US widens H-1B visa fraud crackdown; Cognizant among IT firms mentioned

Explained: Why the US has launched a probe into H-1B and PERM visa fraud

The Trump administration has launched one of its most aggressive investigations yet into alleged abuse of the H-1B and PERM employment visa programmes, putting several companies under scrutiny. Among the firms named by a senior US labour official is Cognizant, although no formal allegations have been filed against the company at this stage.

 

The investigation, led by the US Department of Labor Office of Inspector General (OIG), focuses on whether employers and labour brokers manipulated visa programmes through fraudulent applications, wage violations and exploitation of foreign workers.  The Office of the Inspector General (OIG) under the Department of Labour has uncovered widespread schemes in which employers and labour brokers submitted fraudulent applications, exploited foreign workers through coercive wage-kickback arrangements, and undercut American workers by flooding the market with below-wage labour, an official statement said.

   

“My team, in conjunction with President Trump and Vice President Vance’s Fraud Task Force, has worked relentlessly to uncover fraud, safeguard taxpayer dollars, and hold bad actors accountable. For far too long, fraudsters believed they could game the U.S. employment-based visa system and get away with it. They were wrong,” said Anthony P. D’Espsoito, Inspector General, U.S. Department of Labor. “This isn’t just paperwork fraud—it’s the exploitation of vulnerable workers, forced labor, the displacement of American workers, and abusive human trafficking. As the Inspector General, my top priorities are exposing fraud, protecting American workers, and putting criminals in cuffs.”

 

Here's what the probe is about and why it matters.

 

What has the US government announced?

 

On July 8, the OIG announced a nationwide investigation into fraud involving the H-1B and PERM employment visa programmes. According to the agency, investigators have already issued "dozens of subpoenas" and are seeking information from whistleblowers regarding alleged abuses by employers and recruitment firm.

 

Labour Department Inspector General Anthony D'Esposito said during an interview with Fox Business that whistleblowers had mentioned companies "like Cognizant" in discussions relating to alleged H-1B and PERM issues. However, he did not accuse the company of wrongdoing or announce any charges. 

"We've already started to issue dozens of subpoenas; we are going to make sure that we track down every lead. We have whistleblowers talking about some of the biggest companies like Cognizant, who have been sort of, you know, in the chatter of issues with PERM and H-1B visas," Labour Department Inspector General Anthony D'Esposito told Fox Business on Wednesday.

 

The investigation is being carried out as part of Vice President J. D. Vance's Task Force to Eliminate Fraud.

 

What are H-1B and PERM visas?

H-1B visa

 

The H-1B visa allows US employers to temporarily hire foreign professionals in specialty occupations that generally require at least a bachelor's degree. Technology companies are among the largest users of the programme, employing software engineers, data scientists, cybersecurity specialists and other highly skilled workers.

 

Every year, demand for H-1B visas far exceeds the annual cap, leading to a lottery system administered by the U.S. Citizenship and Immigration Services.

 

PERM programme

 

PERM (Program Electronic Review Management) is the labour certification process employers must typically complete before sponsoring foreign workers for permanent residency (employment-based green cards).

 

Employers must demonstrate that:

 

• no qualified US worker is available for the position;
• hiring the foreign worker will not adversely affect wages and working conditions of US workers; and
• recruitment was conducted according to Department of Labor rules.

 

Because PERM is often the first step toward obtaining an employment-based green card, it is closely scrutinised by regulators.

 

What kind of fraud is the investigation targeting?

 

According to the OIG, investigators are examining several forms of alleged abuse, including:

 

• submission of fraudulent visa applications;
• fake recruitment or labour certification processes;
• wage kickback schemes, where employees allegedly return part of their salary to employers;
• "benching" workers without legally required pay;
• coercion or exploitation of foreign workers;
• labour trafficking and forced-labour networks linked to visa programmes; and
• undercutting US workers by paying below prevailing wages.

 

The agency has urged both American workers and foreign employees to report suspected fraud through its hotline.

 

Why are H-1B visas politically sensitive?

 

The H-1B programme has long been at the centre of political debate in the United States.

 

Supporters argue that it allows American companies to fill genuine shortages in specialised fields such as technology, engineering and healthcare.

 

Critics, however, contend that some employers misuse the programme by:

 

• replacing US workers with lower-cost foreign employees;
• outsourcing jobs overseas;
• suppressing wages; and
• exploiting visa holders, who may hesitate to change employers because their immigration status depends on sponsorship.

 

Successive administrations—including those of Donald Trump and Joe Biden—have increased enforcement in different ways, though their broader immigration policies have differed.

 

Why has Cognizant been mentioned?

 

D'Esposito specifically referred to Cognizant while discussing information received from whistleblowers.

 

However, it is important to distinguish between:

 

• being mentioned during an investigation;
• being under scrutiny; and
• being formally accused or charged.

 

As of now:

 

• no criminal or civil charges have been announced against Cognizant in relation to this investigation;
• the company has not been found guilty of any wrongdoing; and
• the investigation appears to be at an early stage, with subpoenas still being issued.

 

Could other companies be affected?

 

Potentially yes.

 

The OIG has indicated that its investigation extends beyond a single company and covers employers, staffing firms and labour brokers involved in H-1B and PERM filings. Large IT outsourcing firms, consulting companies and staffing agencies could all face greater scrutiny if investigators uncover evidence of systemic abuse.

 

What does it mean for Indian IT firms?

 

Indian-origin IT service providers are among the largest users of the H-1B programme because of their sizeable onsite consulting businesses in the US. Any increase in enforcement could result in:

 

• higher compliance costs;
• more frequent audits;
• longer processing timelines for visa applications;
• greater scrutiny of wage practices and recruitment records; and
• reputational risks for companies named during investigations.

 

For now, however, the announcement marks the beginning of an investigation—not a finding of liability. Whether any company ultimately faces penalties will depend on the evidence gathered during the probe.