How Major Tech Companies Use Staffing Agencies to Get More H-1B Visa Candidates

Ever wondered how exactly major tech companies use the H-1B program? It’s not always as cut-and-dry as it seems. Sometimes, they use subcontracting firms to hire foreign candidates for them, and until recently, these relationships were hard to discover.

A massive (no really, it’s huge, and far too cumbersome for your home computer to dig through; we gave it to our Dice Data Science Team to parse) dataset from the U.S. Department of Labor (DOL) shows us who is hiring H-1B visa candidates. It also shows what’s called a “secondary entity,” which is a designation afforded to companies that use outsourcing to bring in foreign talent.

These “secondary entities” pop up when a staffing firm fills out the DOL’s Form ETA-9035 & 9035E, which asks the hiring company to designate if the H-1B visa candidate will work for them, or if that person will be placed elsewhere (i.e., a client or subcontracting firm). If they check “yes,” that other company is considered the “secondary entity.” So, if Google used a firm like Cognizant to source foreign talent, Google would be listed as a “secondary entity” for that visa recipient.

Here’s how the major tech companies are using subcontractors to source H-1B talent:

Apple is far and away the biggest “secondary entity” here, with 2,295 H-1B visa applicants arriving via consultants and staffing agencies. Google is a distant second with 921, while Microsoft is third with 545. Facebook has 190 H-1B hires made via sourcing firms, while Amazon (96) and Netflix (31) round out this list.

An important caveat: This is only representative of hires made via subcontracting firms. Most companies also hire H-1B candidates directly. There are a few reasons to go through a hiring agency, though. For companies that also hire directly, use of a sourcing firm can help them secure more foreign-born workers with varied skill-sets. This is like a land-grab for H-1B visas; with denials skyrocketing, major tech companies are using subcontractors to secure as many bodies as they can.

A sourcing firm may also help with on-boarding and how to handle H-1B workers at the end of a contract; it’s simpler for a company like Apple to simply disable key-cards and let the sourcing firm deal with the other personnel issues. Staffing agencies are skilled at “churning” workers when the time comes.

But not all churn through workers at a rapid clip. Some tech companies offer massive perks for visa holders, H-1B included.

Change may be afoot for these tech companies, too. We’ve previously identified that H-1B visa hires are most often identified as “software engineers” or “software developers” by title, which isn’t quite a specialty occupation in tech. But the government has started issuing more Requests for Evidence (RFEs) to tech companies, asking them to prove their foreign-born talent holds special training or education that makes them uniquely qualified for the job they’re hired into. If changes to the H-1B program are successful, we expect the number of foreign-born tech workers hired via the program may slow dramatically.

36 Responses to “How Major Tech Companies Use Staffing Agencies to Get More H-1B Visa Candidates”

  1. Carl Christensen

    In the Philly area – Comcast and Vanguard must be huge users (and abusers) of the H1B system. Every call I get for jobs there are from Tata and about 500 subsidiary “job shops” based in India – who are all just fronts for Tata (and eventually their end client Comcast and Vanguard). That’s quite a lot of hoops to jump through for what is basically a low-end, low-paying contract. Which makes it absurd – the H1B is supposed to be “best & brightest” – but it seems the most mundane jobs are being filled. Certainly not the next Linus Torvalds or Satya Nadella.

    • H-1B is systematically ruining the USA leadership in Science and Technology space. It’s weeding out Americans from their carers and denying our college graduates a chance on entry-level jobs.
      Thousands of STEM program graduates end up retail jobs if not unemployed for years. It’s impossible to retain competitive edge when we have stopped building internal capacity but outsourcing. Where and when will Americans earn the experience?

      • Brian,

        You couldn’t be more correct! I’ll add that this kind of behavior is steering young people away from STEM because of the fear that they may not have a stable job. large companies are proving to be the biggest culprit in the demise of our country’s lifestyle. They are so wrapped in bureaucracy and greed that they fail to see that they are maiming their own children and decedents.

    • Econ Admin

      That’s an important topic not covered by the Dice article. Look at the last table at http://econdataus.com/h1b_employers_2019.htm to see the largest secondary employers of H-1B through in the first 3 quarters of fiscal year 2019 (October 1, 2018 through June 30, 2019). Comcast is number 11, 75, and 235 with 1,471 (1060+265+146) applications for 1,873 (1337+389+147) total workers. Vanguard is number 50 and 52 with 677 applications for 1,013 total workers. As a programmer with 30 years experience, I don’t have a big problem that I can’t get a job with Apple, Google, Amazon, Microsoft, Facebook, or Netflix. But I do have a problem with getting no response from lower-profile companies that are heavy users of H-1B workers. In the top 11 secondary users, this includes AT&T, WELLS FARGO, AMERICAN EXPRESS, VERIZON, ANTHEM, CAPITAL ONE, FORD MOTOR, CITIGROUP, and COMCAST. As you say, these are mostly mundane jobs, seemingly not requiring the “best & brightest”. More likely the standard is the “cheapest and most easily manipulated”.

