Indian IT Outsourcing Firm Pays Biggest Immigration Fine in History

The lengths to which businesses will go to get cheap labor are boundless.  Tech firms, despite their luster, are no better in this regard than landscaping firms, hotels, or construction companies. Most tech firms want to reduce their labor costs (except for their executives), and a surprising number seem to treat the law as an obstacle to get around. I’ve written about the Justice Department’s settlement with 6 of the most famous information technology (IT) companies in America over anti-trust charges involving a conspiracy to suppress wage demands, and a subsequent lawsuit filed by the employees who would have been harmed by the conspiracy.

A newer case came into the spotlight last week.  The Justice Department’s $35 million settlement of civil fraud charges against Infosys, a firm whose business model is largely based on the outsourcing and offshoring of IT work to India, facilitated by using the H-1B guestworker visa, exposed a pervasive scheme of visa abuse in the H-1B and B-1 “business visitor” visa categories. This scandal lends support to the efforts of Sen. Charles E. Schumer (D-N.Y.), Sen. Richard J. Durbin (D-Ill.), and Sen. Charles Grassley (R-Iowa) to put new limits on IT outsourcing firms.

Infosys denies any wrongdoing, despite agreeing to the largest immigration-related fine in history and despite the government’s abundant evidence that, in the words of U.S. Attorney John Bales:

“Infosys committed visa fraud by knowingly and unlawfully using B-1 visa holders to perform skilled labor in order to fill positions in the United States for employment that would otherwise be performed by United States citizens or require legitimate H-1B visa holders.”

Various sources report that other outsourcing firms are being investigated by the Justice Department and Homeland Security, as well.

The Senate’s immigration reform bill takes on the outsourcing industry by prohibiting firms from having a majority of their workforce comprised of H-1B (and L-1) temporary foreign workers, and stops so-called H-1B “dependent” employers (those with 15 percent or more of the workforce on H-1B visas) from placing their foreign worker employees in other firms. This means, for example, that Microsoft could continue to bring over thousands of H-1Bs and employ them in its own facilities, but Infosys and its ilk could not continue to bring in thousands of H-1Bs each year and deploy them to do the work of banks, insurance companies, and other businesses, because such a large share of Infosys employees are temporary foreign workers.