Tuesday, February 5, 2008

BusinessWeek exposes how Industry really uses H-1b workers

Listening to Compete America one would think that H-1b workers are the "best and brightest" in the world, contributing to "U.S. global competiveness." But as the 1/31/08 BusinessWeek article "Are H-1B Workers Getting Bilked?" exposes, H-1b are being used by Indian consulting firms to bring in cheap labor, driving American consulting firms out of business, and displacing highly-skilled U.S. workers.

First, Indian consulting firm Patni undercut American workers when DOL approved the labor condition applications for a "prevailing wage" of $44,000 per year. This is far below the "$45 to $80 per hour" that the Yoh study found to be the average for U.S. workers with "high demand" skills, such as "Database Administrator" and "Application Developer."

What Patni didn't disclose was that the $44,000 "salary" presumed that their workers put in lots of overtime. Their base pay was only $11.72 an hour - they were expected to reach their "salary" by working overtime. But even with 23 days of overtime, one H-1b's annual pay worked out to only $35,305 in 2004.

As State Farm in Bloomington Illinois was laying off their American staff, the LCA Database reveals that Patni Computer Systems was bringing in hundreds of Indians on H-1b visas - many placed at State Farm. As mandated by the U.S. Congress, the Department of Labor rubber-stamped these LCAs (labor condition applications) for wages as low as $27,000 for computer programmers. H-1b workers must have a minimum of a BS degree and specialized skills.

Many of the LCAs were filed by Dayanand Allapur, Vice President HRD 617-914-8367. Patni's main number Cambridge, MA is 617-914-8000

Among the Americans who lost their jobs was George Moraetes. He reports having "seen 4 - 5 H1-b's living in a one bedroom apartment" and that the same pattern of H-1b usage was employed by GE.

Contrary to helping the U.S. remain "globally competitive," the top users of the H-1b program are Indian consulting firms. They are transferring U.S. jobs and technology back to India and increasing the U.S. trade deficit. Without the H-1b and L-1 visa programs much of this loss of U.S. tech leadership would not be possible.

Patni is headquartered in Mumbai, India. Their website provides roadmaps for transferring manufacturing offshore: http://www.patni.com/

The U.S. Congress needs to wake up to the imminent threat posed to the U.S. economy by shipping our manufacturing to China and now services to India. Or economy cannot sustain this growing trade deficit and gutting of U.S. infrastructure.


Anonymous said...

The good thing for US workers is that these H1-Bs are putting in copious amounts of overtime. Studies indicate that workers who put in 60 hours a week for over 2 months end up producing less than workers putting in 40 hours a week.

Overtime increases productivity only in the short-term. After around 2 months, employees get tired and worn down with the constant work and start making mistakes. Those mistakes add up and kill productivity from constant re-work.

American managers have known these facts for some time. Henry Ford pioneered some of the work in this area. That is why the US work week is 40 hours and why 40 hours is an international standard.

This Indian company practice is yet another example of mismanagement which only results in poor quality service.

Anonymous said...

Does anyone know any sources that could report the unemployment rate for US computer programmers?

Anonymous said...

On the similar lines, there is this company called Corpus (www.corpus.com) based in Dallas, TX, which does something similar, but breaks laws on many levels. They were caught bribing senior executives at Verizon for getting contracts and filling them with unqualified H1B programmers from India. The reason they can bribe the executives at Verizon is they pay peanuts to these so called "hi-tech programmers". Now Corpus is blacklisted from Verizon and can't do business with Verizon any more. And the senior executives responsible for this were removed in a clandestine manner from Verizon. Verizon is a public company and in the business of providing basic services across the country. This amounts to downright treason on part of Verizon. There should be something we can do about this?

Anonymous said...

Happened to see this delusional op-ed from Fortune-

The elite media and corporate execs (like Cisco's Chambers quoted here) are truly out of touch with the realities of sustaining an American way of life and culture - something every other country is allowed and encouraged to do for their own.

Anonymous said...

I am on a H1b - employed by an American startup. I have been employed for some skills which the company had advertised for, for quite sometime and has not been able to find people (when they did find someone they weren't able to retain him for long). I am paid well above the median salary. I hold stock options in the company, am proud of the work I do and how my skills benefit the company.