  2. Why will they hide when USA government want them to get H1b’s instead of outsourcing companies? They simply need some contractors like any large company that’s when they hire through staffing agencies. Those numbers are very small in such large companies.
    Please don’t spread false information for the sake of views. Or you just hate them already before even starting your ‘analysis’.

    • Econ Admin

      > Those numbers are very small in such large companies.

      That’s not the case with many companies and locations. According to Census numbers, nearly half of the software developers in Santa Clara County, the heart of Silicon Valley, are non-citizens. Those are likely mostly H-1B but may include other visas and/or OPT (Optional Practical Training) for foreign students. For a more visual example, there’s a video of the headquarters of Walmart in Bentonville, Arkansas online. You can find it if you google “Walmart Bentonville H1b” (without the quotes) and click on Videos. The Census data shows that the software developers in Benton County, Arkansas were 46.3 percent non-citizens in 2017. That’s not surprising looking at the video. The problem isn’t a few contractors. It’s that the H-1B is being used to obtain large numbers of cheap, compliant workers. Many companies love them because they have extreme leverage over them. It’s very difficult for an American worker to compete against that. You could promise to be cheap and compliant but employers know that they just don’t have the same leverage over a citizen.

  3. Kevin Brand

    “If changes to the H-1B program are successful, we expect the number of foreign-born tech workers hired via the program may slow dramatically”

    What you meant to write was that “When the rules originally written into the H-1B program are ACTUALLY ENFORCED, we expect the number of foreign-born tech workers hired via the program may slow dramatically” These RFEs regarding specialty occupation proof are not new changes…these are our officials and representatives of the US work force enforcing the rules placed onto the H-1B program to PROTECT US WORKERS against being replaced/displaced by these Temporary Guest Visa workers.

  4. I agree there is are issues with H1B, but a blanket statements against it will not help either. Let’s think the contractors are paid low, but the company still ends up paying double than what contractor’s actually paid. That means as a company, it is not getting any discount by hiring contractors. Also if companies are willing to pay premium for lowly-paid contractors, does the availability of work-force is not a problem? How can it be sure by curbing H1B applications issuance will not shift office base to other countries completely shifting economy created by H1B holders due to their spending? And China at US heels, already have their own silicon valley, will US be able to compete by taking such stringent actions and not fixing the source? Few queries for picking our brains and help us taking right decision …

    • Econ Admin

      > the company still ends up paying double than what contractor’s actually paid.

      Not true. The “prevailing wage” paid by the employer accounts for any additional benefits. That’s the whole point of the “prevailing wage” provision and even that can be low for a Level I and Level II worker which is the rating for most H-1B workers.

      > Also if companies are willing to pay premium for lowly-paid contractors, does the availability of work-force is not a problem?

      Again, no. As explained above, there’s usually a discount, not a premium. If there is a premium, it’s likely counterbalanced by the fact that companies have more leverage over H-1B workers. If an H-1B worker is fired or laid off, they have to leave the country if they don’t quickly find another sponsor. That makes them more likely to work 80-hour weeks. Also, some may be motivated by the fact that their savings will make them relatively rich if they return to their home countries. American workers have no such motivation and the companies know it.

      Regarding availability of work-force, I find it interesting that I have a portfolio of Python apps, linked to by my resume and LinkedIn account, and hardly any potential employer ever goes to it. In fact, I’ve only seen it referenced once or twice, right before an interview. Can it be that our great technological companies, desperate for workers, cannot create the technology to scrape the web and, if their automatic software is unable to evaluate the apps, then flag it for a recruiter? No, all the evidence I see is that there is no broad shortage of tech workers, at least in major tech hubs like Silicon Valley. The so-called “STEM shortage” is largely a myth pushed by tech companies to enlarge the labor pool. About half of all STEM workers do not end up working in STEM. We need more careful, objective studies as to exactly why that is. Also, we need more objective studies as to exactly what happens to all of the older tech workers who continue to be laid off.

