How some companies manipulated the H-1B visa lottery
Each year in April, the US conducts a lottery that shapes the lives of hundreds of thousands of people. And each year, only around 85,000 are granted an H-1B visa for highly-skilled workers. With skyrocketing application numbers, the odds of winning have only gotten slimmer. But new data obtained by Bloomberg News has revealed how certain companies have manipulated the system, gaining an advantage over people who play it fair.In other words, the game was rigged.
On today’s Big Take podcast, host Sarah Holder speaks to investigative journalists Eric Fan and Zachary Mider, who explain how outsourcing companies and staffing firms exploited loopholes in the H-1B system to get extra shots at the lottery.
Here is a lightly edited transcript of the conversation:
Holder: When Sandeep Maganti first moved to the US from India for college, he had a passion for technology and a laser focus on the future.
Maganti: I was a teenager that was hoping to build a whole new life and whole new career and trying to see where my luck or all my hard work takes me at that point.
Holder: After getting a computer science degree from Arizona State University, he teamed up with a fellow ASU alum to launch a startup.
Maganti: It’s an AI-powered real estate investment platform. We run the models on the back end, predicting the revenue of short-term real estate investments or commercial real estate investments.
Holder: Sandeep said they raised $400,000 from a private investor and turned their idea into a company valued at over a million dollars. It was just a few years into his time in the US, and he was already on track to build the kind of life and career he’d dreamed of as a teenager. But something else loomed over him. He’d managed to stay in the country legally through a student visa and a series of work authorizations, but his status in the States was still temporary. And that meant he was living with a lot of uncertainty.
Holder: And throughout all this, Sandeep, did your immigration status weigh on you at all? How did it impact your work?
Maganti: So that’s been the whole problem. You can’t have a solid decision or like anything solid until you have your immigration plan solid because you can’t buy a house or you can’t build a business or you can’t do whatever you’re looking for in your life. It’s not something you can be stable on. It impacts every decision that you’re making in your life.
Holder: Sandeep wanted a more long-term plan. So he stepped away from the day to day of running his startup, got a job at another US-based company and set his sights on the H-1B — a visa designed for highly-skilled workers with employers in the US. A limited number of H-1B visas are handed out each year through a lottery system. And the first time he applied, he wasn’t picked. Or the next. Or the next.
Maganti: It was really devastating for me. I was like eight years into the United States, and I still don’t have a life which I can rely on or a career that I can rely on. So I don’t have clarity on what I need to do.
Holder: Sandeep had the job and the sponsor. But his lottery ticket wasn’t drawn.
Eric: His qualification didn’t matter. His investment and entrepreneurship didn’t matter. The fact that he was already employing people and starting a company here didn’t matter. It was a complete game of luck.
Holder: Eric Fan is an investigative data reporter at Bloomberg. And for the past few months, he’s been looking into how the H-1B system actually works. And he found that there’s something else at play — making that game of luck even more precarious, and it’s stacking the deck against workers and employers who seem to be doing everything right. Today on the show: a Bloomberg investigation reveals how companies have been exploiting loopholes to game the H-1B system — and what that could mean for hundreds of thousands of visa hopefuls.
Holder: Every year, employers in the US submit hundreds of thousands of applications for H-1Bs, hoping to give their employees a shot at a visa. An H-1B typically lasts up to six years, and is often an on-ramp to permanent residency. The number of visas awarded every year is currently capped at about 85,000. But when Eric tried to figure out the chances of getting one, he noticed that between 2020 and 2023, the number of applications for that limited pool had doubled. That meant the odds of getting an H-1B visa were getting worse, fast.
Fan: So, as I talked to my friends, as I go online, it became very apparent that there’s a huge problem in the system.
Holder: And that problem goes back to the way the system was designed.
Mider: Since the very beginning, the program has sort of been dogged by concerns that certain companies were kind of finding a way to get a disproportionate share of the visas.
Holder: That’s Bloomberg investigative reporter Zach Mider. He says the flaws in the system trace back to the way the H-1B program was set up in response to pressure from tech companies that started building in the 1980s.
