Dive Brief:
- The federal government took action against IT talent outsourcing Thursday, suspending Cognizant, Infosys, Tata Consultancy Services, HCL Technologies and Capgemini from the Permanent Labor Certification Program. Department of Labor Secretary Keith Sonderling said the DOL also suspended Microsoft and Adobe from a program that allows companies to hire foreign workers for employment in the U.S.
- “I am hereby suspending from the permanent labor certification program some of the largest IT outsourcing firms in the world,” Sonderling said during a press briefing. “Due to multiple active federal investigations, the Department of Labor is suspending Microsoft and Adobe from the program … We will not accept any new or process any pending permanent labor certification program applications involving these companies.”
- Vice President J.D. Vance took aim at Microsoft, claiming the company laid off 6,000 workers last year while gaining federal approval for 6,000 H-1B temporary work visas and filing 3,682 permanent labor certification program applications. “There has been no company in the United States, unfortunately, that has abused this system more than Microsoft,” Vance said.
Dive Insight:
The Department of Labor’s suspensions target IT services firms and software vendors that are prime movers in the AI economy, building large practices around adoption of the technology. As organizations fire up AI assistants and autonomous agents, there are looming concerns of workforce cuts in software development, IT help desk roles and other technical positions.
While the tech unemployment rate remained almost a full percentage point below the national average of 4.2% in September, IT roles in the technology sector lost more than 10,000 positions compared with the prior month, according to a CompTIA analysis of labor data. Signals remained mixed, as CompTIA saw active job postings for IT professionals rise to a three-year high, adding more than 272,000 open roles.
Another encouraging sign on the tech workforce front is the rush to embed AI engineers inside organizations grappling with AI deployment challenges. Microsoft in July pledged to send 6,000 forward deployed engineers into the field as part of a $2.5 billion investment in a newly formed AI enablement company called Microsoft Frontier Company.
Microsoft responded to Vance’s claims in a statement published Thursday. The company said it looked forward to providing the Trump Administration with additional details and noted that 80% of the approximate 6,000 H-1B visa applications submitted during its last fiscal year were “to extend or change the status” of existing employees, not hire new workers.
“Microsoft only files H-1B petitions for those who meet the rigorous standards of this visa category,” the company said. “We pay our employees some of the highest compensation in the tech sector, and our wages are among the highest of all H-1B filings.”
The other companies mentioned by Vance and Sonderling did not respond to Channel Dive’s requests for comment prior to publication.
Vance detailed the Trump Administration’s position on the H-1B visas and the permanent labor certification program, also known by the acronym for the Program Electronic Review Management administrative process, or PERM.
“The H1-B visa program is meant to allow companies to bring in really the best of the best from outside the United States of America for positions that are completely impossible to fill with American workers. Unfortunately, the program has become rife with fraud,” Vance said. “The H-1B visa is how these workers get into the United States in the first place, and then a PERM program is how those employees stay.”
Despite the Department of Labor action, President Donald Trump went forward with a White House ceremony to present Microsoft CEO Satya Nadella with the National Medal of Technology and Innovation at a Thursday ceremony in Washington.
“For more than three decades, Satya Nadella has been a key figure in the transformation of Microsoft, revolutionizing the company and empowering businesses, students and consumers from all over the world with some of the most capable software ever built,” he said.
