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Wed, Apr 30, 2014

Companies profit from cheap labor of H-1B visa immigrant workers

As a child growing up in India, Rajesh dreamed of coming to .the United States.

In 2000, after graduating from college with degrees in civil engineering and information technology, he got a job with a large multinational outsourcing firm known as Infosys. And in 2004 Rajesh saw his dream come true when the company agreed to sponsor his H-1B visa to America.

But Rajesh quickly found the visa came with many strings. In the United States, he said, like many H-1B workers, he was overworked, underpaid, and lived in a modern servitude for fear that his bosses would revoke his visa.

“You’re kind of at their mercy,” Rajesh said.

Rajesh, who requested his real name not be used to avoid backlash from his former employers, is one of more than a million skilled workers who have come to the United States with an H-1B visa.

The program allows companies to bring 65,000 skilled foreign workers into the United States each year and to hire an additional 20,000 skilled workers already in the U.S. who have acquired advanced degrees to fill positions that can’t be filled with American workers.

The visas are held by the companies, not the workers, Bill Wright, a spokesperson for the U.S. Citizenship and Immigration Services (USCIS), said. And H-1B visa petitions must be vetted and approved by the U.S. Department of Labor, USCIS, and the State Department. Companies are only allowed to sponsor one employee per petition.

Though three departments are involved in the process of vetting and approving H-1B visa petitions, none of them track H-1B workers once they are in the country.

David North of the Center for Immigration Studies, a nonprofit research organization dedicated to studying the impacts on immigration in the United States, estimated there were about 650,000 H-1B workers in the United States as of 2009.

Each H-1B visa lasts for three years, but the employer can petition for a three-year extension to the visa. Most workers return home after the first three years, Wright said.

In 2012, 64 percent of the H-1B petitions, including renewals and petitions from the previous fiscal year that were approved by USCIS, were for workers from India, according to a report by the U.S. Department of Homeland Security.

In addition, 61 percent of H-1B petitions approved by USCIS were for workers in computer-related occupations who staff the Information Technology departments in large companies.

Rather than deal with the paperwork, many of these companies turn to large outsourcing firms like Infosys, which sponsor the visa applicants and contract the workers out to the companies as consultants.

There are several types of contracts these companies use, Ronil Hira, an associate professor of public policy at the Rochester Institute of Technology and the author of Outsourcing America, said in an interview. One of the most common is a time and materials contract, in which companies rent labor.

The other type of contract firms generally use is known as a firm-fixed-price contract, in which companies pay a fixed price for a specific level of service.

Once H-1B workers are contracted out to various companies, Hira said they can fill a number of different roles.

“One is the knowledge transfer, where an American worker is training their foreign replacement,” Hira said. “Another is as a liaison to that offshore team itself.”

Photo: suphakit73 Flickr

Photo: suphakit73 Flickr

Hira said that workers generally aren’t contracted to specific companies for long periods of time because they don’t want them getting too comfortable.

“They don’t want them to set up any kind of roots in the U.S., you know, get married or try to get a green card,” Hira said. “They don’t sponsor for green cards.”

These outsourcing firms are legally gaming the system by hiring large quantities of H-1B workers, Hira said. Many are taking advantage of legal loopholes that allow them to bring H-1B workers into the country, and pay them less than American workers.

“H-1B workers can legally be paid below market wages, and so it just invited firms to take advantage of that and bring in lower cost workers to replace or displace American workers,” Hira said. “These firms are extraordinarily profitable in part because they’re able to take advantage of those lower wages.”

Hira estimated that companies pay H-1B workers up to 25 to 30 percent less then their American counterparts, depending on the position they are contracted to fill.

While the U.S. Department of Labor acknowledged Hira’s numbers might be accurate, they said they require companies to pay H-1B workers a prevailing wage based on the geographical region where the worker is employed; the employer must have made the job available to American workers so that they are not displaced.

“If you’re looking at national averages that might be true because [prevailing wages are] based on geographic location,” Egan Reich, spokesperson for the U.S. Department of Labor said.

“We certify that the employer who’s requesting the workers has basically tried to find American workers,” Reich said. “Also, we certify that their wages and working conditions won’t have an adverse effect on American workers where they are.”

Though many of these outsourcing companies will file thousands of H-1B petitions every year, for Rajesh’s former employer, it wasn’t enough. In late October, Infosys reached a $34 million civil settlement with federal prosecutors in Texas, who alleged that the company committed fraud by using B-1 visa recipients to do the work of H-1B workers.

B-1 recipients are not allowed to work in the U.S. and can only attend business meetings, training sessions, or sign contracts. Shamoil Shipchandler, an assistant U.S. attorney in the Eastern District of Texas, estimated obtaining a H-1B visa is also 10 times more expensive that a B-1 visa.

Shipchandler said the government alleged in its complaint that for the past five years, Infosys has had mechanisms in place that allowed them to bring in B-1 recipients to do work that would have required an H-1B visa.

One such alleged mechanism was the use of invitation letters that were presented to consular officials stating the individual was entering the U.S. to attend a business meeting, when in fact they weren’t.