Mider: Employers in the US were telling Congress, we can’t get enough workers in certain fields, especially high-tech fields. And so when Congress reformed its immigration laws in 1990, they said, we’re going to create this category of visa called H-1B that’s going to be specifically for high-skilled workers that you don’t think you can find in the American job market.
Holder: At first, the system was first come, first serve. The vision was that employers would apply for the visas gradually throughout the year — and once they ran out, the government would stop granting them. But by the mid-2000s, it was clear that the system needed to change. Because on April 1st every year, when the visa application window opened, the United States Citizenship and Immigration Services office would be overrun.
Fan: Hundreds of thousands of applications were coming in literal paper boxes from FedEx. And the US government would have so much trouble processing those paperwork, there wasn’t enough time for them to figure out who came first and who came second. It became a necessity to run a random lottery.
Holder: A random lottery… with very expensive tickets.
Fan: Employers had to file a full visa application, which runs hundreds of pages. They have to pay thousands of dollars in application fees. They have to describe exactly what job they want to fill. Here’s the individual, here’s the job, here’s the salary we’re going to pay them, here’s the location they’re going to work from.
Holder: But in any lottery, the odds of winning go up if you buy more tickets. The same principle applied to the H-1B lottery. Employers who could submit more applications had a better chance of getting their employees visas. And Zach says, that gave an advantage to certain types of companies, like huge IT outsourcing firms, mostly based overseas.
Mider: Let’s say you’re an outsourcing company that has 200,000 workers in India, and you have a need for a certain number of those workers to be in the United States for a certain period of time. If you say, figure you need a thousand of them next year, but you’re not too particular about which thousand, then you can simply do the math and you could say, well, my chances of success in the lottery are, you know, 25%. And I need a thousand people. So I’ll put in 4,000 applications of people who would be good enough at those roles, and I’ll get about a thousand. And so, while your company that just had the one worker has a 25% chance of getting what they want, the outsourcing company can kind of leverage its foreign workforce to get 100% of the visas they want.
Holder: In 2020, the Trump administration changed the application process. Instead of entering the lottery with a full-fledged application, employers would only need to fill out a short form and pay a $10 fee to get their employee’s name in the mix. Then, only if their lottery ticket was drawn would they need to go through with the whole application. The goal was to cut down on paperwork and save money. But it also had another effect.
Fan: That massively increased the opportunity to flood the lottery.
Holder: When tickets got cheaper in 2020, Eric and Zach said it created opportunities for another kind of company to game the system: staffing firms. These firms essentially work as middlemen: recruiting foreign workers and connecting them with contract jobs at US-based companies. And part of their pitch is that they can get you an H-1B visa because of how adept they’ve become at gaming the system.
Mider: The new opportunity worked like this. If I have a person who I want to help get a visa, I can simply just create a bunch of other companies or just conspire with other companies that already exist to put that person’s name in multiple times. And so it becomes a system where, essentially, if someone wants a visa and they can kind of work with these— a group of these very small companies. They can almost be guaranteed to get one. And so the chances really skyrocket for people who are willing to work with these kinds of companies that are willing to cheat and kind of budge ahead in the lottery. And so anybody who’s just doing it the old-fashioned way of like, I actually have a real job and I want this worker to have an H-1B. They get pushed to the end of the line because they’re not putting the person’s name in more than once.
Holder: Zach says those staffing firms have been able to fly under the radar. Because many of them are very small.
Mider: If it was Apple or Tesla that did this, I think with thousands of employees, I think the government would have caught on pretty quickly and probably tried to do something to them. But these are all like companies you’ve never heard of, often that don’t really have much physical existence. Like maybe they have an office, maybe they don’t, maybe they’re just like an LLC that somebody created without much real existence at all.
Holder: For a long time, it was impossible for reporters like Eric and Zach to figure out the extent of the problem or which companies were the worst offenders.
