How there has been a shift in companies that use H-1B visas in the US, they are no longer technology companies

Silicon Valley’s drive for innovation has long relied on the H-1B visa program to attract top-tier global talent in science and engineering. However, new data obtained by Bloomberg News reveals that a wider range of industries, including banks and telecommunications companies, are among the largest users of the programme -- often through staffing and outsourcing companies that secure nearly half of the 85,000 new H-1B visas issued annually. These companies, acting as visa middlemen, are reshaping the programme’s purpose, raising questions about its impact on wages and U.S. workers.According to Bloomberg’s analysis, covering new H-1B hires from May 2020 to May 2024, Citigroup Inc. added 3,000 H-1B workers, outpacing tech giants like Nvidia, Oracle, and Qualcomm. However, unlike the high-skill researchers and engineers typically associated with tech companies, about two-thirds of Citi’s H-1B workers were IT contractors sourced through staffing and outsourcing agencies. These workers, often reportedly paid significantly less than direct hires, highlight a growing trend where non-tech companies leverage the visa program for lower-cost labor.“This is the tip of the iceberg,” said Susan Houseman, a senior economist at the W.E. Upjohn Institute for Employment Research, in an interview with Bloomberg. “While there’s been a national debate about the U.S. reliance on imported goods, not enough attention has been paid to the offshoring of service jobs -- not because it doesn’t happen or isn’t important, but because we don’t have good data on it.”

Lottery fraud in H-1B visas

The H-1B visa, established by Congress in 1990 to bolster U.S. competitiveness in emerging tech industries, has become oversubscribed, leading to annual lotteries for the limited visas available. Staffing and outsourcing firms, functioning as visa middlemen, have exploited this system. These firms provide corporations with lower-level IT workers or facilitate the offshoring of back-office functions. Bloomberg’s data, obtained via a Freedom of Information Act lawsuit against the Department of Homeland Security, identifies major U.S. companies like Capital One Financial Corp., Verizon Communications Inc., AT&T Inc., and Walmart Inc. as heavy users of these visa middlemen.Until recently, some middlemen manipulated the visa lottery through a practice known as “multiple registration,” where they submitted numerous applications for the same worker to increase their odds. The U.S. Citizenship and Immigration Services (USCIS) labeled this practice fraudulent in a 2023 report and implemented rule changes last year to curb it. Bloomberg’s investigation also identified 13 staffing firms flagged by USCIS for such tactics, with at least six supplying workers to Capital One. Over half of Capital One’s 905 H-1B contract workers during the four-year period were linked to multiple registrations, the highest proportion among the top 10 companies analyzed.Capital One relied on 429 staffing firms, 361 of which used multiple registrations. In response, a Capital One spokesperson told Bloomberg that the company was unaware of any government accusations of visa fraud by its vendors but would “take appropriate action” if such issues arose. Verizon and Capital One emphasized that they require suppliers to comply with applicable laws, while AT&T, Walmart, and USAA declined to comment.

What the shift in H-1B visas mean for salaries

The data also reveals significant pay disparities. H-1B contractors are often paid far less than direct hires, even for similar roles. Bloomberg’s analysis of the top 10 end-clients shows that among nearly 5,300 H-1B “software developers” hired from 2020 to 2024, over 75% were contractors, earning roughly $48,000 less on average than direct hires, even when controlling for education and age. One in three contractors received the minimum salary required by the Department of Labor.Steve Hall, Chief AI Officer at Information Services Group Inc., told Bloomberg that part of the pay gap reflects contractors performing less technical roles, such as liaising between U.S. clients and offshore teams. However, critics argue that the reliance on visa middlemen distorts the H-1B program’s original intent. Labor advocates contend that it undercuts U.S. workers, creates a vulnerable workforce with fewer protections, and tilts the labor market in favor of employers.The lack of comprehensive data on pre-existing H-1B contractors and offshored jobs complicates efforts to assess the program’s full impact. As Houseman noted, the offshoring of service jobs remains understudied, yet its implications for the U.S. labor market are significant. With companies across industries increasingly turning to visa middlemen, the H-1B program’s role in shaping the workforce continues to spark debate.