Investigating how loopholes and middlemen are breaking America’s H-1B visa system
By Jason Grotto, Bloomberg News
In December 2023, with the migrant surge at the US-Mexico border dominating the national conversation, Bloomberg data investigations reporter Eric Fan was crafting a series of Freedom of Information Act requests that would crack open another problematic part of America’s immigration system — the skilled-worker visa program known as H-1B.
Congress conceived the H-1B visa in 1990 as the primary pipeline for American businesses to access the world’s top talent. It was also the main pathway for skilled immigrants to pursue green cards, allowing them to permanently live and work in the US. At the time, labor groups worried that the H-1B program might displace American workers or depress wages. So, Congress capped the number at 65,000 per year, awarded on a first-come, first-served basis. It was later raised to 85,000.
By the mid-2000s, the information technology revolution caused demand for H-1B workers to surge, and applicants snapped up the annual allotment within the first day or two. So, the U.S. Citizenship and Immigration Services, an arm of the Department of Homeland Security, created an annual lottery to select which entries would be considered. Over time, the chances of winning dwindled as demand continued to soar.
But high demand wasn’t the only factor making the H-1B lottery harder to win. For years, immigrants and policy experts had alleged that visa middlemen were gaming the lottery’s rules to ensure they would obtain the visas they needed to employ tens of thousands of H-1B workers. These staffing firms and outsourcing companies would then provide the visa workers under contract to businesses across the tech, banking, retail and manufacturing industries.
The implications of the gaming go beyond taking advantage of a flawed and increasingly outdated visa system. More than a half dozen lawsuits have alleged that the visa middlemen were discriminating against U.S. workers and using H-1Bs for comparatively run-of-the-mill jobs, not for high-skilled positions where talent is in short supply, such as software engineers and artificial intelligence experts. Instead, large numbers of less distinguished applicants were landing H-1Bs, often at lower pay. Because of the way the H-1B program is structured, these workers face hurdles porting their visas to new employers, leading to claims that the program created a new form of indentured servitude.
The economic stakes are clearly high. For every lower-skilled applicant who receives an H-1B visa through gaming, others, including those with higher skills, lose out. A 2023 study from the University of Pennsylvania’s Wharton School found that for every 10 H-1Bs that top U.S. multinational companies lose out on, nine jobs are moved abroad. An economist at the Federal Reserve Bank of Richmond estimated that a mere 10% reduction in high-skilled immigrant workers would shrink the U.S. economy by about $86 billion.
That’s why Fan and Bloomberg News set out on an ambitious Freedom of Information Act effort to obtain information that the government had refused to release to the public: The full database of H-1B petitions and other data that would provide insight into the U.S. employment visa system. The USCIS regularly releases some H-1B data on a public portal. But the information is threadbare, making it difficult to track who benefits the most from the program or even how many H-1Bs are approved each year. It was also impossible to use that readily available data to investigate allegations of widespread abuse and gaming of the H-1B lottery.
After the USCIS did not respond to seven of the FOIA requests for the underlying data, we filed a lawsuit under the FOIA. Before doing so, Fan’s reporting on the regulatory landscape allowed us to know exactly what information was contained in the H-1B petitions and other datasets. He also developed sources with deep knowledge of the immigration system, including academics who previously had obtained small slices of the data. That became a crucial factor, since it would be hard for the government to deny access to information it had already released. After two months of litigating, the DHS relented and gave us the relevant data for the most recent four years — more than 1.8 million records in all.
Zachary Mider had joined Fan in working with the publicly available data and talking to dozens of experts when the FOIA’d data came in. They soon realized that we had what we needed to expose a flawed system prone to manipulation. Thanks to the interviews and sources they had already lined up, the story came together relatively quickly.
Using the records obtained through our lawsuit, Fan and Mider were able to show how large outsourcing and smaller staffing companies were exploiting flaws in the visa system to land thousands of H-1Bs for workers with less-remarkable resumes while other U.S. businesses, American workers and talented immigrants lost out. They discovered that nearly half of all H-1B visas in the past four years had gone to middlemen firms that were gaming the system.
The USCIS had claimed that some of the smaller firms were committing what the agency referred to as “fraud” in obtaining H-1Bs. A report published in late 2023 described a scheme where 13 related companies exploited the H-1B lottery by entering each worker’s name multiple times. Referred to as “multiple registration,” the tactic boosted their chances by essentially entering multiple tickets for the same person. But the agency did not name the companies or provide any details of how widespread the fraud has been.
Using the FOIA’d data, which cover lotteries conducted from 2020 through 2023, as well as other sources, Fan and Mider estimated that roughly 15,500 visas — about one out of every six awarded last year — were obtained by gaming the lottery in this way. They also revealed the identities of 13 related companies that U.S. officials had accused of exploiting the visa lottery using multiple registration. Over a four-year period, that staffing firm operator, who also happened to be a politician in India, used a dozen companies to enter the same applicants as many as 15 times, securing hundreds of H-1Bs while others lost out.
His “body shops” made a fortune by taking a fat cut from the salary of each worker they bring into the U.S. and contract out to other companies. Indian news outlets picked up Bloomberg’s story about the Indian politician. (He’s denied involvement).
The H-1B data, combined with documents made public in an unrelated federal trial in 2023, also revealed how multinational outsourcers keep winning: They leverage their huge overseas workforces to request far more H-1B visas than they actually want. Outsourcers can submit excessive lottery entries because “it doesn’t matter who gets selected as long as somebody gets selected,” says Emily Neumann, managing partner at immigration law firm Reddy Neumann Brown PC. “The system is set up better for them.”
Take Cognizant Technology Solutions Corp., a Teaneck, New Jersey-based corporation whose 344,000-strong workforce is located mostly in India. As lottery entries surged and win rates plunged over the past three years, Cognizant sharply increased the number of visas it sought, according to the H-1B data. That meant the number of visas it received remained roughly constant. In a written response, a company spokesman said that it is “fully compliant with the U.S. laws in regard to the visa process.”
Throughout the effort, we kept our focus solely on the intentions of the H-1B program and the regulations that govern it. As the 2024 presidential election heated up and in the aftermath, immigration continued to fuel debate. Even in President Trump’s coalition, his new Silicon Valley allies, including Elon Musk, clashed with the nativist wing of the MAGA movement, most notably Steve Bannon, over H-1B visas.
Our reporting cut through the noise and partisanship by showing that the H-1B program is a net positive for the economy and brings talented people to work in the U.S. — but it is also badly broken and open to manipulation, allowing companies to land cheaper labor for low-level tech jobs while taking coveted H-1B slots from those who provide skills that are lacking in the U.S. workforce.
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