data.

Bay Area tech giants including Apple, Google and Facebook rely heavily on H-1B workers, but Big Tech saw little to no increase in denial rates when applying to hire new H-1B workers from fiscal years 2015 to 2019, according to analysis in a report by the National Foundation for American Policy, which supports expanding the H-1B program beyond the current 85,000 cap on new visas.

But Indian outsourcing giants including Tata, Wipro and Infosys got walloped with rejection rates of 28 percent to 46 percent, and major U.S.-based outsourcing and staffing firms Ernst & Young, Deloitte and Cognizant saw denial rates of 18 percent to 52 percent, according to the report.

Rejection rates for H-1B renewals among major technology firms were little changed. The Indian companies and Cognizant had denial rates considerably lower for renewals than for new H-1B workers — ranging from 19 percent to 28 percent — while E &Y’s rate went down slightly and Deloitte’s went slightly up.

Federal government data have shown that the steepest increase in H-1B denials has come during the administration of President Donald Trump. His Buy American and Hire American executive order has dramatically increased scrutiny and rejection of H-1B applications.

Bay Area technology giants have pushed for an increase to the annual H-1B cap on the visa, which is intended for jobs requiring specialized skills, arguing that they need more visas to secure the world’s top talent. Critics point to reported abuses by U.S. companies and outsourcers, and contend the visa is used to supplant U.S. workers and drive down wages.

The New Foundation for American Policy, in its report, claimed that a key goal of the Trump administration has been “to make it more difficult for well-educated foreign nationals to work in America in science and engineering fields.” The White House did not immediately respond to a request for comment.

The report cites research by Britta Glennon, a professor at the University of Pennsylvania’s Wharton business school, who concluded, “Restrictive H-1B policies could not only be exporting more jobs and businesses to countries like Canada, but they also could be making the U.S.’s innovative capacity fall behind.”

However, Howard University professor Ron Hira, who studies the H-1B, said his research indicates that a significant share of H-1B workers in the U.S. are leading teams of workers overseas, so U.S. companies can get work done much more cheaply than at home. “Even though H-1B wages are low, wages in India are much much lower,” Hira said. “You can hire a professional IT worker for $4 an hour, $8,000 a year.”

Hira argued that increasing denial rates for outsourcers and staffing companies does not address what he sees as a fundamental problem with the H-1B program, that it allows companies to pay foreign workers less than the prevailing wage. More than half of H-1B holders receive lower pay than industry averages, in accordance with U.S. Department of Labor policy.

Still, Hira said, boosting denial rates for outsourcers and staffing firms should mean U.S. businesses including major Silicon Valley tech firms — which use large numbers of contract workers from outsourcing and staffing companies — will pay more for contract work because more of it will be done by U.S. workers receiving market wages.

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