Potential Opportunity Cost of Infosys' Bad Choice Is Staggering

Don Tennant

As U.S. government officials meet with Infosys' attorneys to present what they've so far uncovered in their ongoing visa fraud investigation, the Indian outsourcing services provider faces stiff monetary and other penalties as a consequence of its actions. But what could be even more consequential is the opportunity cost it is likely to suffer over the near term, and possibly longer.

 

The opportunity cost - an economics term that refers to what is lost as a result of making the choice to take one course of action instead of another - will at some point be calculated in terms of the business Infosys will have lost due to its choice to vilify Infosys employee and whistleblower Jay Palmer rather than take immediate action to rectify the violations he reported internally to the company in October 2010.

 

One need only consider what Infosys stands to lose in the health care sector alone to see the enormity of the problem the company is facing. Lucas Mearian at Computerworld has done some excellent reporting on the massive IT costs the health care industry in the United States is facing in the course of transitioning from the ICD-9 medical coding system to ICD-10, as required by federal government regulations. To give you a sense of the magnitude of the expense, consider that the cost and complexity of the transition are being widely compared to what it took to fix the Y2K bug. Here's an excerpt from one of Mearian's reports:

ICD-10 will also require staff at hospitals and private physician practices to map and load codes, redo system interfaces, redevelop reports and retrain users. System changes will impact nurses, physicians, patient financial services, case management, utilization review and other staff, in addition to coders. "It is the kind of thing that people have compared to Y2K. It's probably more complex than Y2K. There's a lot more human interaction than Y2K," said Robert Alger, vice president of health plan IT strategy at Kaiser Permanente.

Deloitte Consulting is advising its clients to take the Y2K comparison seriously:

The size and scope of ICD-10 implementation is projected to be expansive, complex and costly: Industry analysts characterize ICD-10 as potentially exceeding Y2K with respect to cost and impact, so advance planning is essential.

To put a dollar figure on the cost of the transition, the U.S. Department of Health and Human Services estimates the cost to providers alone will be a whopping $3 billion through 2017. That means that just as outsourcing services providers saw dollar signs when the Y2K transformation began, they're positively giddy over the prospects of the ICD-10 transition. In fact, just yesterday India's Business Standard reported that the big outsourcing providers in that country are already salivating:

Healthcare regulatory reform in America might prove another Y2K opportunity for the Indian information technology industry Tata Consultancy Services (TCS), Infosys, Wipro and HCL Technologies are among those looking at healthcare with a new focus. Their largest revenue contributor till now, banking and financial services, is under pressure. According to a Technology Holdings survey, U.S. healthcare had seen around 100 deals in the past 25 months, an average of four deals per month, aggregating $20 billion. The U.S. healthcare payer business process outsourcing (BPO) market was $1.2 billion in 2011, and will continue to grow at a 15-20 per cent compounded annual rate (CAGR) over the next three years. A Technology Holdings survey says the payer outsourced services market will grow nine per cent CAGR to reach nearly $15 billion by 2016.

So you can see why all those salivary glands are flowing. But of Infosys, Wipro, TCS and HCL, only Infosys is in the precarious position of potentially losing its share of the booty. That's not to say that Wipro, TCS and HCL haven't engaged in the very same sorts of visa and tax fraud as that being investigated by the U.S. government in the case of Infosys. I wouldn't be a bit surprised if they, and any number of U.S. companies that also rely heavily on the H-1B visa program, all have dirty hands.

 


The difference is that Infosys is suffering the misfortune of being the lone company with an employee who summoned the courage to blow the whistle on the illegal activity. That put Infosys in the position of having to make a choice. It could either embrace Palmer, and rectify the violations at next to no cost; or it could treat him as a pariah and go about its business of shamelessly violating U.S. immigration and tax law. Tack on the opportunity cost of the choice it made to whatever damages the U.S. government's criminal case and Palmer's civil case will extract, and it's plain to see why it's always better to just do the right thing.



Add Comment      Leave a comment on this blog post
Mar 12, 2012 11:33 AM George George  says:

news.google.com/news/more?hl=en&;gl=us&q=infosys&um=1&ie=UTF-8&ncl=dNAQ-FrMjcDvJCM6l4YT6bLiiTe_M&ei=Pb9eT7PxOqyEsALG0_GfCA&sa=X&oi=news_result&ct=more-results&resnum=2&ved=0CDkQqgIwAQ

Reply
Mar 13, 2012 1:54 AM George Alexander George Alexander  says: in response to Richard

Richard, thanks for your thoughts. What I meant was, yes, something will happen - a guilty verdict in the most likely scenario, fines, visa restrictions and scrutiny, compensation to Palmer etc but Infosys' business will continue without a big glitch. I'm aware of them putting a big effort into hiring locals since last year and a few months ago, Don reported a reshuffling of the HR department. There was a reiteration of visa policies also and my insiders tell me that they regularly get calls to refer US based candidates that do not require sponsorship. It maybe that they are preparing for a guilty verdict and adjusting their way of doing things according to the most likely scenario from the verdict.

