American computer professionals who complain that they lose jobs or get lower pay because of imported tech workers may have reason to smile. Government regulators are cracking down on alleged fraud in worker visa programs.
But some heavyweight companies, such as San Diego’s Qualcomm, are lobbying hard to bring in even more foreign engineers. Smaller local software companies want more offshore techies, too.
On January 25, India-based Infosys, a so-called body shop, or placement firm that sends talent to American companies, revealed that it and some of its employees are targets of a Texas criminal investigation into fraud and abuse of United States visa laws. The State Department, Homeland Security, Department of Justice, and Internal Revenue Service are investigating Infosys practices.
Importation of tech and other workers with a bachelor’s degree is normally accomplished through the H-1B visa program, by which foreigners can take jobs of up to six years with American corporations. America brings in 65,000 such workers a year, plus another 20,000 with advanced degrees. In addition, foreign workers take jobs with nonprofit organizations, and under the L-1 program, companies bring in employees already working in their overseas subsidiaries.
Critics complain that the H-1B engineers (heavily from India and greatly under age 30) are paid less than their United States counterparts, thus depriving Americans of jobs and depressing the general technology wage level. Under United States law, this is not supposed to happen, but studies have shown that it does.
Infosys was first sued in a whistle-blower civil suit in Alabama. An employee said he suffered retaliation after complaining that Infosys engaged in large-scale visa and tax fraud. In particular, he charged, Infosys got around the H-1B limitations by using the B-1 visa program. B-1 visas are only for nonproductive purposes, such as attending a convention; people with B-1 visas cannot receive wages from American employers. The whistle-blower charged that Infosys deposited the workers’ pay in their Indian bank accounts and gave them bank debit cards to cover living expenses in the United States. The workers’ names weren’t on the books, and state and federal withholding taxes were not paid.
The whistle-blower’s Alabama lawyer shared his information with federal government investigators, and in May of last year Infosys reported that its records were being subpoenaed. Then, on January 25, the company revealed the depth and breadth of the investigation and said it could adversely affect Infosys business.
The critics hope such adverse effects will spread throughout the H-1B program. The Infosys investigation “has put a chill in the industry,” says Donna Conroy, director of Chicago-based Bright Future Jobs, which represents American workers pushing for outsourcing reform. “The regulatory pressure has been beefed up. Companies are talking about hiring Americans again.”
Don Tennant, columnist for IT Business Edge, says that the civil and criminal Infosys cases, along with some other positive developments, are industry game-changers. The biggest tech story of this year will be “the implosion of the H-1B visa-centric business model” of major corporations, he proclaims in his column. “Company after company [will be] forced to halt…abuse of the visa system for fear of suffering the consequences that Infosys will have suffered.”
Professor Norm Matloff of the University of California Davis, who has written extensively on the H-1B program, points out that the original purpose was to bring in “the best and the brightest from around the world,” but that is not happening. “The vast majority are ordinary people doing ordinary work.” It’s all about low-priced labor, he says. “The use of foreign workers for cheap labor pervades the entire tech industry, including the large, mainstream U.S. firms, and including the foreign workers hired from U.S. universities.”
The victims are really the best and brightest American engineers “being squeezed out of the market once they accumulate 10 years or so of experience,” Matloff says on his website. And H-1B discourages United States college students from pursuing tech. “H-1B is causing an internal brain drain of American talents.”
Conroy of Bright Future Jobs deplores statements such as an infamous one by the chief executive of HCL Technologies, another Indian body shop, that American tech grads are “unemployable.” Conroy says that the body shops and America’s own tech chief executives “truly believe in the inferiority of Americans. [They believe] Americans are fat, lazy, and stupid.”
On January 30, President Obama was asked by a woman why America keeps bringing in H-1Bs when her engineer husband can’t get a job despite more than ten years of experience. A stunned Obama said, “Industry…tells me that they don’t have enough highly skilled engineers.” He promised to send the husband’s résumé to American companies.
In 2007 and 2009, senators Dick Durbin of Illinois and Charles Grassley of Iowa introduced bills that would rein in H-1B and L-1 abuses. But neither bill got to the floor. Conroy concedes any bill is “dead right now” but thinks the time is right to put one in the hopper again. “The [H-1B] program is plagued with fraud and abuse,” says Durbin — a view that many share, hoping that the crackdown on Infosys will frighten some companies.
Two years ago, the United States Citizenship and Immigration Services, part of Homeland Security, put out a memo that is also proving helpful in curbing abuses. An employer seeking to hire an H-1B worker must establish an employer-employee relationship. Basically, the employer must have a sufficient level of supervisory control over the employee — having the ability to hire and fire the worker and to control his or her work product. Some hoped the memo would be the death of the body shops that recruit in India and retain some control over hirees in the United States. Maybe the Infosys probes will do the job.
Qualcomm says that 60 percent of its new grads and interns in the United States are foreign nationals. Last year, chief executive Paul Jacobs said in a speech that one of the most important jobs of government was to reform laws so more of the “best and the brightest” can come in from abroad. Why? Jacobs didn’t say it, but last year the president of Cornell University told a Senate committee that in 2006 foreign-born inventors were behind 72 percent of Qualcomm patents.
According to the American Association of Engineering Societies, foreign-born students get 42 percent of engineering master’s degrees and 53 percent of engineering PhDs at American institutions. So Qualcomm and its fellow big companies have an argument, too.