Trump Moves to Realign Visa Allotments Key to Tech Outsourcing

  • Seeks rules changes to direct H-1B visas to higher paid jobs
  • Aimed at information-technology outsourcing companies

President Donald Trump is taking a swipe at tech outsourcing companies. The U.S. President is ordering a review of America's H-1B visa program to favor more skilled and highly paid applicants. Bloomberg News takes a look at the work visa program that has channeled thousands of foreign workers to the U.S. (Source: Bloomberg)

President Donald Trump took aim at information-technology outsourcing companies Tuesday as he ordered a review of H-1B visa programs to favor more skilled and highly paid applicants.

Trump blasted “widespread abuse” of the visas for skilled foreign workers before signing an executive order directing federal agencies to find ways of reorienting the program.

“Right now, H-1B visas are awarded in a totally random lottery and that’s wrong,” said Trump, who traveled to a tool factory in Kenosha, Wisconsin, to sign the order. “Instead, they should be given to the most skilled and highest paid” and should “never, ever be used to replace Americans.”

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.

Protecting Jobs

The “Buy American - Hire American” order Trump signed Tuesday also includes provisions directing federal agencies to tighten enforcement of laws granting preferences to U.S.-made goods in federal purchasing, which Trump said had been “gutted” by waivers and exceptions.

“We are sending a powerful signal to the world: We’re going to defend our workers, protect our jobs and finally put America first,” Trump said in remarks prior to signing the order in a ceremony at tool manufacturer Snap-on.

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.

Behind the Push To Reform U.S. Work Visa Programs: QuickTake Q&A

Outsourcing Industry

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 by Joshua Brustein, Hannah Dormido, Yue Qiu, Alexander McIntyre, Saritha Rai, and Toluse Olorunnipa

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