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Indian company Infosys to pay record immigration fine

Company abused H-1B rules — should Qualcomm be worried?

Infosys, the big outsourcing company based in India, has agreed to pay a $34 million fine for committing "systemic visa fraud and abuse" in bringing temporary workers into the United States.

According to the New York Times and Wall Street Journal, federal prosecutors today (Oct. 30) will unveil a settlement that is supposedly the largest punishment ever for immigration abuse.

H-1B visas are intended for foreign workers who come to the U.S. for three years. Only 65,000 visas are issued each year, and companies such as San Diego's Qualcomm, one of the biggest H-1B users, have lobbied for more visas.

An Infosys employee, Jay Palmer, warned the company that it was using short-term visas, intended for quick business trips, instead of the H-1Bs to evade the law. He sued, claiming he was mistreated for blowing the whistle. He lost the case, but the federal government picked up his evidence. The Reader has followed the Palmer case.

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Infosys, the big outsourcing company based in India, has agreed to pay a $34 million fine for committing "systemic visa fraud and abuse" in bringing temporary workers into the United States.

According to the New York Times and Wall Street Journal, federal prosecutors today (Oct. 30) will unveil a settlement that is supposedly the largest punishment ever for immigration abuse.

H-1B visas are intended for foreign workers who come to the U.S. for three years. Only 65,000 visas are issued each year, and companies such as San Diego's Qualcomm, one of the biggest H-1B users, have lobbied for more visas.

An Infosys employee, Jay Palmer, warned the company that it was using short-term visas, intended for quick business trips, instead of the H-1Bs to evade the law. He sued, claiming he was mistreated for blowing the whistle. He lost the case, but the federal government picked up his evidence. The Reader has followed the Palmer case.

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Comments
24

Clearly the main short-term motivation is to lower high-tech labor costs - which is definitely an issue, but I think the biggest problem with this is the eventual transfer of American technical superiority overseas. As Prof. Ron Hira says of firms like Infosys, "What these firms have done is exploit the loopholes in the H-1B program to bring in on-site workers to learn the jobs [of] the Americans to then ship it back offshore," he says. "And also to bring in on-site workers who are cheaper on the H-1B and undercut American workers right here." http://www.npr.org/blogs/alltechconsidered/2013/04/03/176134694/Whos-Hiring-H1-B-Visa-Workers-Its-Not-Who-You-Might-Think

Oct. 30, 2013

ImJustABill: I think the major motivation for large H-1B users is to lower the salary levels for engineers and scientists across the board. But you make a good point: technology transfer to other nations could be a problem. Best, Don Bauder

Oct. 31, 2013

I doubt if Qualcomm is worried about this. It seems Infosys was blatantly breaking some rules. Qualcomm certainly uses a lot of H1-B employees as a tactic to lower labor costs but from my (very limited) understanding of the H1-B laws it would probably be hard to prove QCOM was doing anything illegal. QCOM can always spin the data a little bit to make it look OK. It's not like QCOM is paying engineers minimum wage - maybe they pay an H1-B engineer 90K when a similarly qualified American might make 100K? But who really knows? I don't know the exact numbers because it's all based on my speculation and rumors I've heard. Maybe QCOM doesn't even know the numbers themselves.

Oct. 30, 2013

ImJustABill: We didn't mean to say that Qualcomm is doing something illegal in its heavy use of the H-1B program. Qualcomm should be concerned because if one Indian company got caught cheating, others could, too. Then there might be a wave of negative political opinion against the whole H-1B program. Best, Don Bauder

Oct. 31, 2013

Jacobs may not be doing something illegal, but he is behaving with grotesque greed and a complete absence of patriotic duty - not putting America and Americans above his thirst for money.

Oct. 31, 2013

Ponzi: In the 1960s, CEO pay was about 60 times the pay of the average worker. Now it is about 300 times higher. This is not illegal. But it is incredibly stupid. It is one of the factors that could injure the U.S. economy grievously. Consumption is 71% of the economy. We need a middle class to sustain our economy. But the plutocrats are destroying it. Best, Don Bauder

Nov. 1, 2013

We'll see what happens with the immigration bill in Congress.

While they were debating path-to-citizenship/amnesty and enforcement issues, the Senate threw in about a zillion more temporary visas - both for high tech and low tech workers. I think the latest version of the Senate bill had an increase to 180,000 for H1-B visas.

Maybe the Infosys case will shine a little more light on why raising the H1-B visa limit isn't such a great idea.

Oct. 31, 2013

ImJustABill: I don't believe the Infosys case will change anybody's mind in Congress. These pols have been paid lots of lucre by lobbyists for large companies using H-1B. Best, Don Bauder

Nov. 1, 2013

I guess you don't need to do anything illegal when you can get the laws changed to what you want them to be.

Nov. 1, 2013

ImJustABill: Amen. Why worry about committing illegalities when you can get the laws changed at will? Best, Don Bauder

Nov. 3, 2013

The problem is that Qualcomm is merely taking advantage of a program to cut salaries sharply. Until this country can properly employ the engineers and computer scientists that are native--and it cannot now do that--there is no reason whatsoever to import legions of people from India and other such spots. The career experts are still telling students to head into STEM careers if they have the aptitude, because that's where the opportunities are and the chances for career success. Big Joke, because Infosys, Qualcomm and a host of others are importing foreigners to take the "high paying" jobs the native sons and daughters have spent years and tens of thousands of dollars educating themselves to hold.

Then there is the persistent and pernicious practice of outsourcing the work itself to operations in such places as India. Put the two together, and the picture is not one of optimism for STEM students and workers in the US. To the contrary, I would not recommend such a career to a technically-inclined young man today: rather I'd send him into work in construction. Construction cannot be shipped to Mumbai or Karachi or . . . To a similarly inclined young woman, I'm not sure what I'd suggest, other than perhaps teaching science in middle or high school or going into construction.

