H-1B visa lottery scheme- America’s biggest foreign worker employment policy is being manipulated and exploited by staffing and outsourcing companies,  according to an explosive report by Bloomberg.

The report highlights how in 2023, 446,000 people sought H-1B visas and only about 85,000 were available. It further adds, over 11,600 visas went to multinational outsourcing companies, with vast overseas workforces that flood the lottery with entries. Another 22,600 went to IT staffing firms.

In all, nearly half the H-1Bs in Bloomberg’s analysis went to outsourcing or staffing companies and as its investigation reveals many of them cheated on a massive scale by submitting multiple entries for the same worker.

How the rigging of the H-1B Lottery System works

The data from 2020 – 2023 obtained by Bloomberg as a result of a lawsuit against the Department of Homeland Security reveals how certain staffing firms have ingeniously exploited the H-1B lottery system through a practice known as “multiple registration.” This tactic involves submitting multiple entries for a single individual to enhance their chances of securing a visa—a manipulation the U.S. Citizenship and Immigration Services (USCIS) characterizes as “fraud”. The findings indicate that about 15,500 visas, or roughly one in six awarded last year, were obtained through such fraudulent means.

In a particularly egregious case, one operator of a staffing firm utilized up to a dozen companies to submit the same applicants as many as 15 times, acquiring hundreds of H-1B visas while many others were left empty-handed.

The USCIS appears hamstrung in its ability to enforce regulations effectively, raising critical questions regarding the agency’s enforcement capacity.

H-1B rigging racket: Curious case of Kandi Srinivasa Reddy

Bloomberg investigation led to Kandi Srinivasa Reddy, an Indian American man who came to US in early 200s and earned a master’s degree. In 2013, he started his own outfit called Cloud Big Data Technologies LLC.

Reddy’s operation involved submitting multiple applications for the same individuals under different company names, thereby increasing their chances of being selected in the lottery. According to Bloomberg’s investigation, Reddy controlled several entities, including Cloud Big Data Technologies LLC, Machine Learning Technologies LLC, and others with similar names and overlapping addresses. These companies submitted numerous entries for the same workers, resulting in over 3,000 entries in total and securing hundreds of H-1B visas since 2020.

In one year alone, Reddy’s firms accounted for more than 300 successful H-1B applications, significantly more than any previous year.

Report further asserts, after winning an H-1B, Reddy’s company rented the workers on contract to corporations such as Meta Platforms Inc. and HSBC Holdings Plc., visa applications show. The company’s advertisements claimed that it collected 20% or 30% of the worker’s pay, an amount that could reach $15,000 or more each year for a typical worker.

Lucas Garritson, a Texas lawyer representing Reddy, told Bloomberg a number of the companies’ visas had been challenged by the USCIS for abusing the lottery system. However, the agency hadn’t followed the proper procedures for prohibiting the activity, nor did it have proof that Reddy’s companies broke the rules.

How the H-1B Lottery System Works

Originally designed to allocate H-1B visas on a first-come, first-served basis, the USCIS switched to a lottery system due to overwhelming demand with a cap of 85,000. Each year, the lottery draws names randomly from the pool of applicants, which has nearly doubled in recent years, making the chances of securing a visa increasingly slim.