Saturday, June 9, 2007

Patni Computer Systems H-1b settlement fails to compensate American Worker victims

As reported by AHN Media Corp:

Patni Computer Systems Inc. has agreed to pay $2.4 million in back wages as part of a settlement with government authorities who claim the company underpaid employees recruited under the H-1B employment visa. . . Patni is one of the nine IT companies that U.S. legislators last month asked to explain their use of the H-1B visa. The issue with wages is that under the H-1B work visas, companies are supposed to pay the workers it brings into the country the prevailing U.S. wages for those jobs so that foreign labor doesn't unfairly compete with American labor for jobs. The company, which has about 13,000 employees, was awarded 1,391 H-1B visas in 2006.
MATH REALITY CHECK: $2.4 million / 13,000 = $185 per employee. This is an insignificant penalty for Patni, which earns $350 million in annual revenue.

PATNI IS A BODYSHOP: They produce nothing of value. Instead they displace American workers at American companies. According to their July 2006 SEC filing:

“We derive a significant portion of our revenues from a limited number of clients in a few select industries. In 2003, 2004 and 2005 our largest client and one of our principal shareholders, General Electric, accounted for 41.2%, 31.7% and 22.1% of our revenues and our second largest client, State Farm Insurance, accounted for 17.4%, 14.9% and 11.5% of our revenues.” . . . Our attrition rates have been high due to a highly competitive labor market in India. . . . We are currently cooperating with the US Department of Labor with respect to compliance matters related to our past and present labor practices. We estimate the liability to be up to $2 million. . . . Most of our employees are Indian nationals. The ability of our software professionals to work in the United States, Europe and in other countries depends on our ability to obtain necessary visas and work permits. As of December 31, 2005, a majority of our software professionals in the United States held H-1B visas . . Wage costs in India have historically been significantly lower than wage costs in the United States and Europe for comparably skilled professionals, which has been one of our competitive strengths. . . Presently, we benefit from the tax holidays given by the Government of India forthe export of IT services from specially designated software technology parks and special economic zones in India.”
According to eWeek the settlement will go to only 600 Patni employees: "The department is committed to vigorously enforcing the H-1B provisions that guard against employers undercutting American workers by underpaying temporary foreign workers," said Secretary of Labor Elaine L. Chao, in a statement.

If true, then what about the other 12,400 employees? The LCA database reveals that Patni has applied for over 13,000 H-1b workers, with median wage of $45,000. That means that 6000 Patni “best and brightest, BS degreed and highly skilled” are earning less than $45,000 salary.

The real victims were the 13,000 American workers who were displaced by Patni’s unfair competition. The U.S. Congress has known for the past decade that the H-1b program is displacing U.S. workers, that the prevailing wage is a sham, and that there is no requirement to not displace qualified U.S. workers. Congress has compensated the Japanese interned during WW II. When will U.S. tech workers receive similar reparations from Congress?

When has Elaine Chao ever acted on behalf of displaced U.S. workers? In every H-1b abuse case, and reimbursement goes to the foreign workers, ignoring the collateral harm to U.S. workers.


Anonymous said...

Patni Computer Systems said in their SEC filing:

Presently, we benefit from the tax holidays given by the Government of India forthe export of IT services from specially designated software technology parks and special economic zones in India.

Are these "tax holidays" considered government subsidies and therefore illegal under WTO rules?

Unknown said...

Your right, these companies are operating here in the US with only one purpose, to make money be displacing the American Worker.

In order to bring some equity back to the American tax paying workers, we at Peningo Systems would like to propose the following:

- Any company that hires an H1-B or L-1 Visa to work in the United States must pay a tax that is equal to 100% of the “Employer and Employee” portion of the Social Security and Medicare tax. This is important, since it takes away one of the “MAIN” incentives to fire an “AMERICAN WORKER” and replace them with an H1-B or L-1 Visa. As it is all H1-B and their employers ARE EXEMPT FROM PAYING SOCIAL SECURITY AND MEDICARE TAX! This practice must stop.

- To combat the abuse of low pay to H1-B and L-1 Visa holder to under cut the American based worker, which is a violation of the letter of the law, the Federal government must come up with a “Up To Date” Salary survey that would accurately reflect what an American actually would get in the free market place. Then the H1-B or L-1 Visa holder MUST be paid in the UPPER 10% of the Salary range...that's right.... the H1-B MUST be paid in the UPPER 10% of the Salary range. This would insure that H1-B are treated in terms of cost the same as an American and that the H1-B is truly a talent that is needed!

If we implement these 2 proposals, then the H-1B would compete with an American based on the merits of his/her abilities and not solely based on the fact that the H1-B is 10s of thousands of dollars cheaper than the American.

This is a fair way to bring equity back into the US as well as protect out Tax Base from the Tax Evading scheme of hiring foreign workers and avoid paying for Social Security and Medicare tax.

If you have time, please check out my Blog at Peningo Opinion Blog

Anonymous said...

H1-B workers are not exempt from Social Security and Medicare tax. Infact Social Security tax money is lost by most H1B workers when they return to their home countries and do not take advantage of any of the benefits offered by the Social Security program. Get your facts right before you advertise your own company.(,,id=131635,00.html)

Anonymous said...

Even Starbucks replaces American IT workers with Indian workers (H1-B or L-1 Visa). Last week Starbucks laid off around 350 workers from their Support Center, many of them were IT workers. Not surprisingly, there will be increases in the amount of contractors (H1-B or L-1 Visa) that will be brought in within the same month from India.
Here are the 3 things that must be done now to even the playing field:
1. Guest-worker employers must pay Social Security and Medicare tax (100%)
2. U.S. employers must demonstrate they have looked for and could not find qualified U.S. workers
3. Guest-worker employers should be subject to random audits to ensure they are following the rules

Anonymous said...

I feel any foreign national hired to work in the US should be here because they perform critical jobs that they are aptly trained for, and certainly not because it is cheaper to hire them.

Patni is completely taking undue advantage of both sides, charging the clients maybe a little less than prevailing wages (American workers lose their opportunity based purely on cost to hire) and then paying the Patni employees very low wages.

My husband is in the US working for Patni, and he gets just about 50k p.a. This I feel is too less, US citizens doing the same job he does get about 75k.

What can we do about it? Nothing. If we make a noise, I'm quite sure we will be shipped back in no time!We cannot afford any legal actions either.