“They would use that as a form letter essentially to get their B-1s into the country,” Shipchandler said. “The people weren’t coming in for business meetings and discussions, they were coming in to work, and to do coding and to do other kinds of activities that were not permitted.”

Shipchandler also said the government alleged Infosys issued memorandums to B-1 workers telling them not to use words like “work,” or say they were in the U.S. on a contract while talking to consular officials. They also allegedly converted the types of contracts they were using in order to conceal the fact that they were using B-1 recipients and not H-1Bs.

Shipchandler said the government alleged that Infosys was using these tactics as a way to gain an advantage over its competitors. B-1 visas are much cheaper and faster to obtain than H-1B visas, which allowed Infosys to contract workers to companies faster.

“We believe that it was largely for a competitive advantage,” Shipchandler said.

The $34 million settlement was the largest immigration-related punishment in history. Shipchandler said the government chose to go the civil route instead of the criminal route because Infosys was cooperative in cleaning up its policies and practices.

Shipchandler said Infosys has agreed to cooperate in creating compliance measures such as hiring an auditor to look at its practices, and to discontinue the use of form letters.

“In large part because they were so willing to become a good cooperate citizen and work with us and address our concerns, it dictated the fact that we went a civil route with them as opposed to a criminal route with them,” Shipchandler said. “We hope Infosys becomes a model to the industry as a good cooperate citizen and their experience changes people’s conduct.”

Despite the settlement, Infosys has publicly denied the allegations filed in the civil complaint.

Though Infosys has agreed to stop manipulating the roles of B-1 visa recipients, many on H-1Bs still toil through long workdays for less pay than their American counterparts.

Rajesh eventually left Infosys for another large multinational outsourcing firm known as Sapient, and was later granted a green card. He has also earned his master’s degree in Business Administration from the University of Chicago.

While he has enjoyed his time in the United States he said the time he spent as an H-1B worker meant he had to work for both the company holding his visa, and the client he had been contracted out to.

There were times, Rajesh said, when he was expected to put in a full day of work with the company, and then stay up into the early hours of the morning working with fellow Infosys employees over the telephone.

“I’ve been in situations where I had to be on the phone until like, 3 in the morning, and then be back at 8 in the morning at work,” Rajesh said.

H-1B recipients also face added pressure from India, where Rajesh estimated that for every worker who decides not to accept the company’s terms, there are six waiting who will. This gives consulting firms like Infosys the leverage to keep H-1B workers from complaining about their situations.

“I wouldn’t say that it’s something that’s common that they do all the time, but they could revoke it, and then you’re kind of out of status,” Rajesh said. “So all of your American dreams could go out the window in just about however much time it takes them to revoke that visa.”

While Rajesh said the threat of having his visa revoked was always real, he never let it stop him from speaking up when he felt his bosses at Infosys went too far.

When one particular incident involved a manager Rajesh said had been acting ill mannered towards him and his co-workers, he spoke up.

“You could be my boss, or you could be the mayor of New York, you are not going to be disrespectful when you talk to me,” Rajesh said. “If you do that next time, and I’ve said that literally, if you do that next time I will walk out on you, and I’m telling you right now.”

Rajesh said that he only had a couple of incidents with his managers, and that he always tried to pick his battles.

“I tried to play my cards well,” Rajesh said. I figured that there was enough dissatisfaction about that person around and that’s when I spoke, but I was still the first person to speak basically.”

Photo: Stuart Miles Flickr

Photo: Stuart Miles Flickr

Though Rajesh was able to stand up for himself, he noted most don’t.

“I have seen a lot of people who got so pissed with the amount of work they had to handle they went back,” Rajesh said. “And when they went back they made lame excuses like, you know, ‘I have to go because it’s my sister’s wedding or there’s a certain thing that I have to do.’ They were just making it up.

“They just didn’t have the guts to go up and say ‘it doesn’t make sense,’” Rajesh said.

While companies can save money on cheaper foreign workers, the H-1B workers can also become a problem because not all workers are as skilled as they claim to be, Rajesh said.

As a project manager at Infosys, one of Rajesh’s jobs was to sift through the resumes of potential H-1B workers to help the company figure which had been fabricated.

“The worst thing that I have seen, and it makes me so mad, is that [there’s] a lot of these guys that completely cook up their resumes,” Rajesh said. “There’s a lot of forgery when it comes to their skill sets and stuff, and a lot of them do not possess the skills that they claim.”

Neeraj Gupta, who worked in two top positions at a Massachusetts-based outsourcing firm formerly known as Patni Americas, said IT companies turn to H-1B visas due to the lack of trained science, technology, engineering, and math (STEM) workers within the U.S.

According to a recent study by Georgetown University, there has been a range in expert opinions ranging from blaming the shortage on poor educational performance by students starting in the K-12 school system, to those who argue there is no shortage at all. The report concludes that there in fact is a shortage, and it can be attributed to students being diverted from STEM fields in both high school and college due to financial and social reasons, as well as a lack of interest.

