Bodyshoppers - Faux consulting companies that recruit H1B workers from overseas with promises of a life in the US and a Green Card and place the "consultants" at US corporations to fill developer positions. Usually while they are paid the "market" rate as per DOL guidelines the companies sometimes deduct "fees" from the salary for the first year or so giving the candidate not much to live on. The green card never materializes and the candidate is usually threatened with having to pay back all the fees if they leave. Some are really good candidates who come into the US this way and usually jump ship as soon as they can if they can find a US company to sponsor the H1B. There has been a crack down on this over the last several years so body shopping isn't as common as it used to be.
Outsourcers - Companies who specialize in transferring work development overseas. "Consultants" come to the US on a H1B for year or so to learn the process and systems then head back overseas to setup the development team offshore. Was very in vogue a few years ago but seems to have slowed down as more companies realized it doesn't work as well as advertised.
The third category is companies who genually are seeking the best candidate for the position and cannot find anybody locally. Really these companies should be sponsoring the candidate for a EB1, EB2, or EB3 green card however the process takes too much time (1-2 years+) and doesn't give the company as much leverage over the candidate as bringing them in on a H1B. If you are coming in on a H1B these are the companies you want to work for, but make sure you get any promises for Green Card sponsorship in writing otherwise it probably won't happen.
US govt. has kinda caught up to this and is rejecting many H1Bs that were sponsored by consulting companies now. So make of that what you will.
Go after the abuses of the program, yes, but it's not fair to many good, valuable people in the USA on visas like this to imply (and you may not be trying to imply this, but it's the impression many people come away with) that it's all abuse.
On the other extreme, you have extremely abusive "body shops" where employers think nothing of threatening to revoke a visa to manipulate a worker. I think that many people who work for the first universe were a little shocked to discover that the biggest recipients of the H1B visa are generally overseas outsourcing companies.
http://www.businessweek.com/table/08/0305_h1b.htm
If you're interested in reading more about serious abuses of the system, I'd recommend reading some of Ron Hira's work (a public policy professor at Rochester) - he did an interview on NPR a while back where he discussed some of the really outrageous cases (some H1B recipients were paid less than $9/hr and met the "prevailing wage" requirement... how on earth can this be happening with a visa designed to remedy shortages of "critical, highly skilled and educated workers"? And how is it that google is running out of visas when we're allocating them to companies paying such low wages!)
It's fubar. The US badly needs a solution, but there are so many competing interests that it's difficult to find a common ground. There is some outright xenophobia. There are people who don't really like immigration, and want to limit it wherever they can. There are companies that want to lay off their entire IT department and replace it with non-citizen workers who can't negotiate their wages. There are engineers who feel positive about immigration in general but resent a specific program specifically brings in more engineer, on the grounds that there is no greater a "shortage" in engineering than any other field, at least when you consider wage growth. There are people who support very liberal immigration policies and figure more is better. There are people who think it's crazy to tell graduates of top STEM programs that they aren't allowed to stay. Some people say that we should staple a green card to every graduate degree in a STEM field (but interesting, not to every law degree or MBA, degrees that are more popular with Americans...)
Unfortunately, the result is stalemate and a program that nobody likes, but everyone uses, because how else are you going to do this You work with the system you have.
My own opinion is that we should make every effort to keep and attract top talent to the US in all fields, but we also need to be aware that the market distortions of visas targeting specific types of workers can, if we're not careful, end up deterring Americans from entering specific fields (creating a self-enforcing cycle of "shortages"). I think we can balance this with good legislation (and the countries that "solve" it will have a big competitive advantage over everyone else), but it's a tall order considering the many angry and conflicting interests around this issue.
I'd be the last to argue, though, that the US immigration system is a good one. It seems to tolerate any number of unskilled illegal migrants on one end, but pretty effectively bar educated, skill migration on the other. I'm no economist, but that intuitively seems to be the wrongly skewed to me.
I have some amount of sympathy for the consulting companies as well. I've seen cases where my friends got CS degrees from University of Pennsylvania, who I know are very good, but can't find a job right out of college. (The day your degree is done, the US policy is to kick you out unless you get an intern with some company or a H1B sponsorship. No grace period.). At this point, you're forced to go to the consultancies, get trained in whatever enterprisey tech stack, fake your resume and then accept whatever ridiculous terms the companies throw at you, work for them for a couple of years and move on once you have your foot in the door.
So.. all I'm saying is the policy needs some change .. I'm just agreeing with my parent that it needs to be easier for grads from US universities.
Many H1B holders start with shady companies but eventually move to better places. Not sure if that's always a good thing.
My point was H1B candidates of the former type have self-selected themselves into a pool of skilled risk takers and could perhaps be an asset for a start-up. But your mileage will vary.
As for the latter category, you are not really hiring an employee ; you are merely hiring a vendor . Buyer beware !