Donald Trump’s administration has temporarily banned Microsoft, Adobe, and several other tech companies from sponsoring workers for permanent US residency, claiming they abused immigration programs at the expense of American citizens.
Vice-president JD Vance said on Thursday that the H-1B visa programme for highly skilled foreign workers had “become rife with fraud” and that over-reliance on such schemes was “a fundamental insult to the American worker.”
He added that “no company in the US” had “abused this system” more than Microsoft.
Vance’s message to Microsoft that it could not “lay off American workers and then replace them with foreign indentured servants” triggered an angry reaction from the Indian government.
“Resorting to terminology that carries painful historical and colonial legacy connotations is deeply offensive,” the foreign ministry in New Delhi said in a statement on Friday.
Referring to Vance’s remarks, it said “such descriptions are unwarranted and ignore the fact that Indian professionals in the United States are highly educated and skilled contributors to its economy and innovation ecosystem.”
Six other IT outsourcing companies—Cognizant, Infosys, Tata, Wipro, HCL, and Capgemini—were also suspended from the Permanent Labor Certification, or Perm, program, which allows US employers to hire foreign workers on a permanent basis.
“Subpoenas have been served, investigations are under way and nobody will be getting a free pass because their name is carved into an expensive building,” said Labor Department Inspector-General Anthony D’Esposito.
Microsoft said the “vast majority” of its employees in the US were American, while Tata Consultancy Services, India’s largest outsourcing company, said its strategy was centred on hiring locally in the US and that Perm applications were in “single digits in the last two years.”
Adobe and Tata as well as Cognizant, Infosys, Wipro, HCL, and Capgemini did not respond to requests for comment.
The announcement marks the latest move in the Trump administration’s broad crackdown on immigration. It has previously taken aim at H-1B visas widely used by tech companies and specialist industries.
Last year, the White House attempted to impose a $100,000 fee on new applications, but, in June, a federal judge ruled the fee amounted to an unauthorized tax and infringed on Congress’ authority to raise funds. The Trump administration has appealed against the ruling.
Before the fee increase, the government charged $215 to register for the H-1B visa lottery and a $780 base fee for employers sponsoring visa applicants. More than 400,000 such visas were approved last year.
While Indians have been the biggest recipients of H-1B visas and the new restrictions target many of the largest outsourcing groups, the impact is likely to be small as the route from H-1B to permanent residency has been out of reach for most Indians, given a decades-long backlog.
Nearly 1 million people from India are waiting for employment-based permanent residency as of December last year, according to an August study by the non-profit National Foundation for American Policy.
Nasscom, the Indian IT services lobbying group, said the number of employees transitioning to permanent residency through Perm was “relatively limited” as Indian tech companies had “significantly reduced their dependence on H-1B visas.”
In his comments on Thursday, Vance said the visas were helping companies undercut US workers. He claimed some H-1B holders were earning between $20,000 and $48,000 less than US citizens hired for similar positions.
Amazon, the biggest user of H-1B visas, was not mentioned in the press conference. But Vance singled out Microsoft, saying it “laid off last year 6,000 American workers at the same time the company benefited from 6,300 H-1B visas and almost 3,000 green cards,” referring to US permanent residency.
The White House on Thursday also announced a fraud investigation into the use of J-1 student visas at nine American universities, including Harvard, Yale, and Stanford.
Microsoft, whose shares dropped more than 1 percent following the announcement, said the visa applications mentioned by Vance were largely “to extend or change the status” of existing employees.
“Microsoft only files H-1B petitions for those who meet the rigorous standards of this visa category,” the company said. “We pay our employees some of the highest compensation in the tech sector, and our wages are among the highest of all H-1B filings.”
At a separate event on Thursday, the Trump administration gave Microsoft’s Indian-born chief executive, Satya Nadella, the National Medal of Technology and Innovation.
He was honored alongside South African-born Elon Musk and Nvidia chief executive Jensen Huang, who was born in Taiwan.
Vance said there was no contradiction between the two announcements.
“Our message to Microsoft is: ‘You’re a great American company, but you’ve got to hire great American workers.’”
Additional reporting by Michael Stott in New Delhi
