Tighter U.S. Oversight Comes to H-1B Visa Program

As federal officers raid alleged abusers, tech employers worry they'll run short of skilled foreign workers, especially in stimulus sectors

As the unemployment rate in the U.S. rises, the federal government is tightening its oversight of a controversial visa program that allows companies to bring in skilled workers from overseas. The crackdown is aimed at reducing alleged abuses of what are known as H-1B visas, but it may also make it more difficult for U.S. companies to hire talented workers from abroad. Tech giants such as Microsoft (MSFT), Oracle (ORCL), and IBM (IBM) have been active participants in the program and have lobbied for its expansion.

The H-1B visa program was originally designed to let American companies fill high-skill positions for which no local workers were available. But critics say the program has had such lax oversight that it has been open to abuse and fraud. In several cases, companies have been charged with underpaying workers they bring to the U.S. In addition, outsourcing firms have become some of the heaviest users of the program, raising concerns that visas are being used to train foreign workers who end up taking American jobs. Late last month the government disclosed that the top four recipients of the work visas in 2008 were all Indian outsourcers—Infosys Technologies (INFY), Wipro (WIT), Satyam (SAY), and Tata Consultancy (TCS.BO). The companies use the visas to bring employees from abroad to work in their U.S. operations, typically for two or three years.

Increased oversight of the program is likely to come on several fronts. The Labor Dept. is tightening its review of applications for the work visas, having staffers process requests manually for the first time. Meanwhile, U.S. Citizenship & Immigration Services (USCIS) is more actively investigating companies that receive the visas for potential misuse. Last month, USCIS and the U.S. Attorney's office in Iowa cooperated on a six-state raid of companies allegedly abusing the program. Matthew Whitaker, U.S. Attorney for the Southern District of Iowa, says the resulting 10-count indictment against a New Jersey-based company called Vision Systems Group is just "the tip of the iceberg." Vision Systems did not return calls seeking comment.

Congress Could Act

Senators Charles Grassley (R-Iowa) and Richard Durbin (D-Ill.), two of the program's vocal critics, are pressing for legislative reform as well. They plan to introduce legislation by early April that would require employers to pledge they had attempted to hire American workers before applying for H-1B visas—a step not required under current law. "I want to make sure that every employer searches to make sure there is no American available to do the job," says Grassley.

American tech companies are wary of any reforms. Microsoft, the top U.S. recipient of H-1Bs in 2008, says the Durbin-Grassley plan risks making it more difficult to recruit talented workers to the U.S. and more likely companies will hire abroad. The company says expansion of the program will bring in skilled immigrants who will help the U.S. economy recover. Still, Microsoft says it supports government efforts to crack down on companies misusing the existing program and has met with USCIS to help develop methods to detect fraud. "We are supportive of steps to reform the H-1B visa system to eliminate the potential for abuse," says Microsoft General Counsel Brad Smith.

The government will begin accepting applications for this year's H-1Bs on Apr. 1. In recent years, the 65,000 visas permitted annually have been scooped up in days. Robert Hoffman, spokesman for the tech lobbying group Compete America, says it's important the government not clamp down too much because skilled workers will be needed in green tech, health care, and other sectors that are targeted for expansion in the stimulus plan. "We're trying to create industries where none exist," he says. "That may create an added need for workers."

    Before it's here, it's on the Bloomberg Terminal.