  5. It is just 4000 such workers in 6 topmost companies.. What do you want to prove with this ? And most of them are “contractors” from real consultants who add value to tge system, not just ” bodies” from a recruiting agency

    • Econ Admin

      If you look at the first table at http://econdataus.com/h1b_employers_2019.htm , you’ll see that there have been requests for 835,300 total H-1B workers that have been certified for the first 9 months of fiscal year 2019 (October 1, 2018 through June 30, 2019). Of course, that is the initial application and many of those will not become actual H-1B workers. But we are talking about much more than “just 4000 such workers in 6 topmost companies”.

  6. The title is a bit misleading. Corporates have only one target in mind. Cost savings on temporary jobs that don’t need a permanent employee. They do this by hiring contractors. A lot of factors influence a decision of hiring FTE vs contractor. Aka corporate greed, satisfying investors etc.

    As long as the contractor fits their needs and billing rates, corporates don’t care contractor is on h1b or green card or American citizen. They are all the same to them. This is where the agencies including the biggies like TCS, Infosys or CTS make money by bringing in cheaper labor rather than hiring someone locally. Also the smaller agencies make money by being middle men when bigger agencies can’t get it.

    So, big American corporations, prime vendors, second vendors are all in this mess together.

  7. John Watson

    Th H1-B visa program is being abused to hire cheaper foreign workers from India, instead of hiring American workers. The Indian IT bodyshops like Wipro, Infosys, Tata, Cognizant, HCL etc. have monopolized the IT industry by gaming the H1B lottery system. US law makers need to scrap th entire H1-B visa system.

  8. Leyton Dalston

    I recently got told by my Fortune 500 company that i’m being replaced by an Indian national and that they are working out his visa already because i’m too expensive. I’ll be replaced once he gets his work visa. This is how the game goes. Greed is not only killing American workforce and ingenuity, it is depriving young graduates of their careers. We are losing future innovators, inventors out of greed. The companies involved in this scam are pouring in billions of dollars into politics to keep this abuse going.
    Politicians can fix this problem easily, guess what, they would not, they can’t afford to lose that perks they’re getting. Easy way to fix this problem, just raise the stakes so that the H1B salary is equal or more to what an American would get for that same job. And also bring back social security taxes. Because working visa doesn’t contribute social security taxes for 5 years, this serves as an incentive to hire H1Bs.

    • I agree. Although I am usually no fan of federal control of anything, the only solution I can see is to force the hiring agencies/companies to deposit 130% of the “prevailing wage rate” with DOL for each worker (if there are no qualified Americans, they should expect to pay more for the expertise), who is given a temporary provisional SSN. DOL withholds the taxes and cuts the actual paycheck to the worker. Make the agencies/employers pay the cost of system administration – net zero American taxpayer impact. This should eliminate the greed factor. THEN, make software developed offshore but used by American corporations subject to tariffs like any other imported asset. No easy, but doable. Thus should cutoff the “wholesale offshiring” option. This insures that MY government is protecting MY interests in MY country.

  9. Kutha Modi

    As an IT manager, I can tell you the Indian skillset is just hype. They are terrible. Worst of all many are liars with fake resumes once they come in the office they can’t even do basic IT stuff. I also believe if someone is caught lying on resume, criminal charges need to pressed and banned from ever getting a H1B in America. These liars are scamming hard working Americans out of jobs.

    On the other hand I have hired young American college graduates and the quality of work is miles ahead of what these foreign H1B folks bring.

    • You are absolutely correct. Staples is a big user of Indian contractors. Two of use were replaced with 7 Indian HCL contractors who cannot handle basic IT tasks according to my one colleague left on our former technical support team. Management is just driving the company into the ground extracting what money is left before selling it off since it’s now owned by a private equity firm.

  10. TechWorker

    Maybe Diversity lottery is a bigger problem. which allows unverified/unskilled people to get in and then, in turn, open-chain family migration.
    H1B is at least vetted for years and then if lucky after 20 years is eligible for Green card. in these 20 years have to go thru multiple hassles to keep renewing the visa, and when anytime leave the country there is no guarantee to get back. And oh yes, more than 80% of US Tech Jobs do not sponser H1b visa.

    • Quote: “Diversity lottery is a bigger problem. which allows unverified/unskilled people to get in”…

      This does not correspond with my experience.

      My wife won in the lottery in 1995 for immigration in 1996. Before the visa was issued, the US consulate vetted us thoroughly. It requested police certificates from all places were we lived after turning 16, confirming that we are not criminals, nor were suspect of anything. Additionally, the consulate sent us – even our 4/5 years old son – to trusted doctors for thorough physicals, to verify that we are not at risk to depend on government support.