I am from India. I like life here in the US and the warmth of the people and am thankful of the opportunity to work in this wonderful place for a few years.

I see others Indians who come in as contractors of the offshore company to whom a part of the low end work has been outsourced by our company.

It seems as those these contractors work under some threat of a bond or non-compete clause which may be used against them if they try to quit here in the US. The employees dont even talk about this in the open, but dig a little and it is obvious. And any sign that they are applying for jobs at American companies and they are pulled back to the India office. And due to the lower salaries which they are paid while in the US (as compared to their US counterparts), they try to save as much as possible and live several people to a room etc. Of course that is their choice.

After the letter written by the American senators to some of the worst abusers of H1b visas (infosys etc.) - looks like the L1 and B1 visas are now being misused by the companies to gain an unfair advantage by means of labor arbitrage.

The smaller US based companies owned by US citizens of Indian origin or naturalized Indians who call themselves 'consultancies' also have a bagful of tricks to try and keep the engineers as low paid labor. These companies just operate illegally and due to the way the H1b visa is setup (the employee goes out of status and is illegal the minute he is fired from the company), the employee finds it very difficult to complain. Non-compete clauses, 'bonds', keeping a part of the salary as backwages (which is illegal), threats of lawsuits are all tricks used by these companies to keep the low paid employee from leaving. Another new trick is to hire non-engineers (MCAs etc.) who are technically not qualified and have no communication skills and then fake their resumes to get the visa. Many of these 'engineers' wont be able to land decent jobs in software companies in Bangalore(besides calls centers and lowest end BPOs). Obviously they will be willing to work long hours for a lower salary and since its a matter of survival they will do just enough work to survive on the job. And the low rates that are charged for them will make them attractive to companies. Esp. for management types who would prefer someone who isn't good at his work but wont complain or think much whatever the work content or work hours are.

I personally believe that H1b visas should be reduced. Or some provision should be made that only real American companies like Microsoft, Google etc. who contribute to the US economy should be allowed to take advantage of this visa. For all others who want to do business in America there is the B1 visa - which is good enough for business visitors of any kind.

Anonymous said...


There're just a couple bad apples on the apple tree.

Even the dumbest H1bs perform better than the ones from trade schools like ITT Tech.

Anonymous said...

I used to work for Patni here in the US on an H-1B. I think the guys in the article are full of s--t. I always got apid what I was supposed to--$60K per year.

Anonymous said...

This is the most ridiculous article I have seen. Mr. Berry seems to be lacking data to prove anything he is claiming. Is he saying that successful companies like Microsoft, Cisco, Intel, etc have no idea what they are doing? Corporate America has hired H1-B visa personnel primarily due to the fact that they could not find local talent. It’s not always cheap from their perspective. The H1-B employee might not be getting all the money. But from a company’s perspective, it is as expensive as hiring a local guy. However, they go looking for people abroad when they cannot find a local person.

America is a land of immigrants. It has always been that way and that has contributed to its success. I am sure that Mr. Berry’s forefathers came from a different country to America looking for a job. I am sure that at that point in time, Mr. Berry’s forefathers might have caused strife to the local labor force – taking their job away working for cheap wages. No reference is being made to anything like that in this article. Foreign labor is nothing new.

Mr. Berry needs to realize that America is a capitalistic country. Large corporations always look for optimizing things and make it cost efficient for them. If you look at it from a higher level, it has always benefited America and has made it a world leader.

Anonymous said...

Jobs created in America by TCS [ Indian company]

ILFORD(Ohio): More than a century after the company's great forbear Jamshedji Tata scoured Ohio looking for steel expertise, India's tech major Tata Consultancy Services (TCS) opened a 1000-seat delivery centre outside Cincinnati on Monday, marking a small but significant counter to overwrought reports about job flight from the United States.

Eminences ranging from the state governor to the local school superintendent turned up for the inauguration of the new facility, to hear and exult about 1000 jobs being created in the area. It was a rare moment of relief, pride, and vindication too for India - and an Indian company - which has been under attack from protectionist forces in the US for taking away American jobs.

