This week, the U.S. Department of Labor said it would suspend Microsoft, Adobe and several major Indian information technology companies from its Permanent Labor Certification program. The move bars those firms from applying for permanent residency on behalf of employees on H-1B visas. It’s a sharp enforcement step, delivered with blunt political rhetoric.
U.S. Vice President JD Vance said Thursday that the Trump administration wanted foreign and domestic companies to “employ American workers.” Companies, he said, “cannot lay off American workers and then replace them with foreign indentured servants.” He singled out Microsoft, accusing it of replacing 6,000 laid-off workers with people on H-1B visas.
The Enforcement Action
The suspensions also affect companies beyond the two American names. Cognizant, Infosys, Capgemini, Tata Consultancy Services, Wipro and HCL are all on the list. Official data showed about 70% of H-1B beneficiaries in 2025 were born in India, helping turn the dispute into a diplomatic one.
The administration’s argument is straightforward. A visa program designed to fill genuine skills gaps shouldn’t become a pipeline for replacing domestic staff. Whether a particular company crossed that line remains for the process to determine, but the stated principle—that American workers shouldn’t be laid off and replaced—is hardly exotic.
New Delhi Pushes Back
India’s Ministry of External Affairs responded Friday, calling Vance’s remarks “deeply offensive” in a government statement. The ministry accused him of using “terminology that carries painful historical and colonial legacy connotations.” It added: “Such descriptions are unwarranted and ignore the fact that Indian professionals in the United States are highly educated and skilled contributors to its economy and innovation ecosystem.”
Vance’s office didn’t immediately respond to a request for comment.
The ministry also sought to reassure its citizens. It said the U.S. measures wouldn’t affect the validity of existing H-1B visas or the status of visa holders and their dependents. “Talent mobility adds value to both economies,” the ministry said, adding that the suspensions “do not advance the shared ambitions of both countries.”
Industry Says It Has Adapted
Indian industry leaders said the targeting overlooks recent changes. NASSCOM, the IT industry body, said Indian technology companies had “significantly reduced their dependence on H-1B visas” in recent years and were expanding domestic hiring for their U.S. workforces.
Tata Consultancy Services, described as India’s largest IT company, offered specifics. The company said its H-1B applications had been in “single digits” over the previous two years. It also said it intended to hire another 15,000 people in the U.S. over the next five years.
That’s a notable claim. If accurate, it suggests the market has already pushed outsourcing firms toward American hiring, without a federal ban doing the work.
Courts Have Already Weighed In
This isn’t the administration’s first move on the program. In June, a federal judge blocked the $100,000 H-1B visa fee that President Donald Trump imposed the previous year. The latest action targets permanent residency applications instead of imposing a new charge; it’s a different lever, pulled after the court setback.
Why This Matters:
The dispute pits two legitimate concerns against each other: protecting American workers from displacement and keeping the U.S. attractive to skilled talent. Companies now face real uncertainty over whether they can sponsor green cards for key employees, affecting hiring plans and long-term investment decisions. The June court ruling against the visa fee also shows that executive action on immigration still faces judicial limits, and agencies that rely on administrative suspensions may face similar challenges. Washington and New Delhi now have a diplomatic irritant alongside a commercial one. How the administration defines and proves “replacement” of American workers will likely determine whether these suspensions hold up and whether they change corporate behavior.