As the debate over specialized visas grows, companies such as Amazon (AMZN) , Intel (INTC) , Alphabet's (GOOGL) Google and Apple (AAPL) that hire H-1B workers may start to distance themselves from outsourcing companies such as Tata, Infosys (INFY) , and Cognizant (CTSH) that have drawn White House criticism.
President Trump has criticized the H-1B visa program as a pool of cheap labor that undercuts U.S. workers. When signing Buy American, Hire American executive order in Wisconsin Tuesday, Trump blasted the random lottery that grants H-1B visas. "Instead, they should be given to the most-skilled and highest-paid applicants, and they should never, ever be used to replace Americans," Trump said.
While Tata, Infosys, and Cognizant are the biggest sponsors of H-1B visas, according to stats from Howard University professor Ron Hira, companies such as IBM (IBM) , Microsoft (MSFT) , Amazon, Intel, Google and Apple are also participants.
H-1B visa sponsors generally fall into two categories, said Mark Koestler, who co-chairs the Business Immigration Group for Kramer Levin Naftalis & Frankel LLP.
One category sponsors H-1B workers to fill jobs inside a company. The other category, which are job shops or outsourcers, hire H-1B workers for fill jobs at other companies, typically at a lower salary. CBS (CBS) program 60 Minutes recently aired a feature on workers who had been replaced by H-1B visa holders, often after training their replacement.
"Most people who find fault with the H-1B program are really thinking of the job shops, which bring in foreign nationals to work not for them but to work for their clients," Koestler said.
The outsourcers work with many large corporations. Disney (DIS) was the poster child for H-1B disputes when IT workers filed sued the Magic Kingdom in 2016 for laying them off after they trained outsourced replacements provided by Cognizant and fellow contractor HCL. A Federal Judge in Florida dismissed the case in 2016. Rosemead, Calif., electric company Southern California Edison faced a similar lawsuit.
The White House specifically identified outsourcers Tata, Infosys, and Cognizant as large contractors who place H-1B visa holders in jobs held by U.S. workers, during a background briefing this week. "They will apply for a very large number of visas, more than they get, by putting extra tickets in the lottery raffle, if you will, and then they'll get the lion's share of visas," a White House official said on background.
Displacement of U.S. workers by H-1B holders has become a hot political issue. "You've seen some of these high-profile examples where you have career employees at a company who have been working there for 10, 20 years, and then they get laid off and they hire a contracting firm using H1B workers at much less pay," the administration official added.
Infosys said in an emailed statement that it helps its clients to become more competitive and to fill the gap of skilled workers in the U.S. "It is our endeavor to help clients leverage the best U.S. talent together with the best global talent, to drive economic growth in the U.S., ensure the U.S. continues to be at the forefront of innovation, and bring skills and education in the new technologies that will transform our world," the company said.
In a CNBC interview this week, IBM CFO Martin Schroeter said that "clearly some companies that have built an entire business model around that H-1B visa program."
Immigration reform group FWD.us -- which was founded by Facebook CEO Mark Zuckerberg, former Microsoft chief Bill Gates and Dropbox CEO Drew Houston and counts Netflix (NFLX) CEO Reed Hastings and Google Chairman Eric Schmidt as supporters -- suggested the government crack down on outsourcers that pay lower wages to large numbers of workers from overseas.
"We should do so in a targeted manner by increasing the wage floor, treating super-dependent companies differently and banning their ability to do third-party placement," FWD.us President Todd Schulte said in a prepared statement. "Highly skilled immigrants create new American jobs, raise wages for native-born workers, and contribute enormously to growing our economy." As part of the overhaul, Schulte suggested, the government could improve protections for U.S. workers while expanding the number of H-1B visas from the 85,000 currently accepted each year.
The implications go beyond tech and coding, Kramer Levin's Koestler said. The government awards H-1B visas to health care staffers, accountants, lawyers, advertising professionals, journalists and other professionals.
The U.S. could also lose out by preventing foreign students from remaining in the country once they graduate, Koestler warned. "A lot of foreign national students who come here pay full freight and by paying full freight they allow U.S. citizens to get scholarships," he said. "We've just trained them and given them a terrific education. Do we want to send them overseas to compete against us?"