Are Indians Using All the H-1B Visas?

If one follows the press, one would assume Indian companies or Indian nationals use all the H-1B visas. Yet the issue is much more complicated than that. In fact, a focus on about a handful of top-using companies has distorted the overall picture of these visas used for highly skilled foreign nationals across the U.S. economy.

To understand the issue, it’s necessary to divide the use of H-1B visas into two separate categories: 1) H-1Bs petitioned for by India-based companies and 2) H-1Bs received by Indian foreign nationals. While there is an overlap between the two groups, these are not the same thing.

H-1B Visas Used by Indian Companies

A January 2011 headline from the technology blog of the Capitol Hill newspaper The Hill read: “GAO: Disproportionate share of H-1B Visas going to India-based staffing firms.” The article noted, “Almost half of all H-1B visa holders are from India.” The perception that Indian companies use most of the H-1Bs is often utilized by critics to undermine support for H-1B visas more generally.

One of the ironies of the criticism of Indian companies and H-1B visas is that the use of H-1Bs by such companies has declined quite a bit in recent years. As a March 2010 report from the National Foundation for American Policy (NFAP), where I am executive director, explained, “USCIS data show in FY 2009, less than 6 percent of new H-1B petitions went to Indian technology companies. Indentifying 25 India-based firms one finds Indian companies utilized fewer than 5,000 (4,809) new H-1B visas in FY 2009. Moreover, tracking these same companies over time, shows that the number of new H-1B visas utilized by Indian technology firms fell by 70 percent between FY 2006 and FY 2009.” (See Figure 1 below.) Based on the release of a list of the top 10 companies for new H-1Bs in FY 2010, it appears the Indian company use of H-1Bs was greater in 2010 than in 2009.

The NFAP report also explained that it is simplistic to assume that visas utilized by an Indian technology company (or any other company) means a loss of jobs in the United States: “When Indian technology companies or other non-Indian IT service providers perform work in the United States it is because U.S. companies believe such work makes their businesses more profitable . . . To the extent Indian (and non-Indian) companies performing information technology service work allow U.S. businesses to focus on core functions, run more efficiently, and enhance shareholder wealth, U.S. companies can hire more people in the long run by becoming more profitable.” This is not the popular perception but just because a viewpoint isn’t popular doesn’t mean it’s not true.

Moreover, when an individual enters the U.S. workforce, he or she earns a salary and spends that money. That spending helps support other jobs in the economy. In addition, when new workers help increase productivity they also help enhance the standard of living in an economy.

                                     Figure 1

H-1B Visas for Indians

A separate issue involves H-1B visas received by Indian nationals. The data from U.S. Citizenship and Immigration Services (USCIS) show Indians are a key source of H-1Bs. This reflects the size of the Indian population, the education level of Indian workers and students, and interest in working in the United States. Many of these individuals have graduated from U.S. universities and are hired off U.S. campuses.

(Source: U.S. Citizenship and Immigration Services, National Foundation for American Policy)

In most years, Indians have not been a majority of the new hires on H-1Bs. (See Table 1.) Examining data from USCIS for “initial employment” one can see Indians represented about 45 percent of H-1Bs in 2000 and 2001, dropped to under 30 percent with the economic downturn in 2002 and 2003, then rose to over 50 percent from 2006 to 2008. In 2009, the Indian percentage dropped to 39 percent. (“Initial employment is the term to denote an H-1B used by a new H-1B visa holder, rather than someone renewing status or switching to a new employer.)

Table 1

H-1B Petitions for Indian Nationals Approved for Initial Employment: FY 2000-2009

                                                                (Source: U.S. Citizenship and Immigration Services)

Table 2 provides a look at Indian nationals compared to those from other countries in being hired on new H-1B visas. Table 2 shows in FY 2009, Indians utilized 39.4 percent of the petitions approved for “initial employment,” while the next largest recipients were individuals from China (10.4 percent), Canada (5.3 percent), Philippines (4.3 percent), South Korea (2.5 percent) and United Kingdom (2.3 percent).

Table 2

H-1B Petitions Approved for Initial Employment by Country of Birth in FY 2009

 (Source: U.S. Citizenship and Immigration Services)

Conclusion

Although the annual H-1B cap is 65,000, there is also an additional 20,000 slots permitted for individuals who receive a masters degree or higher from a U.S. university. H-1B visa holders hired by U.S. universities or non-profit research institutes are exempt from the numerical limits. Overall, we normally see a little more than 100,000 H-1Bs approved in a year for “initial employment.” That annual flow of new H-1B visa holders comes to about 0.06 percent of the U.S. labor force. It should be obvious that while such professionals are important to many employers and the United States as a whole, given this small percentage it is difficult to argue they are creating widespread joblessness or other “evils” that are sometimes attributed to them.