As the workforce decreased, Gupta said, companies became more reliant on H-1B workers and eventually had no reason to look within the U.S. to fill these positions.

“There’s just not enough workforce available,” Gupta said. “And because it’s not available, and you import them, you take away the incentive for these organizations to invest in building the U.S. domestic workforce.”

While Patni Americas grew to become the largest outsourcing firm in Massachusetts, receiving more than 1,200 H-1B workers in 2012 before it was bought by another outsourcing firm known as iGATE, Gupta said the problem isn’t with the outsourcing companies themselves, but with the U.S. policy that has made these business models possible.

“Clearly the issue is not the company, the issue is U.S. policy,” Gupta said. “These companies clearly have a business model that’s focused on leveraging India and driving lower cost service to U.S. enterprises, so to that extent they’re following the laws of the land and the policies that the U.S. has set up.”

While these consulting firms aren’t currently doing anything illegal by bringing workers into the U.S. on H-1B visas, Congress has been looking to tighten some of the loopholes these companies have managed to jump through, while also increasing the yearly cap.

A bipartisan immigration reform bill proposed in the U.S. Senate by a group of four Republicans and four Democrats would increase the yearly H-1B visa cap from from 65,000 to 115,000 according to an article published in the New York Times on Jan. 28, 2013. There would also be a “market-based system” that could allow those visas to reach 300,000 in one year. Last April, due to high employer demand, the 65,000 available visas were allocated in just five days, and 39,000 requests for H-1B workers were denied, according to the Brookings Institution. This year, they were expected to run out on April 1, or Day 1, according to the Times of India, which cited the improving US economy and need for IT investment.

According to the Huffington Post, tech giants such as Microsoft, Google, and Facebook lobbied in support of extending the cap. However, the bill also contains provisions preventing a company from having more than 50 percent of its workforce on H-1B or L-1B visas.

Companies with more than 15 percent of their work force would be deemed “H-1B dependent,” the Post said, and would have to recruit American workers before they would be allowed to hire more H-1B workers. They would also be required to pay H-1B workers a higher prevailing wage.

The Senate bill is currently stalled in the U.S. House of Representatives, where House Speaker John Boehner (R-Ohio) said it will remain for the remainder of the year.

“We have no intention of ever going to conference on the Senate bill,” Boehner told the Post.

Meanwhile, President Obama said in his 2014 State of the Union address that he would “go it alone” on immigration if he couldn’t work with Congress. The statement “sort of breeds this kind of distrust,” House Majority Leader Eric Cantor (R-Ohio) told United Press International in February.

UPI also quoted Senate Republican Leader Mitch McConnell’s (R-KY) description of the stalemate. “The Senate insists on comprehensive [legislation]. The House says it won’t go to conference with the Senate on comprehensive and wants to look at [it] step by step.”

While Congress is trying to work through gridlock, it’s important to note that not all H-1B workers are used to displace American workers with cheaper foreign labor.

Every year companies use the H-1B visa to hire about 20,000 skilled workers who have recently earned advanced degrees, such as Aadityaraj Singhvi.
Last April Singhvi had a big problem. After earning his master’s degree in engineering from San Jose State University, his student visa was set to expire and he was facing the possibility of being sent home to India.

Then, on October 1, Singhvi hit the lottery.

ADTRAN Inc. agreed to sponsor his H-1B visa and the petition was randomly selected by USCIS in a lottery system the department employed due to the unusually high volume of petitions they received. ADTRAN is a global supplier of networking and communications equipment, and has offices in Burlington, Ma.

Singhvi currently works as a design verification test engineer for ADTRAN and said finding out his visa had been selected was a moment he will never forget.

“That was the most finest moment and most happiest moment of my life,” Singhvi said of hitting the H-1B lottery.

While the USCIS did not release the amount of applications they received for FY 2014, they haven’t employed a lottery system since 2008 when they received 163,000 applications, USCIS website said.

Singhvi said that seeking out a sponsor for an H-1B visa is common for workers who have recently completed an advanced degree program. He estimated that 50 to 55 people he knew from school looked for sponsors after they graduated.

“Fortunately all [of] my friends got it except one,” Singhvi said. “He applied but his application was not accepted in that lottery.”

For Singhvi, the transition from the optional practical training period of his student visa to an H-1B visa has been seamless. Though he’s only been with ADTRAN for a few months, he says it’s been a very good experience.

“They have treated me very good so far,” Singhvi said, “I’m paying more taxes, other than that it’s not much of a great change.”

While Rajesh’s H-1B experience was more turbulent than Singhvi’s, he now calls himself the model H-1B worker because he was able to turn his visa into a green card. He still works in project management and said he makes “a lot more” then he used to.

While he admits he went through some tough times on his way to acquiring a green card, he said living in the United States has been everything he expected it to be.

“I have lived my American dream,” Rajesh said.

Adam Sennott
Spare Change News (Boston)

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Adam Sennott wrote about H-1B visas for his senior capstone project at Emerson College. He is the former editor of Spare Change News in Boston, a street paper that since 1992 has covered homelessness, inequality, culture and resistance.

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