The US just blocked Microsoft and Adobe from sponsoring green cards. Here's what that means.

On Thursday 8 October, the US government suspended eight companies from a programme called PERM — the paperwork route an American employer must complete before it can sponsor a foreign employee for a green card, meaning permanent residence in the United States.

The eight are Microsoft, Adobe, and six large IT outsourcing firms: Cognizant, Infosys, Tata Consultancy Services, Wipro, HCL and Capgemini. US Vice-President JD Vance announced the suspension alongside Labor Secretary Keith Sonderling, accusing the companies of using foreign workers in ways that undercut American ones.

What exactly has been suspended?

Not the right to employ foreigners. The companies can still hire workers on temporary visas.

What has been suspended is the permanent step. Think of a foreign engineer's status in the US as a ladder. A temporary work visa, usually an H-1B, is the lower rung: it lets you work, but it ties you to an employer and eventually runs out. A green card is the upper rung: it makes you a permanent resident who can change jobs freely and stay indefinitely.

PERM is the bridge between the two rungs. Before an employer can sponsor that green card, it must file a labour certification proving no suitable American worker was available for the role. Suspend a company from PERM and you remove the bridge. Its foreign staff can keep working, but they cannot climb.

Neither Vance nor the Labor Department said how long the suspensions last.

What is the government accusing them of?

Vance's central claim concerns Microsoft. He said the company laid off around 6,000 American workers last year while obtaining 6,300 H-1B visas and almost 3,000 green cards.

Sonderling said the companies were named in connection with active federal investigations, and that collectively since 2009 they had requested almost three million foreign workers, received more than 230,000 H-1B approvals, and obtained more than 100,000 permanent labour certifications. The Labor Department also said it had uncovered $22bn in visa fraud, without breaking that figure down by company.

Separately, Labor Department Inspector General Anthony D'Esposito said investigators had served subpoenas on nine universities over suspected fraud in the J-1 visa programme, which covers exchange visitors including visiting researchers. Harvard, MIT, Yale and Stanford are among those named.

What does Microsoft say?

This is the part of the story that changes how the numbers read, and it was missing from much of the early coverage.

Microsoft says around 80% of its visa filings were not new hires at all, but applications to extend or change the status of people already working for the company. Shrink that to 100: for every 100 visa filings Microsoft made, roughly 80 were paperwork for existing employees and about 20 were for someone new. (Rainingmoney's illustration of Microsoft's own 80% figure.)

The company also said its filings for new employees amount to roughly 1% of its US workforce, that the vast majority of its US staff are Americans, and that its H-1B wages are among the highest filed.

None of this has been tested. These are the government's accusations and the company's denial. No court or tribunal has ruled.

Why should a Nigerian reader care?

Three reasons.

The route. A job at a large multinational, then a temporary visa, then permanent residence, is one of the best-trodden paths out of Nigeria for a skilled technology worker. These eight companies sit directly on that path.

The outsourcing firms. The six IT firms on the list are among the world's biggest employers of contract technology labour, and they recruit globally, not only in India.

The signal. Nearly three-quarters of H-1B approvals go to Indian nationals, so Nigeria's direct share of this particular programme is small. But when Washington turns its attention to visa-based hiring, the tightening rarely stops at one nationality or one visa class. (The three-quarters figure is reported; the inference about where tightening spreads is Rainingmoney's reading.)

The jargon

H-1B — a temporary US visa for skilled jobs, tied to a specific employer.

Green card — permanent residence in the US. No employer sponsorship needed afterwards.

PERM — the labour certification an employer must obtain before sponsoring a green card.

J-1 — a US exchange visitor visa, used by visiting researchers and students.

Debarment or suspension — being barred from using a government programme, usually while under investigation.

What to watch

This section is Rainingmoney's reading.

Whether a duration is published. An open-ended suspension is a very different thing from a 90-day one. Nobody has said which this is.

Whether the investigations produce findings. An accusation at a news conference and a proven case are not the same thing, and the gap between them is where this story will actually be decided.

Whether the list grows. Amazon is the largest US user of H-1B visas; Microsoft is fifth. The absence of the biggest user from the list is the most interesting thing about it.

Whether other countries read this as an opening. Canada, the UK and Gulf states compete for the same engineers.

The bottom line: eight of the world's best-known technology employers have lost their bridge to sponsoring permanent residence in the US, on accusations none of them accept and none of which has yet been proven.