For many technology professionals, the American dream follows a familiar path. Get a technology degree. Find a job in the United States. Obtain an H-1B visa. Build a career. Then, eventually, ask the employer to sponsor a green card. For thousands of foreign IT professionals, particularly Indians, that last step can take years. Now the U.S. government has put another obstacle in that journey. The government has suspended several major technology companies from the Permanent Labor Certification Program, a process that is commonly required before an employer can pursue an employment based green card for a foreign worker. The companies named in the latest action include Microsoft, Adobe, Cognizant, Infosys, TCS, Wipro, HCL and Capgemini.
So, what exactly is going on? To understand the controversy, you need to understand three words: H-1B, PERM and green card.
What is an H-1B Visa?
The H-1B is a temporary U.S. work visa for foreign professionals employed in certain specialty occupations. Technology is one of the biggest areas where H-1B workers are employed. A software engineer from India, for example, may receive a job offer from a U.S. technology company or IT services company. If the employer successfully sponsors the worker, the employee can work in the United States under H-1B status.
The system exists because companies sometimes need specialized workers whom they cannot readily find in the U.S. labor market. In principle, that sounds straightforward. But the H-1B system comes with rules designed to prevent companies from using foreign workers simply as a cheaper alternative to American employees.
The Department of Labor says employers must comply with wage requirements and other protections. Its Project Firewall enforcement initiative specifically focuses on cases involving potential displacement of U.S. workers, inadequate recruitment of American workers, preference for H-1B workers when qualified U.S. workers are available, and misrepresentation of job duties or working conditions.
And that is where the controversy begins.
How Can the H-1B System Be Abused?
The existence of H-1B workers is not itself evidence of abuse. A company may genuinely need a software engineer with a rare skill. A foreign professional may have exactly that expertise. There is nothing inherently improper about hiring that person. The concern arises when companies allegedly use the immigration system in ways that defeat its purpose.
For example, regulators can investigate whether an employer:
- Fails to genuinely recruit qualified U.S. workers.
- Uses foreign workers primarily to reduce labor costs.
- Misrepresents job requirements or working conditions.
- Uses questionable recruitment practices.
- Submits fraudulent immigration applications.
- Uses labor brokers or intermediaries improperly.
- Forces foreign workers into exploitative arrangements.
The Department of Labor’s Office of Inspector General announced in July 2026 that it was intensifying investigations into alleged H-1B and PERM fraud, including allegations involving fraudulent applications, wage kickbacks, worker exploitation and practices that could undercut American workers. These are allegations and areas of investigation. They should not be interpreted as proof that every H-1B worker, every immigration application or every company involved has violated the law.
Why are Indian IT Companies Receiving So Much Attention?
There is a simple reason. Indian technology professionals are a major part of the U.S. H-1B workforce, and large Indian IT services companies have historically been among the major participants in the system. Companies such as Tata Consultancy Services, Infosys, Wipro, HCL and Cognizant operate enormous technology businesses spanning India and the United States. Their business models often involve moving employees between countries to work on projects for multinational clients.
That can be completely legitimate. But the scale of the industry means that if regulators believe there is systemic abuse involving labor contractors, recruitment practices or visa applications, large IT outsourcing companies are naturally going to receive significant attention. The U.S. government’s concern is about alleged practices by employers and intermediaries, not the nationality of individual employees.
What is PERM?
PERM stands for Program Electronic Review Management. It is a Department of Labor’s labor certification process used by employers seeking to sponsor certain foreign workers for permanent employment in the United States. In a typical employment based green card case, the employer must demonstrate that it has tested the U.S. labor market and that there are not sufficient qualified, willing and available U.S. workers for the specific position.
The employer must also comply with wage and recruitment requirements. Only after satisfying the labor certification requirements can the employer generally proceed with the next stages of the employment based green card process. Think of it as a checkpoint. The H-1B broadly says, “We want to employ this foreign professional temporarily in the United States”. PERM asks a different question, “We want to employ this foreign professional permanently. Have we established that qualified U.S. workers are not available for this particular position under the required rules?”
That difference is critical. H-1B is temporary while PERM is part of a permanent residency pathway. A PERM suspension therefore does not automatically cancel someone’s H-1B. The worker may still have a valid H-1B today, but the employer’s ability to move forward with the permanent residency process may be delayed or prevented from moving forward, depending on the stage of the case and the specific circumstances.
What Happens to Employees Already in the Green Card Process?
This is where people should be careful about generalized advice.
- A person’s immigration case can be at very different stages.
- One employee may not have started PERM.
- Another may have a PERM application already filed.
- Another may have an approved labor certification.
- Someone else may already have an approved immigrant petition or may be waiting for a visa number.
The effect of the suspension can therefore vary substantially. The current announcement says new and pending PERM applications involving the affected companies will not be processed while the suspension applies. For someone personally affected, the correct next step is to determine exactly where their case stands and obtain advice from a qualified U.S. immigration attorney.
What Happens Next?
The answer will depend on the government’s investigations and the companies’ responses.
- The companies can be expected to defend their employment and immigration practices, provide documentation and challenge government actions where appropriate.
- Investigators can examine recruitment records, wage information, job descriptions, immigration filings, employee movements and other evidence.
- If regulators find violations, companies could face enforcement consequences.
- If the companies demonstrate compliance or successfully challenge the government’s action, the restrictions could eventually be lifted.
The important point is that suspension does not necessarily mean permanent exclusion. It is part of an enforcement process.
What Could Change For the IT Industry?
This may ultimately be bigger than a handful of companies. For years, the global IT industry has developed a highly efficient international staffing model. A company can recruit engineers in India, train them, assign them to international projects and move some employees to the United States when clients require on-site expertise. The H-1B program has been an important part of that model.
If immigration enforcement becomes more aggressive, companies may have to rethink how they staff American projects. They may hire more workers directly in the United States. The long-term effect will depend on how the government enforces the rules and how companies respond.
