The United States government has suspended Microsoft from participating in the employment-based Permanent Labour Certification (PERM) programme, a key step in the process through which eligible foreign workers can seek permanent residency. The action was announced by US Vice President JD Vance on October 8, 2026, amid federal allegations concerning the use of employment-based immigration programmes.
The decision also affects other technology and IT services companies, including Adobe and several major Indian IT firms, according to reports published on October 8 and 9. The US Department of Labor has said it will not accept new or process pending PERM applications involving the affected companies.
The development has raised concerns among foreign professionals whose employer-sponsored green card applications depend on the programme.
Why Has the US Government Taken Action Against Microsoft?
US officials have accused Microsoft of misusing employment-based immigration channels while reducing its American workforce. Vice President JD Vance alleged that the company had laid off thousands of American employees while continuing to sponsor foreign workers.
The administration says the action is intended to protect employment opportunities for American workers and address suspected non-compliance with immigration and labour certification requirements.
These allegations remain distinct from a final legal finding. The suspension and the associated investigations do not, by themselves, establish that Microsoft has committed fraud.
Microsoft's Response to H-1B Visa Allegations
Microsoft has disputed the suggestion that its visa practices involve replacing American workers with foreign employees.
According to the company's statement reported by TechCrunch, approximately 80% of the roughly 6,000 H-1B petitions it submitted during the previous fiscal year concerned existing employees seeking visa extensions or changes in immigration status, rather than new hires.
Microsoft also said that the remaining petitions concerned individuals already legally present in the United States who chose to join the company. It stated that these recruits represented approximately 1% of its US workforce.
The company further maintained that H-1B employees receive compensation comparable to that of other employees performing equivalent work and said it was prepared to provide additional information to the administration.
The disagreement centres on the interpretation of the company's hiring and visa sponsorship practices, as well as the government's concerns about compliance with employment-based immigration rules.
What Is the PERM Programme and Why Does It Matter?
The Permanent Labour Certification programme is administered by the US Department of Labor. For many employer-sponsored employment-based green card categories, the process requires an employer to demonstrate that there are not sufficient qualified, available and willing US workers for the relevant position and that employing a foreign worker will not adversely affect the wages and working conditions of similarly employed US workers.
PERM certification is an important stage in many employment-based permanent residency cases, although not every green card category requires it.
By suspending the affected companies from the programme, the government has halted the acceptance and processing of their covered PERM applications, according to published reports.
What Could the Suspension Mean for Foreign Employees?
The suspension may delay employment-based permanent residency applications for affected employees whose cases depend on PERM certification.
Potential consequences include uncertainty about application timelines and the next steps available to employees and their employers. The precise effect will depend on each person's immigration category, current status and stage in the application process.
The suspension of PERM participation should not be confused with a blanket cancellation of H-1B visas. The reported action specifically targets the permanent labour certification pathway, rather than announcing a general end to the H-1B programme.
Affected employees will need to rely on official guidance and qualified immigration advice for information about their individual circumstances.
Wider Scrutiny of Technology and IT Services Companies
The federal action extends beyond Microsoft. Reports identify Adobe and major IT services companies, including Infosys, Tata Consultancy Services, Wipro, HCLTech, Cognizant and Capgemini, among the firms affected by the PERM suspension.
The administration has also announced investigations into several US universities concerning their use of visa programmes for international researchers and academic professionals.
The developments signal increased scrutiny of employment-related immigration arrangements across parts of the technology and higher education sectors. The investigations and suspensions may have implications for employers and foreign professionals who rely on these pathways, although the eventual outcomes remain uncertain.
What Happens Next?
The situation will depend on the progress of the federal investigations, the government's subsequent decisions and any legal or administrative developments affecting the suspensions.
For companies and employees, the distinction between an allegation, an ongoing investigation and a final determination remains important. Further verified updates will be needed to establish the full impact on pending applications and future sponsorship arrangements.