The delivery centre, located in the Cincinnati suburb of Milford, will take in mostly local hires over the next three years after TCS cranks it up with associates from India. It will handle design, development and delivery needs of TCS' key North American customers such as Boeing, Nielsen and General Electric.

"I'm just thrilled...this means a lot to the local community," said Greg Asher, a Computer Science graduate from the nearby University of Cincinnati, who is TCS' first local hire, as he enthusiastically conducted visitors around the center. At a reception, Neil Leist, the local county's school superintendent, mulled about how the center will help foster math and science education in area schools.

A thousand jobs might mean a drop in the ocean in India, but in these troubled times in Middle America, its manna from heaven for communities where thousands of jobs are being leached. TCS will be the largest employer now in Clermont County, and its delivery center on a site known as Seven Hills is expected to become the Mecca for many local students.

TCS will benefit too. At a time of rising salaries in India and growing visa shortages and roadblocks, the company gets a handsome footprint in the country that provides nearly 50 per cent of its revenues, although CEO S.Ramadorai chose to put it in a broader perspective – "to be closer to our customers."

The move also reflects a growing strategy among Indian IT companies to spread their bets – and work – across the globe in an emerging new model. Infosys, Wipro, Satyam and others have also been spreading their wings and going far and wide, but none more than TCS, a company whose first IT contract came from the Detroit police department in the 1970s.

TCS now has facilities in several US cities, besides in Toronto, Canada; Guadalajara, Mexico; Santiago, Chile; Montevideo, Uruguay; and, Sao Paolo, Brazil.

With 16000 employees in North America and 6000 in South and Latin America, nearly 20 per cent of the company's 108,000-strong workforce is in the western hemisphere even as it ramps up in places as far apart as Morocco and China.

"It is a new flat world model," Ramadorai acknowledged, referring to not just work but also jobs flowing out of India, after a mostly one-way traffic till a few years back.

For the moment though, the Seven Hills facility outside Cincinnati is the toast of both the company and Clermont County. Spread over 220 acres, it will be TCS' largest facility area-wise (in terms of headcount, TCS Chennai tops with 22,000).

Back-of-envelop numbers suggest it was bought for a song at a time of strong rupee and weak dollar - $ 20 million with all the bells and whistles, with plenty of breaks from the state and the county.

But money wasn't on anyone's mind yet as TCS took wings in the state that was home to Wright brothers and invented the cash register. "Ohio prides itself on our business-friendly environment and we are always looking to increase economic opportunities for our citizens," said Governor Ted Strickland, breathlessly invoking Gandhi and Tata. "We are excited that TCS has decided to make this significant long-term investment, making Ohio home to the newest and fastest-growing sectors of the economy." Other local executives joked that this was a case of "insourcing."

Considering that Jamshedji Tata began his old-economy, steel manufacturing adventure in India from Ohio, there was some sweet irony in the latest development.

Anonymous said...

Corporate America has hired H1-B visa personnel primarily due to the fact that they could not find local talent.

1000 Jobs created in America by TCS [ Indian company]

How UNTRUE are these 2 statements. Just ask any Nielsen employee who had their job outsourced to India. The replacement comes to the US on TCS' H1-B visa. The Nielsen Company has already lost 1250 employees a few months ago and more jobs are being outsourced every week.

Will TCS pay US students, fresh out of school the $60,000 they claim? I doubt it. Highly educated employees with up to many years experience have already been outsourced to India. Their replacements earn an average of $3000 - $4000

How can a US employer compete against these illegal H1-B visas that are being used to create new jobs in India at 5% - 10% of our usual wages

Anonymous said...

I think the consulting firms should be given H1B visa only after non-consulting firms like Microsoft, Oracle, and Yahoo fill up their positions. This way, the outsourcing companies cannot use the H1B visa to outsource the US jobs to other countries. Also, more jobs in US tech companies would spur more job creation in US. The best way would be to deny visas to consulting firms like TCS, Wipro and Satyam rather than to Microsoft, Google and others. I cannot understand why such a simple thing cannot be put in practise by INS, rather than thinking that the whole H1B system is used to ship jobs to India and China. Companies like Microsoft/Google pay their H1B employees at par with the US citizens. Please comment on this what you think

Anonymous said...

