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New Data Hammers Home Problems With H-1Bs and Outsourcing Firms

Government reports show outsourcing firms get lion's share of H-1B workers and underpay them

2 min read

Illustration: iStockphoto
Illustration: iStockphoto

The biggest critique of the United States’ H-1B visa program is that tech companies use it as a channel for importing cheap labor from overseas. New data released by the federal government affirms that argument. It shows that most of the visas go to a handful of IT outsourcing companies, which pay their guest workers well below average.

The reportson H-1B employers and salaries by the U.S. Citizenship and Immigration Services show that 69 percent of the 350,000-plus visas approved in 2016 were for computer-related occupations, and 74 percent went to people born in India.

The top 20 employers took 37 percent of the approved visas. The top five were all IT outsourcing firms: Cognizant Tech Solutions, Infosys, Tata Consultancy Services, Accenture, and Wipro. All together, these companies took 60,000 visas.

The average salary of H-1B visa holders was $91,000. But top outsourcing firms paid well below this number, with TCS paying as little as $72,000 on average.

Non-outsourcing tech companies seem to be more fair. Apple, Cisco, Microsoft, and Google, for instance, pay their H-1B workers average wages of over $120,000. These higher-paying companies generally hire more workers with Master’s degrees, while most outsourcing firms hire mainly Bachelor’s degree holders.

But even major tech firms are using the program to pay less than median wages in their area, points out Ron Hira, professor of political science at Howard University. Microsoft, for instance, pays H-1B software developers $126,000 on average, while the Bureau of Labor Statistics puts the average salary for that job at $132,000. “Any firm that is able to pay less money is going to pay less money,” Hira says.

Presidents of IEEE-USA argue that there is a reason H-1B salaries cluster around $65,000 to 75,000: paying H-1B workers at least $60,000 exempts company from regulations designed to prevent visa abuse. Read their commentary to understand why IEEE-USA opposes efforts to expand the H-1B visa program.

Companies can set wages based on certain criteria, and outsourcing firms frequently bend those rules by defining an employee at the lowest possible skill level. They aren’t breaking any rules, but observers say the rules need to change.

Hira has argued that raising the wage floor the right way is the most critical reform needed for the H-1B visa program. “The government could require all firms to show that they have looked for American workers first, and require them to pay the average wage.”

“Raising the wage would be good for H-1B as well as U.S. workers,” he says. “H-1B workers would receive a fair market wage. And right now the H-1B program is far oversubscribed so many international workers who wish to come cannot. Raising the wages would mean that the top skilled ones would come.”

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