The US has suspended some of the world’s largest IT services companies, including Infosys, TCS, Wipro and Cognizant, from a key programme used to sponsor foreign workers for permanent residency, alleging widespread abuse of the country’s worker visa system. Microsoft and Adobe have also been suspended.
US Labor Secretary Keith Sonderling announced the move at a White House briefing on Thursday, with Vice President JD Vance, who heads the administration’s Anti-Fraud Task Force, by his side. The programme in question is the Permanent Labor Certification Program, commonly known as PERM. Sonderling said the Department of Labor will not accept any new applications, or process pending ones, involving the suspended companies.
Besides the four Indian-linked names above, HCL Technologies and Capgemini are also on the list. Sonderling said these firms have collectively received over 230,000 H-1B approvals and over 100,000 permanent labour certifications. Microsoft and Adobe, he said, were suspended because of multiple active federal investigations.
Vance Targets Microsoft
Vance reserved his sharpest criticism for Microsoft, saying no company in the US had abused the system more. He pointed out that Microsoft had laid off 6,000 American workers last year, according to Newsweek’s account of the briefing. BusinessToday reports that Microsoft was approved for more than 6,000 H-1B visas and filed 3,682 PERM applications.
Vance also argued that workers recruited through outsourcing firms earn about $48,000 less than comparable American workers. At the same time, he took care to say Microsoft is a great American company, and that the aim was for it to thrive by hiring and empowering American workers rather than to harm it.
What The Suspension Means
PERM is the step where an employer has to show the Department of Labor that there are no qualified and willing US workers available for a role, and it is generally a prerequisite for sponsoring a foreign employee for an employment-based green card.
This is not a ban on H-1B visas themselves, which are temporary work visas. But cutting off access to PERM makes it far harder for the affected companies to convert their H-1B workers into permanent residents, which could hurt their ability to retain talent in the US over the long run. Indian nationals make up roughly 70% of H-1B holders, so Indian professionals are likely to feel the impact most.
It wasn’t immediately clear from the briefing coverage how long the suspensions will last. No public response from the companies had been reported at the time of writing. Indian markets had already closed by the time the announcement was made, with TCS shares ending Thursday 0.4% lower at Rs. 2,075.25, so the market reaction will only play out on Friday.
A Probe That Has Been Building Since July
The suspensions follow a Department of Labor Office of Inspector General investigation into H-1B and PERM fraud that was announced in July. Inspector General Anthony D’Esposito said at the time that dozens of subpoenas had been issued, and that whistleblowers had flagged some of the biggest companies, including Cognizant, over issues with PERM and H-1B filings. The probe sits under the Task Force to Eliminate Fraud led by Vance.
The crackdown also extends beyond the corporate world. The Labor Department has reportedly opened investigations into nine prominent universities, including Harvard, Yale and Stanford, over their use of J-1 visas.
Pressure On Indian IT Keeps Mounting
Indian IT companies are among the biggest users of the H-1B programme. USCIS data for April to September 2024 showed Infosys receiving 8,140 H-1B approvals and TCS 5,274, followed by HCL America with 2,953 and Wipro with 1,634.
The latest step comes a little over a year after the White House announced a $100,000 fee on new H-1B visas, a move that was later challenged in court. At the time, Indian business leaders said the fee could eventually benefit India in the long run, as companies shift more work and hiring closer to home. The announcement had also triggered a surge in last-minute bookings to the US from H-1B holders racing to get back before the deadline.
Other countries have been quick to try and capitalise on the shifting US stance. Germany’s ambassador to India had publicly invited skilled Indians to work in Germany once the $100,000 fee was announced.
The latest move is also the newest in a series of actions by the Trump administration on both legal and illegal migration, coming ahead of the November midterm elections. With multiple federal investigations still ongoing, further action against the suspended companies can’t be ruled out.