      Also, they asked a lot of questions about our skills and work experience. I have and had experience and education in three fields: MS in Math, PhD in Economics, and many years as a software developer. My wife has MS in Applied Math and several years as a software developer. That satisfied the consulate diplomats.

      When we immigrated to Connecticut in 1996, I was 45, my wife was 35, and our son was 5. We naturalized in the very beginning of 2002. I worked as a scientific software developer and financial software developer. Currently I am 68, between jobs, but expect to work again soon and continue to work at least until will turn 70. My wife teaches Math in a local university and a community college. Our son graduated with BS in EE in 2014, and works since in the Silicon Valley.

      Accordingly, I do not think that it was bad for the US that we immigrated here.

    • @TechWorker, sure, “more than 80% of US Tech Jobs do not sponser H1b visa”, but there are already enough Indians with green card and citizenship to get those jobs. The general rule for any STEM job is “non-Indians or non-Chinese do not need apply”.

  11. H1Bs, offshoring, politicians living rich from the betrayal of the citizens. The systematic destruction of labor unions, the political power, affluence, and well being of the middle class has been happening for 40 years. It is going to take drastic change to reverse this path to feudalism. They are taking it ALL, there never were trickle down crumbs coming to you. Wages were deliberately stagnated. Wake up before it is too late, it almost is for our children to inherit anything like a decent life, clean air, food, water, and soon to make a decent living. No money for education, infrastructure, but tax cuts to pay back wealthy campaign donors were fine, despite the deficit. Liars and cheats. Every American paid for that, and will keep paying, unless we change things.

  12. Call your senators to kill Bill S.336. https://www.senate.gov/general/contact_information/senators_cfm.cfm

    HR 1044 was passed by sneaky voice vote (no fingerprints) to give ALL the H1-B Indians greencards. Corresponding bill is in Senate as S.336. Half of you were angry that “Russia influenced the election” by purchasing $200K of Facebook ads; meanwhile we have imported an entire fifth-column that is purchasing senators and representatives to sell out American citizens even more that they have sold us out already. These imports have set up an entire lobbying operation funded with millions of dollars from contributing H1-B’s “own money” (you can bet it was laundered through H1-B’s and subs coming from TAT, Infosys, etc..) to fund the lobbying.
    https://www.senate.gov/general/contact_information/senators_cfm.cfm
    https://www.breitbart.com/…/silicon-valley-investors-use-stealth-to-push- outsourcing-bill-to-senate-vote/
    https://www.breitbart.com/…/kevin-mccarthy-140-gop-reps-vote-for- democrat-plan-to-outsource-jobs-to-indian-graduates/
    https://www.breitbart.com/radio/2019/07/12/hilarie-gamm-green-card-bill-is-anti-diversity-anti-women-anti-minority-and-against-the-middle-class/

    • jlo – thanks – I already have. AND I called my congressman to COMPLAIN about how they are not representing the interests of their constitutents. But that was last month and I need to call again to remind them. With all the money in politics these day they have a short attention span for us constitutents. Put the numbers on speed dial on your cell.

      • That's the way things are

        “I called my congressman to COMPLAIN about how they are not representing the interests of their constitutents” -They do not care. You (middle class) are not the constituent. The corporations are. People are just waking up to that fact.

  13. I have been in the SAP Consulting business for the last 20 years. Traveling every week to a client site, up to 45 weeks a year. H1B’s completely dominate this SAP work now. At least 90%. And what’s worse is they are willing follow the projects like migrant farm workers so companies now expect they do not have to pay expenses for travel. I was laid off a few weeks ago and am not willing to move at this point. Many of the H1B’s I’ve had to use on projects in the past were barely competent for the role. A few have been outstanding. I think all this proves the thought that we get the government we pay for. And Corporations are the ones buying. It’s been an eye opening experience. And not a pleasant one.

  14. Doug Hoover

    When I was working at Google, about 40 percent of the technical staff were Indian and, if I walked past a group of people who were “of European descent”, they would usually be speaking Russian. If this article found only 921 H-1B’s going to Google, it must be missing something. – this number seems far too small. Maybe that is because Google (and Facebook and others) use *two* layers of intermediaries between themselves and the H-1B visa holders. The first is the recruiting firm, who contracts them to the second, an outsourcing firm like Accenture or HCL, who contracts them to Google or Facebook. In that case, I think the H-1B employee will be credited to the outsourcing firm. I am told that Apple doesn’t use the two-layer system, to hire H-1B’s, just one layer. That might account for the difference.
    Obviously the second layer will siphon off even more of the money that the ultimate employer is paying, but I think they serve some purpose because I don’t think Google had as much of a problem with unqualified people. Apparently the outsourcing company filters them out.