Anyone remember "The Nielsen TV Ratings" ? Good old, all American Nielsen. NOT anymore. ALL jobs are now being outsourced to India. Let's just rename the company The "INDIAN" TV Ratings. The price of Greed in our Formally Great Country is going to finally take its toll.

Cure4ALL said...

These H-1Bs are also the most cunning of individuals

Read this question that's posted on a popular Indian immigration forum and the replies that follows.
I am working on H1 through a consultancy company. My consultancy is giving me 75% of my billing rate, which is not bad but I can do better if I transfer my H1 and payroll to a friend's company who will not take any money from my billing rate. Fortunately, one of my close friends, who is a citizen, is willing to register a company for the sole purpose of running my payroll.The problem is I am not sure about all the paperwork that a company has to show in order to file for an H1 transfer. Since the company would be totally new, no tax/revenue documents would be available. However, since my client knows about my intentions and has agreed to go through the payroll transfer, my friend's company will have a client contract (proof of guaranteed income) in order to show the availability of funds to pay me. I would appreciate it if someone with a similar experience or knowledge would help me out. TIA.
Why would you care about the paperwork? That's not your job. In other words,
your friend is not really running the company, you are. That's illegal
How is this company going to demonstrate the resources to pay you? The company
is a fraud since it has no intention of generating any revenue - profits - for
the owner. How are they going to pay their share of the social security and
medicare taxes if they are paying you 100% of the billing? What about the other
taxes that are due by virtue of the company's existance? Guess what happens if
"your fiend's" company does not pay taxes due? He could go to prison for tax
evasion; is he aware of the consequences to him of his favor to you?Schemes like
this and people like you are one of the reasons that citizens are angry about
H1B visas

Anonymous said...

The public should have listened but they didn't. Read this to see how heroic Americans tried to save US jobs.

We Tried to Rescue American Jobs

rmalik said...

I am an indian and also an engineer on H1B and i did my MS in Electrical engineering from Chicago, IL. I totally agree with Kim and i think Indian consultancies are doing a fraud here by bringing in people who are not even engineers on H1B visas for engineering jobs. This is a complete abuse of the system and i think now its high time because even real good guys with Masters and Phd are having trouble finding jobs in this once called golden US economy. Keep going Kim, i am with you.


Anonymous said...

Remember how immigrationvoice.com made their voice heard. They sent flowers to Dept. You too can do that. They also had peaceful demonstration. A peaceful demonstration will invite every body's respect. You can have demonstration on TIME SQUARE (NY) or at any other similar vanue. Invite media to get good coverage. Ordinary American does not know the perils of American IT workers. Please educate them. This will also give Govt. enough reason to go against the wishes of those powerful IT companies. I feel this idea will work. Giving jobs to Americans will help country as well as comppanies in long run. Constant supply of H-1B holdes and gradute students have hurt the wages. This has impacted the income of Americans. That in turn affected the economy.

Anonymous said...

There are thousands of corporations in USA owned by Indians who are now citizens. Most of them entered on work visa. Problem with them is that they hire ONLY INDIANS (Asian Indians). Most of the employees have H-1B Visa. This is unfair to Americans. The Govt. should put restiction of such a practice. Now Indians make 30%-70% of the staff IT departments of the many of the big corporations. A large number of Indins work for them as "consultants" who are on H-1B visa. Many of H-!B holders do not get proper salary and benefits. There are Indian managers who hire only Indians prferebly from the area in India where he (manager) was born.

This practice should be stopped. Many such companies are now applying for fresh H-1B Visa. When companies apply for H-1B, the companies prove that they could not find a worker in their area. This is done by rejecting the resume they get. Always they create a requirement, that can not be fullfilled in USA. The resume of foreigner is "tailored" to match that requiremnt. This works.

Anonymous said...

The previous poster said it all. Indians practice nepotism in the workplace. If they continue to do this bad behavior then they should get out of America and stay out!!

Prashanth Reddy said...

Thanks for the informative post regarding H-1b workes in Industry point of view..