Fan: That data was never public and we had to file a FOIA lawsuit. So for the first time, we’re able to say exactly how many companies are gaming the system. And we were very surprised because we’ve found thousands and thousands of them. And it became immediately clear that these staffing companies have— sometimes 99%, 100% of their entries are these multiple entries as compared to a regular company, such as Apple, Google, would usually have less than 5%.
Holder: There are legitimate reasons for someone to have multiple applications entered on their behalf – say, if they have competing offers from several companies to sponsor them. But those situations are uncommon. So when Eric found these instances in which 100% of a company’s applicants were being entered multiple times, the stat was striking.
Fan: I thought there was a problem, but it was so much worse than I imagined. And it turned out almost half of all the visas that were approved last year went to either outsourcing or staffing companies, meaning for most of the folks who study and live and work in the US who have a job offer from one of the top companies like Google and Tesla, they’re losing out.
Holder: So Eric and Zach identified the biggest H-1B cheaters, the question was, would anything be done to stop them? That’s after the break.
Holder: A Bloomberg investigation found that about half of the coveted H-1B skilled worker visas between 2020 and 2023 were going to outsourcing companies and staffing firms — and that an estimated one in six involved the slippery tactic of submitting multiple lottery entries for the same person.
Holder: What’s the impact of this type of gaming of the system? Who exactly is this hurting?
Mider: I think the big picture is it’s hurting the American economy.
Holder: According to a 2023 Wharton School study, for every 10 H-1B visas that top US multinational companies lose out on, nine jobs are moved abroad. The Federal Reserve Bank of Richmond estimated that reducing the number of high-skilled immigrant workers in the US by 10% would shrink the economy by about $86 billion. So there’s the economic toll. There’s the toll on H-1B hopefuls who are competing in a lottery that’s rigged. And then there’s the toll on the H-1B recipients whose futures are now tied to companies that skirt the rules
Fan: So I’ve interviewed a number of workers and former workers at these staffing companies and what they told me was they usually knew full well that staffing companies pay them very little and there’s no job security and they often had to sign contracts that forbid them from leaving the company for years. And most egregiously, they were often asked to pay the lawyer fees and visa fees and registration fees, which is not allowed.
Holder: Eric and Zach wanted to know, what happened to the companies that they found were bending the rules?
Mider: Now, some of the visa recipients have had their visas taken away and have to be sent home or whatever. But the companies themselves, which often were kind of the masterminds of this, don’t really have any consequences that we can see. And so, what the government says in response is essentially they don’t have the authority to bar anyone from the lottery. And so as long as people keep submitting applications and there’s nothing on the application that looks suspect, they have to keep handing out visas to these companies.
Holder: Have you gotten comment from any of these companies? What do they say about their practices?
Mider: We spoke to a representative of the staffing industry, who said that the laws are actually pretty vague. And that, in his view, it wasn’t really clear, especially during the first couple years of this new program, that it was actually forbidden to collude with other companies to put people’s names in multiple times. And even after it kind of became more clear that that wasn’t allowed under the law, the government may have not followed the proper procedures to kind of make sure everyone is aware of that. And so, from the staffing industry’s perspective, it wasn’t so much cheating as more just like they saw an opportunity in the law and they took it.
Holder: That opportunity no longer exists. Last year, the US government made a significant change to the system that shifted the dynamics of the lottery.
Fan: So, last year the government introduced new rules so that each candidate has an equal chance in the lottery. So instead of selecting on the number of registrations submitted by employers, each candidate, regardless of how many registrations they have, has an equal chance. So that drastically removed the incentive to cheat. That removed the incentive for staffing companies to collude and submit multiple registrations.
Holder: And Eric says that change has had an immediate effect.
Fan: This year, according to government data, the number of multiple registrations declined 90%.
Holder: Specific loopholes like these have been opening and closing for decades. But a big takeaway of Eric and Zach’s reporting is that the H-1B program has fallen far short of its initial goal.