Regarding elections, the average American who is not in IT does not know of a companies like Infosys, Wipro, TCS, CTS, HCL etc and the issues from them so this will have no effect on the election season unless the main stream media talks about it. All they know generally is of "offshoring" or "outsourcing" - nothing much on visas. Infact, you have both parties wanting to increase immigration through skilled visas and the candidates talk very highly about it backed up by popular media folks (listen to the highly respected physcist Michio Kaku on youtube on H1B with regards to IT or KPFT the liberal radio channel's immigration segment that always touts for skilled immigration). In short, the non-IT American who does not watch Lou Dobbs is sold on the H1-B visa.

Actually Don does publish stuff that doesn't come from other regular sources but he also adds to it his opinion and analysis which is primarily the liberty offered by blogs over traditional media which undergo a lot of editorial scrutiny. That is why you won't see any of the regular main stream media outlets talk about the Palmer issue beyond what was reported initially. You might see a small news piece on the day of the verdict. That's pretty much what you can expect from the mainstream media.

Reply
Mar 13, 2012 2:36 AM john80224 john80224  says: in response to Richard

I hope I'm just too cynical, but get outside of the IT community and I'd be surprised if one in five voters knows who Infosys is and of those, probably only one in five would even know there's any significant issue they're having here.  Unless more media picks up on what Don's mentioned, i.e. a tie between healthcare and Infosys' practices, AND they personalize the practices to how it hurts everyone's healthcare, the fraction of a percent of voters interested won't get the political lip service.

Reply
Mar 13, 2012 2:45 AM akprn akprn  says:

Though I appreciate Palmer's effort, nobody in good sense would agree with contents in this blog. There is no reason mentioned as to why any of these companies would lose out on these contracts. The trial will start in Aug. Healthcare companies are already in the process of upgrading.  They will obviously go through competitive bidding process. Whichever company is able to demonstrate competitiveness and bid lower than others will get those contracts. This is not going to have any impact on any of these companies. If US gov is going to fund or co-finance the upgrade project, which I really doubt, then they should impose restriction on outsourcing of these projects. But like many other things that gov should be doing but not currently doing, nothing will be done on this front as well. I wonder what will happen when conservatives who talk about lesser gov involvement comes to power. I think the situation is just going to prevail or get only worse as companies would not want to lose out on their big profits. In the name of being competitive and keeping lower cost, US companies will continue to outsourcing. Instead they could least try hiring fresh college graduates. But if college grad are expecting too high starting salary just because they have spent too much on their education, then its not going to work to anyone's benefit.

Reply
Mar 13, 2012 4:54 AM R. Lawson R. Lawson  says: in response to George Alexander

"Regarding elections, the average American who is not in IT does not know of a companies like Infosys, Wipro, TCS, CTS, HCL etc and the issues from them" . . .

That may be true, but I don't think every citizen needs to know about this issue for something to be done about it.  Any time a member of Congress gets 10+ calls a day on a specific issue they take note.  Make sure you are placing those calls.  Our opponents certainly are.

"so this will have no effect on the election season unless the main stream media talks about it.""

But most citizens know about offshoring and most can attest to the destruction caused to their communities since NAFTA was passed and China became the defacto producer of consumer goods.

What people need to know about the H-1b visa who are outside of our industry is that the greatest sponsors of H-1b visas are firms engaged primarily in offshore outsourcing.  Drive home that the H-1b "offshoring" visa goes hand in glove with the movement of good paying American jobs overseas. 

They won't immediately understand the intricacies of this program, but what they need to grasp is that H-1b == offshoring and lower wages.  And don't use double equals sign like I just did, since they won't get that either

Reply
Mar 13, 2012 7:28 AM Don Tennant Don Tennant  says:

Reply to SS: I am deleting your comment because it contains a personal insult.

Reply
Mar 13, 2012 7:36 AM akprn akprn  says: in response to Don Tennant

"When I come across a particular development, such as the fact that Infosys and other Indian IT service providers are targeting the U.S. healthcare industry".

Don, a quick google search on Infosys Healthcare clients will take you to the Infosys website which mentions Aetna as a decade old partner. Again a quick wiki search shows that Aetna is a fortune 100 company with revenue of $35B in 2009. So, these healthcare companies are existing clients of Infosys and other IT companies. So its nothing new to them. Just like the banking sector, these IT companies have presence in most of the sectors.

Again a quick search on ICD-10 compliance date shows the result as October 1, 2013(this is the delayed date announced a month back, actual compliance date was much earlier). As I see it, any such large transformation programs in large companies, will be multi-year projects. So they would already be in full swing, which means the contracts would have already been signed and handed over to ABC IT service provider. So I really don't understand where is the opportunity cost that you mention that will be a loss to Infosys?

By the time, the trial decision is out, these companies would have danced their way to the bank(if not literally).

Reply
Mar 13, 2012 7:48 AM akprn akprn  says: in response to ITJob

One more interesting link..Patni is now taken over by iGate in 2011 and the combined entity is called iGate Patni. The CEO of this company is Phaneesh Murthy who himself is a ex-infosys employee. Looks like the leadership in Indian IT companies is limited to select few!

