The U.S. government has suspended Microsoft and other technology companies from the Permanent Labor Certification process, known as PERM, a step employers use to sponsor foreign workers for employment-based permanent residency.
Vice President JD Vance announced the decision on October 8, citing suspected irregularities in recruitment. The suspension also affects Adobe and several major technology services providers, including Cognizant, Infosys, Tata Consultancy Services, Wipro, HCL Technologies and Capgemini.
What the government is examining
Under PERM, employers must demonstrate that qualified, willing and available U.S. workers could not be found for a position. The recruitment process includes advertising requirements designed to give those workers an opportunity to apply.
Vance alleged that companies were placing job advertisements in newspapers unlikely to reach suitable candidates, then using the lack of responses to justify sponsoring foreign workers. The allegations remain under investigation.
Newspaper advertising is itself part of the PERM requirements. The regulatory question is whether employers conducted genuine recruitment and followed the applicable rules.
Microsoft’s response
Vance said Microsoft laid off 6,000 American workers last year while obtaining 6,300 H-1B visas and nearly 3,000 green cards, arguing that the figures showed workers were being replaced.
Microsoft said 80% of approximately 6,000 H-1B applications submitted during its last fiscal year were extensions or changes of status for existing employees, rather than new hires. The company also said its H-1B employees receive the same pay as other employees performing comparable work.
Visa applications and green card approvals therefore cannot automatically be counted as new hires or evidence that particular employees were replaced.
The announced suspension concerns PERM and does not, by itself, cancel existing H-1B visas.
Uncertainty for businesses and consumers
The business implications will depend on the suspension’s duration and each company’s exposure. Analysts cited by Reuters expect limited near-term effects for Indian IT firms, but see potential longer-term challenges in retaining U.S.-based professionals and managing employment costs.
A direct effect on consumer prices or service quality has not been established. Any future impact would be indirect: higher costs could be absorbed by providers or passed to clients, depending on contracts, competition and productivity.
The central business question is whether prolonged uncertainty over permanent residency will affect staffing—and eventually the cost or delivery schedules of technology services.
Separately, the administration announced investigations into nine universities, including Harvard, Stanford and Yale, over suspected misuse of exchange-visitor visas.
Sources: Reuters, Associated Press, Microsoft and U.S. federal labor certification regulations.