Mider: Immigration is a very difficult issue for Washington. The last time there was a real effort to reform the immigration system was more than a decade ago, and it kind of famously failed and collapsed. And up until this point, even when there’s been times of a lot of consensus about fixing H-1B, it’s always been thought of as something we have to resolve as part of this bigger immigration deal, which means that in practice, it’ll never get done.
On today’s Big Take podcast, host Sarah Holder speaks to investigative journalists Eric Fan and Zachary Mider, who explain how outsourcing companies and staffing firms exploited loopholes in the H-1B system to get extra shots at the lottery.
Here is a lightly edited transcript of the conversation:
Holder: When Sandeep Maganti first moved to the US from India for college, he had a passion for technology and a laser focus on the future.
Maganti: I was a teenager that was hoping to build a whole new life and whole new career and trying to see where my luck or all my hard work takes me at that point.
Holder: After getting a computer science degree from Arizona State University, he teamed up with a fellow ASU alum to launch a startup.
Maganti: It’s an AI-powered real estate investment platform. We run the models on the back end, predicting the revenue of short-term real estate investments or commercial real estate investments.
Holder: Sandeep said they raised $400,000 from a private investor and turned their idea into a company valued at over a million dollars. It was just a few years into his time in the US, and he was already on track to build the kind of life and career he’d dreamed of as a teenager. But something else loomed over him. He’d managed to stay in the country legally through a student visa and a series of work authorizations, but his status in the States was still temporary. And that meant he was living with a lot of uncertainty.
Holder: And throughout all this, Sandeep, did your immigration status weigh on you at all? How did it impact your work?
Maganti: So that’s been the whole problem. You can’t have a solid decision or like anything solid until you have your immigration plan solid because you can’t buy a house or you can’t build a business or you can’t do whatever you’re looking for in your life. It’s not something you can be stable on. It impacts every decision that you’re making in your life.
Holder: Sandeep wanted a more long-term plan. So he stepped away from the day to day of running his startup, got a job at another US-based company and set his sights on the H-1B — a visa designed for highly-skilled workers with employers in the US. A limited number of H-1B visas are handed out each year through a lottery system. And the first time he applied, he wasn’t picked. Or the next. Or the next.
Maganti: It was really devastating for me. I was like eight years into the United States, and I still don’t have a life which I can rely on or a career that I can rely on. So I don’t have clarity on what I need to do.
Holder: Sandeep had the job and the sponsor. But his lottery ticket wasn’t drawn.
Eric: His qualification didn’t matter. His investment and entrepreneurship didn’t matter. The fact that he was already employing people and starting a company here didn’t matter. It was a complete game of luck.
Holder: Eric Fan is an investigative data reporter at Bloomberg. And for the past few months, he’s been looking into how the H-1B system actually works. And he found that there’s something else at play — making that game of luck even more precarious, and it’s stacking the deck against workers and employers who seem to be doing everything right. Today on the show: a Bloomberg investigation reveals how companies have been exploiting loopholes to game the H-1B system — and what that could mean for hundreds of thousands of visa hopefuls.
Holder: Every year, employers in the US submit hundreds of thousands of applications for H-1Bs, hoping to give their employees a shot at a visa. An H-1B typically lasts up to six years, and is often an on-ramp to permanent residency. The number of visas awarded every year is currently capped at about 85,000. But when Eric tried to figure out the chances of getting one, he noticed that between 2020 and 2023, the number of applications for that limited pool had doubled. That meant the odds of getting an H-1B visa were getting worse, fast.
Fan: So, as I talked to my friends, as I go online, it became very apparent that there’s a huge problem in the system.
Holder: And that problem goes back to the way the system was designed.
Mider: Since the very beginning, the program has sort of been dogged by concerns that certain companies were kind of finding a way to get a disproportionate share of the visas.
Holder: That’s Bloomberg investigative reporter Zach Mider. He says the flaws in the system trace back to the way the H-1B program was set up in response to pressure from tech companies that started building in the 1980s.
Mider: Employers in the US were telling Congress, we can’t get enough workers in certain fields, especially high-tech fields. And so when Congress reformed its immigration laws in 1990, they said, we’re going to create this category of visa called H-1B that’s going to be specifically for high-skilled workers that you don’t think you can find in the American job market.
