The H-1B Outsourcing Visa

Is the H-1B visa a talent visa or an outsourcing visa? Many Americans see it as an outsourcing visa, and for good reason. Until tech Right leaders like Elon Musk and Vivek Ramaswamy understand this perspective, their attempts to bring in more foreign labor via the existing H-1B program will face increasing opposition.

“Pink Slips at Disney. But First, Training Foreign Replacements.” Back in 2015, this headline made national waves when Disney replaced about 250 tech workers with H-1B holders. Even worse, these workers received no severance unless they trained their foreign replacements.

One employee, Leo Perrero, broke down crying as he testified before the Senate about his experience—especially when he talked about having to explain his firing to his kids. And lest you think that the H-1B is a talent visa, Perrero had to repeatedly explain basic concepts to his foreign replacements.

Stories like this continue to this day. In March 2024, the Wall Street Journal published an exclusive about how Tata Consultancy Services, an Indian outsourcing giant, fired Americans and gave their jobs to H-1B workers (they also discriminated against Americans on the basis of age and race). In October 2024, a federal jury found that Cognizant Technology Solutions was guilty of intentional discrimination against non-Indian and non-South Asian employees, as the company illegally favored H-1B workers over U.S. workers. A Cognizant VP admitted under oath that these visa holders were not more skilled than U.S. workers.

If the H-1B is a talent visa, H-1B workers would be paid more than their U.S. counterparts. The data, however, indicates otherwise. Based on public data, America First Insight found that for positions including technical lead or Java developer, the median pay for H-1B holders is significantly below the normal median pay. An analysis by the Economic Policy Institute in 2020 likewise found that a majority of H-1B employers use the program to pay foreign workers well below market wages. A 2017 article in IEEE Spectrum, a magazine of the Institute of Electrical and Electronics Engineers, noted that “outsourcing firms get lion’s share of H-1B workers and underpay them.”

Having worked in the tech industry, I would concede one counterpoint: it’s not hard to find examples of talented tech workers who are beneficiaries of the H-1B visa. But while a few anecdotes may convince the tech Right within their own social circles that the H-1B is a talent visa, it doesn’t change the truth that it is an outsourcing visa. It’s like trying to sell a bloated 1,500 page spending bill by highlighting a few good provisions.

If the tech Right wants to simply maintain the status quo, that would be achievable; it’s fairly easy to get the government to do nothing. If they want to reform the H-1B visa system to make it easier to find foreign talent, though, they will have to face reality: more and more Americans do not favor their position. And while Trump’s most recent comments appear to back the existing H-1B visa program, his stance has been mercurial in the past, and he tried to make it harder to qualify for an H-1B visa in his first term.

Simply put, the H-1B system needs more than incremental reforms—it needs structural reforms. Here is a good starting point: the H-1B visa should only be for builders, not outsourcers. If you’re a company trying to create a product, you can use the H-1B visa to plug some talent gaps. Outsourcing (or “consultancy”) firms like Tata and Cognizant should receive zero H-1B visas.

American workers would not be the only beneficiaries of this change. Smaller companies that have struggled to compete against large outsourcing giants for H-1B visas would also benefit. So would talented foreign workers like Pratik Wagh, who lose out to sub-skilled workers only because those workers are employed by outsourcing giants who know how to game the H-1B lottery in their favor.

Another meaningful reform would be instituting per-company caps. No more than 2% of a company’s U.S. employees could be H-1B holders, with some allowances made for smaller companies. Scarcity brings clarity. When caps exist, they shift the incentive structure toward filling limited spots with talent, not with cheap labor. (This 2% cap would not affect usage of the O-1 visa, which rightly has a reputation for being a talent visa.)

Whatever the ideal reforms look like, they must be fundamental in nature. Americans rightly see the H-1B visa as an outsourcing visa, and reforms that don’t fix this problem will go nowhere.

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