TCS, Infosys, Wipro & others suspended from PERM green card program by US. What is it & how is it different from H1-B?

The United States government has suspended eight major technology companies, including Microsoft, Infosys, Wipro and Tata Consultancy Services (TCS), from a key green card program that allows skilled foreign workers to gain permanent residency through their employment.

Senior US officials cited alleged fraud as the reason behind the move, saying companies have been using the program to replace American workers with cheaper foreign workers, and comes as the latest step in the Trump administration's crackdown on skilled foreign labor.

ALSO READ | Cognizant, Infosys, Tata, Wipro, HCL among 8 IT firms suspended from US green card programme


What is PERM?

The suspension is targeting a key employer-sponsorship mechanism, called the Permanent Labor Certification or PERM, which is used by major technology companies and outsourcing firms. The US government said that for certain companies, it would not accept any new PERM applications or process any pending ones.

PERM came into effect in 2005, aiming to speed up the long processing times experienced under the previous paper-based "Alien Employment Certification" program.

ALSO READ | TCS, Microsoft respond to US PERM suspension, reaffirm commitment to American workforce

Under the program, the US Department of Labor (DOL) allows an employer to sponsor a foreign worker permanent residency. The process is initiated by qualified US employers, and not individual workers.

The Labor Department must certify to the US Citizenship and Immigration Services that there are not enough US workers that are qualified and available for a given job opportunity, and that the employment of the foreign worker will not affect the wages and working conditions of similarly employed Americans.

Outside of PERM and family-based routes to permanent residency, individuals can also self-petition for green cards through processes such as the EB-1A application for individuals with extraordinary ability or the EB-2 National Interest Waiver.

Why does it matter?

The PERM program serves as a critical bridge between temporary work status and a green card for many foreign skilled workers. Many IT firms employ hundreds of thousands of workers who typically start on temporary work visas such as the H-1B, and later seek permanent residency.

Without the option to be sponsored by their employer under PERM, foreign workers could lose a key route to permanent residency and would have to stay on temporary visas for longer. For companies, recruiting foreign talent could become harder, as many workers overseas view the path to permanent US residency as a key reason for taking a job.

Companies under suspension

The US said it is suspending Microsoft and Adobe along with some of the largest IT firms in the world, including Cognizant, Infosys, Tata Consultancy Services, Wipro, HCL Technologies and Capgemini.

Other companies such as Meta, Amazon or Alphabet's Google remain free to participate in the program.

‘To protect jobs for Americans’

The move widens an ongoing crackdown on visas which the Trump administration has said cost US jobs. Vice President JD Vance said, without citing specific evidence, companies are using the PERM program to replace American employees with foreign workers and undercut their wages.

Vance said on Thursday: "Our message to Microsoft is: You're a great American company, but you've got to hire great American workers."

The suspensions follow Trump's move to impose a one-time $100,000 fee on new H-1B visa petitions for highly skilled foreign workers, which has been blocked by federal court orders.

PERM vs H1-B

H-1B is a temporary work visa that allows skilled foreign workers to work in the US, generally for up to six years. PERM meanwhile is a permanent labor-certification process. The freeze does not appear to directly affect current holders of H-1B visas.

Move could backfire

Some experts said that while the PERM suspensions might target specific companies, such policies risk making the US less competitive globally by deterring highly skilled foreign talent.

"It is a fallacy to think that you can protect American workers by keeping skilled foreign workers out of the country. You think that foreign talent competes with Americans within our borders, they'll certainly compete with Americans by working abroad," said Chad Sparber, Director of the Lampert Institute for Civic and Global Affairs at Colgate University, as per a Reuters report.

Ahmet Gulek, Postdoctoral Fellow at Stanford’s Immigration Policy Lab, said that permanent residency is the primary way for talented foreign workers to stay in the country and without it, some will leave, and some will not come in the first place, even temporarily.

TCS, Microsoft react

TCS reacting to the development said it does not expect its suspension from the permanent labour certification programme to impact either workforce strategy or customer engagements, adding that it would comply with any directive from the US Department of Labor.

Microsoft meanwhile highlighted that a huge majority of its US employees were Americans and stressed on its belief in the "strength and talent of the American workforce."