Holder: At first, the system was first come, first serve. The vision was that employers would apply for the visas gradually throughout the year — and once they ran out, the government would stop granting them. But by the mid-2000s, it was clear that the system needed to change. Because on April 1st every year, when the visa application window opened, the United States Citizenship and Immigration Services office would be overrun.
Fan: Hundreds of thousands of applications were coming in literal paper boxes from FedEx. And the US government would have so much trouble processing those paperwork, there wasn’t enough time for them to figure out who came first and who came second. It became a necessity to run a random lottery.
Holder: A random lottery… with very expensive tickets.
Fan: Employers had to file a full visa application, which runs hundreds of pages. They have to pay thousands of dollars in application fees. They have to describe exactly what job they want to fill. Here’s the individual, here’s the job, here’s the salary we’re going to pay them, here’s the location they’re going to work from.
Holder: But in any lottery, the odds of winning go up if you buy more tickets. The same principle applied to the H-1B lottery. Employers who could submit more applications had a better chance of getting their employees visas. And Zach says, that gave an advantage to certain types of companies, like huge IT outsourcing firms, mostly based overseas.
Mider: Let’s say you’re an outsourcing company that has 200,000 workers in India, and you have a need for a certain number of those workers to be in the United States for a certain period of time. If you say, figure you need a thousand of them next year, but you’re not too particular about which thousand, then you can simply do the math and you could say, well, my chances of success in the lottery are, you know, 25%. And I need a thousand people. So I’ll put in 4,000 applications of people who would be good enough at those roles, and I’ll get about a thousand. And so, while your company that just had the one worker has a 25% chance of getting what they want, the outsourcing company can kind of leverage its foreign workforce to get 100% of the visas they want.
Holder: In 2020, the Trump administration changed the application process. Instead of entering the lottery with a full-fledged application, employers would only need to fill out a short form and pay a $10 fee to get their employee’s name in the mix. Then, only if their lottery ticket was drawn would they need to go through with the whole application. The goal was to cut down on paperwork and save money. But it also had another effect.
Fan: That massively increased the opportunity to flood the lottery.
Holder: When tickets got cheaper in 2020, Eric and Zach said it created opportunities for another kind of company to game the system: staffing firms. These firms essentially work as middlemen: recruiting foreign workers and connecting them with contract jobs at US-based companies. And part of their pitch is that they can get you an H-1B visa because of how adept they’ve become at gaming the system.
Mider: The new opportunity worked like this. If I have a person who I want to help get a visa, I can simply just create a bunch of other companies or just conspire with other companies that already exist to put that person’s name in multiple times. And so it becomes a system where, essentially, if someone wants a visa and they can kind of work with these— a group of these very small companies. They can almost be guaranteed to get one. And so the chances really skyrocket for people who are willing to work with these kinds of companies that are willing to cheat and kind of budge ahead in the lottery. And so anybody who’s just doing it the old-fashioned way of like, I actually have a real job and I want this worker to have an H-1B. They get pushed to the end of the line because they’re not putting the person’s name in more than once.
Holder: Zach says those staffing firms have been able to fly under the radar. Because many of them are very small.
Mider: If it was Apple or Tesla that did this, I think with thousands of employees, I think the government would have caught on pretty quickly and probably tried to do something to them. But these are all like companies you’ve never heard of, often that don’t really have much physical existence. Like maybe they have an office, maybe they don’t, maybe they’re just like an LLC that somebody created without much real existence at all.
Holder: For a long time, it was impossible for reporters like Eric and Zach to figure out the extent of the problem or which companies were the worst offenders.
Fan: That data was never public and we had to file a FOIA lawsuit. So for the first time, we’re able to say exactly how many companies are gaming the system. And we were very surprised because we’ve found thousands and thousands of them. And it became immediately clear that these staffing companies have— sometimes 99%, 100% of their entries are these multiple entries as compared to a regular company, such as Apple, Google, would usually have less than 5%.
