NEW YORK: The Indian Ambassador to the United States Navtej Sarna’s pitch on behalf of the much beleaguered H-1B visa, its positive effect on the US economy, in an appearance on CNN, on Monday, is perhaps a last ditch effort by the Indian government to try salvage its major IT service companies like Infosys and Tata Consultancy Services from major financial setback, which looms on the horizon.
However, it’s a lost cause. Sarna’s effort is a case of too little, too late. There’s now bipartisan support in US Congress, backed by President Donald Trump, to clamp down on foreign work visas. Indian foreign workers have been painted as manipulative job snatchers.
Sarna laid out some impressive facts to lay the groundwork that Indian IT companies and H-1B workers are good guys, not bad hombres: they created 400,000 jobs – Indian tech companies have invested $2 billion in a four-year period, paid $20 billion in taxes; every 100 H-1B visas result in support to 183 jobs in the US, made companies globally competitive.
But what Sarna didn’t point out that nearly 86% of H-1B visas for computer-related jobs and 46.5% for engineering positions were given to Indian nationals last year; most of it garnered by big Indian IT companies.
IT companies like Infosys and TCS have themselves to blame if Congress passes legislation raising minimum wage for H-1B workers. For years the two companies allegedly committed visa fraud, wage theft; failed to promote more diversity in their workplace, didn’t increase hiring locally.
In 2013, Infosys agreed to pay the US $34 million to settle allegations the company abused a visa program intended for business travelers. Infosys used B-1 visa holders, told them how to “deceive” US immigration officials to secure entry into the U.S., work on projects.
Also in 2013, Tata America International Corp. – the US arm of TCS – agreed to pay almost $30 million to settle a class action in California federal court accusing it of requiring nearly 13,000 noncitizen employees to hand over their federal and state tax refund checks.
What Sarna should have talked about – and perhaps he couldn’t because of paucity of statistics – is the number of American workers hired by Indian IT companies in the last few years, at prevailing wages. However, what members of Congress, Attorney General Jeff Sessions – a critic of H-1B visas – and Trump himself, may remember more is the Congressional testimony of Ron Hira, an Indian American academic and staunch critic of H-1B visa.
Over the last few years, Hira has relentlessly lambasted Indian IT companies, spoken at numerous forums on loopholes in the H-1B visa rules. Writing in the Economic Policy Institute, Hira explained how Infosys and TCS were involved in the Southern California Edison (SCE) “scandal”, where US workers were replaced with H-1B visa workers through the repugnant practice known as “knowledge transfer” – where American workers train a foreign worker to take their job, before being fired.
Hira revealed tactics used by the two Indian companies, how they “…don’t use the H-1B visa as a way to alleviate a shortage of STEM-educated U.S. workers; they use it primarily to cut labor costs. But the other main arguments proffered to support an expansion of the H-1B program are easily debunked with even a cursory look at the H-1B data.”
Hira said H-1B workers are paid lower wages. At present, the minimum wage for a worker hired on an H-1B visa is $60,000. Even in 2013, a study done by a consulting firm, Aon-Hewitt, showed that SCE’s IT specialists were earning an average annual base pay of $110,446.
The New York Times, in a story headlined ‘How outsourcing companies are gaming the visa system’, in November, 2015, revealed the same: companies like Infosys, TCS and Wipro pay bare minimum wage to many of their employees – abiding by the rules, and to get more H-1B workers, flood the system with more applications every year, squeezing out smaller companies and startups. There’s no public record of the applications.
Infosys and TCS may exult year after year at their profit margins, bottom line. They’re unlikely to acknowledge, however, how corporate greed, ignoring future pitfalls and consequences, may hurt not only their company but India’s economy too; harm chances of non-IT foreign workers as well.
What’s surprising is also that Indian IT companies have failed to learn from past missteps.
Even as Sarna is extolling the virtues of Indian IT companies, it’s emerged that TCS took yet another contract from Pacific Gas & Electric, in California, to offshore 72 IT jobs through ‘knowledge transfer.’ This practice has incensed anti-immigration advocates; several lawsuits have been filed by American workers. To take on another such project in the face of upcoming legislation and political heat smacks of smugness, to say the least. The likely reasoning by TCS: ‘We’re playing by the rules of the US immigration system.’
Indian shareholders and the public is confused by the corporate governance issues Infosys is mired in at present, with their Board and management slugging it out through nebulous accusations against each other. It’s not known if the controversial H-1B visa issue has anything to do with it.
But that may well be the case.
(Sujeet Rajan is Executive Editor, Parikh Worldwide Media. Email him: firstname.lastname@example.org. Follow him on twitter @SujeetRajan1)