Oct. 31, 2013

Visduh: Precisely: H-1B is designed to bring down the salary level of STEM workers. However, Qualcomm awards its chief executive, Paul Jacobs, more than $20 million a year in compensation even though he is only 51 years old. Best, Don Bauder

Oct. 31, 2013

That is particularly galling since there is no evidence that Paul Jacobs had any unusual qualifications for the position, nor had he made any major contribution to the development of CDMA technology. He has a doctorate, and the time spent earning that degree likely kept him away from the real action at Qualcomm in its early years. His elevation to CEO showed the outsize clout his father carried within the company (and probably still carries.) Looks like nepotism pure and simple. And that's one reason why I would steer clear of ownership of stock in Qualcomm.

Nov. 1, 2013

Visduh: Paul Jacobs would not have been named head of Qualcomm without the influence of his father, a co-founder of the company. Period. However, I do believe Paul Jacobs has done a good job as CEO, at least thus far. Best, Don Bauder

Nov. 1, 2013

From what I've read, the Jacobs family controls less than 4% of Qualcomm's stock, but stuffed the board of directors with loyalists. When Qualcomm falters, Paul Jacobs will likely be fired in short order. I think the Jacobs clan is very large, and Paul Jacobs actually needs his Qualcomm salary to provide an inheritance to his children and extended family.

Nov. 1, 2013

Burwell: I don't know that the family controls 4% of the stock, but I do know it has great influence in the boardroom. According to Yahoo, insiders control 1% of the stock. Wall Street institutions control 80%. Vanguard is the largest of the institutional holders with 4.77% of the stock. Best, Don Bauder

Nov. 3, 2013

IEEE (Institute of Electrical and Electronics Engineers) Spectrum magazine had a good article on this recently: http://spectrum.ieee.org/at-work/education/the-stem-crisis-is-a-myth. Basically for decades everyone has been saying there's going to be a severe shortage of engineers but we never see rapidly escalating salary bidding wars nor companies unable to fill positions.

Oct. 31, 2013

ImJustABill: You are pointing to the anomaly that makes the case against H-1B: companies claim there is a shortage of U.S. STEM (science, technology, engineering and mathematics) workers. But if that were true, STEM compensation would be going up, not sideways. It has been going sideways for more than a decade. The claim of a shortage is a myth manufactured by companies that want to lower STEM salaries so they can boost profits and top executive pay, which is already outrageously excessive. Best, Don Bauder

Nov. 1, 2013

Yes. If there is a shortage of a good in limited supply (e.g. STEM labor) the price goes up. Basic, basic, basic, basic economics. You know this. I know this.

Mark Zuckerberg knows this. Irwin Jacobs knows this. Most of the people in Congress know this. They just choose to ignore it.

Nov. 1, 2013

ImJustABill: Money talks. Why must it nauseate? Best, Don Bauder

Nov. 1, 2013

Pa Jacobs has donated tens of millions to build up the engineering program at UCSD. He has contributed so much dough the engineering school is named after him. For all intents and purposes, it appears that he runs the engineering program. Despite Pa's financial commitment and oversight, Qualcomm appears to hire few if any UCSD graduates. Qualcomm also appears to hire very few white males, except at the executive level. I want Pa to explain why Qualcomm shuns graduates from an engineering program he bankrolls. Are UCSD students, most of whom come from wealthy families, lazy or incapable of working long hours? Does he fear loading the payroll with white pot heads and drug addicts?

Nov. 1, 2013

Burwell: These are excellent questions. Someone should put them to the senior Jacobs. Another question: how did Nathan Fletcher get that phony position at UCSD? Any influence-peddling there? Best, Don Bauder

Nov. 2, 2013

Burwell, with one graduate of the UCSD engineering school in the family, I had never thought of the issues you raise. Did Jacobs give all that much to the school to get his name on it? And is it really true that he has large-scale influence on the operation and still has it? Qualcomm, you would think, would look to the Jacobs school for its new talent first, not last. But the stats show that it doesn't give them any sort of preference.

There's some kind of disconnect here. It could have to do with Jacobs having expected that his dollars would give him control of the school. UC "scholars" are an irascible bunch, and the engineering faculty might have been willing to pay some homage to ol' Irv because of his generosity, but not to allow him to dictate the curriculum or content of the classes. I'm sure they all think they are smarter than he is. Are they right? Your guess is as good as mine.

Is the old boy trying to run the UCSD engineering school from above, and if so, is he satisfied? The dearth of UCSD engineering grads at Qualcomm means something, and it just may be that he is holding the grads hostage. In other words, when the UCSD engineering program will give Irv and Paul just what they want, they might consider the grads for jobs. Until then? Just look around and see that the company doesn't hire from the founder's namesake school.

I have a simpler explanation. Irv thought he'd buy control of the school when he gave the $ millions and had the school put his name on the program. The profs would have none of it. What he really wanted was his name, or the Qualcomm name, on as many things as possible. We've already established that the old dude would like to be king of SD. But on the coast, he's been putting his name on plenty of things, and the UCSD engineering school may be one of the least costly. He'd like that remake of Balboa Park that would offer opportunities to add the Jacobs name to a substantial assortment of other civic structures. And with his recent forays into local mayoral and council elections, he's tipped people off to his devious schemes. Add a dose of questions about Jacobs' mental stability now, and you have a real piece of work emerging from the mists.

Nov. 3, 2013

Visduh: At one time Richard Atkinson, former chancellor of UCSD and former president of the UC System, owned a huge slug of stock in Qualcomm. Best, Don Bauder

Nov. 4, 2013

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