Holder: There are legitimate reasons for someone to have multiple applications entered on their behalf – say, if they have competing offers from several companies to sponsor them. But those situations are uncommon. So when Eric found these instances in which 100% of a company’s applicants were being entered multiple times, the stat was striking.
Fan: I thought there was a problem, but it was so much worse than I imagined. And it turned out almost half of all the visas that were approved last year went to either outsourcing or staffing companies, meaning for most of the folks who study and live and work in the US who have a job offer from one of the top companies like Google and Tesla, they’re losing out.
Holder: So Eric and Zach identified the biggest H-1B cheaters, the question was, would anything be done to stop them? That’s after the break.
Holder: A Bloomberg investigation found that about half of the coveted H-1B skilled worker visas between 2020 and 2023 were going to outsourcing companies and staffing firms — and that an estimated one in six involved the slippery tactic of submitting multiple lottery entries for the same person.
Holder: What’s the impact of this type of gaming of the system? Who exactly is this hurting?
Mider: I think the big picture is it’s hurting the American economy.
Holder: According to a 2023 Wharton School study, for every 10 H-1B visas that top US multinational companies lose out on, nine jobs are moved abroad. The Federal Reserve Bank of Richmond estimated that reducing the number of high-skilled immigrant workers in the US by 10% would shrink the economy by about $86 billion. So there’s the economic toll. There’s the toll on H-1B hopefuls who are competing in a lottery that’s rigged. And then there’s the toll on the H-1B recipients whose futures are now tied to companies that skirt the rules
Fan: So I’ve interviewed a number of workers and former workers at these staffing companies and what they told me was they usually knew full well that staffing companies pay them very little and there’s no job security and they often had to sign contracts that forbid them from leaving the company for years. And most egregiously, they were often asked to pay the lawyer fees and visa fees and registration fees, which is not allowed.
Holder: Eric and Zach wanted to know, what happened to the companies that they found were bending the rules?
Mider: Now, some of the visa recipients have had their visas taken away and have to be sent home or whatever. But the companies themselves, which often were kind of the masterminds of this, don’t really have any consequences that we can see. And so, what the government says in response is essentially they don’t have the authority to bar anyone from the lottery. And so as long as people keep submitting applications and there’s nothing on the application that looks suspect, they have to keep handing out visas to these companies.
Holder: Have you gotten comment from any of these companies? What do they say about their practices?
Mider: We spoke to a representative of the staffing industry, who said that the laws are actually pretty vague. And that, in his view, it wasn’t really clear, especially during the first couple years of this new program, that it was actually forbidden to collude with other companies to put people’s names in multiple times. And even after it kind of became more clear that that wasn’t allowed under the law, the government may have not followed the proper procedures to kind of make sure everyone is aware of that. And so, from the staffing industry’s perspective, it wasn’t so much cheating as more just like they saw an opportunity in the law and they took it.
Holder: That opportunity no longer exists. Last year, the US government made a significant change to the system that shifted the dynamics of the lottery.
Fan: So, last year the government introduced new rules so that each candidate has an equal chance in the lottery. So instead of selecting on the number of registrations submitted by employers, each candidate, regardless of how many registrations they have, has an equal chance. So that drastically removed the incentive to cheat. That removed the incentive for staffing companies to collude and submit multiple registrations.
Holder: And Eric says that change has had an immediate effect.
Fan: This year, according to government data, the number of multiple registrations declined 90%.
Holder: Specific loopholes like these have been opening and closing for decades. But a big takeaway of Eric and Zach’s reporting is that the H-1B program has fallen far short of its initial goal.
Mider: Immigration is a very difficult issue for Washington. The last time there was a real effort to reform the immigration system was more than a decade ago, and it kind of famously failed and collapsed. And up until this point, even when there’s been times of a lot of consensus about fixing H-1B, it’s always been thought of as something we have to resolve as part of this bigger immigration deal, which means that in practice, it’ll never get done.