For years, the H-1B visa has been criticized for “taking American jobs” or “offering cheap labor.” But many H-1B holders feel misunderstood. They went through competitive campus and social recruitment processes, got hired by U.S. companies fairly, and are often paid above the prevailing wage required by law.
The real controversy isn’t about these individuals. It lies in the misuse of H-1B visas by outsourcing firms and the client companies behind them. A recent Bloomberg investigation revealed how some of the biggest banks, telecoms, and retailers in the U.S. indirectly hire H-1B workers through Indian outsourcing companies, lowering labor costs while quietly fueling an entire “immigration labor supply chain.”
From May 2020 to May 2024, Citigroup added roughly 3,000 H-1B visa holders—more than Nvidia, Oracle, or Qualcomm. But two-thirds of them weren’t direct hires. They were placed by Indian outsourcing companies under contract. These contractors, who often fill back-office IT roles, are paid significantly less than Citigroup’s own employees.
Citigroup isn’t alone. Capital One, Verizon, AT&T, and Walmart have all been found using similar outsourcing strategies. Bloomberg's interactive chart shows where outsourced H-1B hires originate—gray dots for direct hires, red dots for third-party placements. Compared to Citigroup and Verizon, even Google and Apple look modest in their use of contractors.
Outsourcing firms typically offer two services: full labor outsourcing (including offshoring to India) and staffing support for lower-level IT roles. These firms submit multiple H-1B registrations for the same candidate under different business names, drastically boosting the odds of winning the lottery. If selected, the candidate is “rented” out to a client company, with a large cut of their wages going to the intermediary.
In FY2023, out of the 85,000 lottery H-1B spots, about 11,600 were awarded to outsourcing firms. Many beneficiaries were submitted by multiple shell employers—a practice that wasn’t classified as fraud until 2023. Only in FY2024 did USCIS begin enforcing a one-person-one-entry policy.
Under U.S. law, H-1B employers must pay workers the local prevailing wage. But in practice, contractors often earn far below what in-house employees make for the same job. Bloomberg found that among the top ten H-1B-using companies, over 75% of their 5,300 software developer hires were contractors. The pay gap was stark:
Beyond pay, these workers face tight control from their agencies. Some have to sign restrictive contracts, hand over tax refunds, or agree to arbitration clauses that waive their right to class action lawsuits. In some cases, a single act of non-compliance can lead to job termination and visa loss.
Seeing all this, the public frustration with the H-1B system seems less misplaced. It’s not about the global talent legitimately working in U.S. companies; it’s about a loophole that allowed staffing agencies to monopolize the system.
If you've experienced working under an ICC (Indian Contracting Company) or outsourcing agency, feel free to share your story in our forum. Let’s bring more transparency to how the system really works.