Google and Wiki are my best friends

Reply
Mar 13, 2012 8:14 AM SealTeam6 SealTeam6 SealTeam6 SealTeam6  says:

Somebody at Infosys has an ironic sense of humor

Infosys hosts public lecture on justice

Infosys Science Foundation hosted Michael J. Sandel, Anne T. and Robert M. Bass from Harvard University at the Infosys campus to deliver a public talk on "Justice: What's the Right Thing to Do'', said a press release.
The aim of this thought provoking session was to create awareness regarding the most pressing issues surrounding ethics that people face in their daily lives.

news.ciol.com/News/News-Reports/Infosys-hosts-public-lecture-on-justice/161284/0/

Reply
Mar 13, 2012 10:00 AM john80224 john80224  says: in response to akprn

I fear I must agree with you.

About the only angle I see this causing much impact on Infosys is farfetched, which would be if the gov't. were to truly penalize them beyond more than fines such as barring new contracts until they double their local presence or something along those lines.  At which point, the insurance companies would cry foul that this is hampering their ability to meet the mandates.  (Plus it would further incent those insurance companies that still do employ their own IT to postpone laying them off and clearly the we don't want THAT.)

Perhaps its cynical, but the government has shown more interest in protecting companies than the people and any truly impacting penalties don't look likely.

Reply
Mar 13, 2012 11:02 AM George Alexander George Alexander  says:

For those that are ambitious that Infosys will be handed a major blow, remember that many companies including those that have had contracts with the government and its agences have been convicted after indulging in unlawful activity and their businesses have continued after due process (recent example is of Accenture). Companies prepare for this kind of stuff and that's why they spend a lot of money on their finance and legal departments. A primary reading on game theory will be a good start to understand how established corporations and government agencies make most decisions. Infosys will be no different. If someone thinks that this will be any different due to visa fraud, then just look at Patni which was already prosecuted and sentenced not for just one visa fraud incident but of more than 607 such incidents in 2008 and they are doing just fine now. I bet most people didn't even know about Patni's visa case and I bet most Americans didn't even know that there is a firm called Patni that has a lot of foriegn workers here.

Reply
Mar 13, 2012 11:32 AM ITJob ITJob  says: in response to George Alexander

And there is interesting link between Patni and Infosys....NRN Murthy was from Patni.

Reply
Mar 13, 2012 12:10 PM Richard Richard  says: in response to George Alexander

Well only time will tell the fate of Infosys. Just becuase nothing happened in the past to other corporations that commited similar frauds, does not mean that Infosys will also be in the same league. This year is crucial for both democrats and republicans ; this is an election year. Hence if Infosys did not get punished then I am sure the american citizens will take out to something bigger to vent their anger. Also don, plz plz plz dont mix your personal opinions with the facts. As someone above rightly said,  "Though I appreciate Palmer's effort, nobody in good sense would agree with contents in this blog. There is no reason mentioned as to why any of these companies would lose out on these contracts. ".  So plz post some facts that are for real so that when we read your blogs we get updated information instead of personal judgements. Hope you dont feel bad

Reply
Mar 13, 2012 12:28 PM Don Tennant Don Tennant  says: in response to Richard

I assure you I don't feel bad, but thank you for your concern. Every piece of updated information that I have discovered or that has been passed to me on the record has been presented in this blog. When I come across a particular development, such as the fact that Infosys and other Indian IT service providers are targeting the U.S. healthcare industry, and in my opinion the civil or criminal case against Infosys has an impact on the development, I will write about it and express my opinion. This is a blog. My blog. The purpose of the blog is to convey factual information and to present my analysis of and opinions on that information. I will continue to do that to the best of my ability. If it doesn't meet your standard for what you choose to spend your time reading, then for heaven's sake don't read it. I promise you, my feelings will not be hurt.

Reply
Mar 14, 2012 2:19 AM sb sb  says:

Don, I am curious why you have made no mention of Cognizant(CTS). CTS is an  Indian outsourcer 100%, but they very shrewdly set up HQ in the US and claim to be an American company. CTS gains a much higher share of its revenue from Healthcare - in fact, the highest among the big Indian outsourcers.

Reply
Mar 14, 2012 3:47 AM Jake Leone Jake Leone  says: in response to Don Tennant

I agree, it is outrageous and destructive to the economy.

InfoSys and the other IT companies need to stop using the Visa system as their sole method of finding workers for Engineering job in the U.S.

I am shocked by other things right now.  I won't mix them up here, but you know the news over the Weekend was very sad.

Reply
Mar 14, 2012 8:19 AM Don Tennant Don Tennant  says: in response to akprn

I'm not sure how you construed from my post that I'm inferring that Infosys doesn't already have established healthcare clients in the United States, and I'm not sure why other readers are taking issue with the topic I raised in this post based on the fact that Infosys has plenty of business in this country and plenty more in the works. I simply brought up the fact that according to reporting from India, which I linked to in my post, Infosys and other Indian IT service providers are targeting the U.S. healthcare sector for new business in the form of ICD-10 compliance. And I can't help but wonder how much of that business Infosys will lose to its competitors because of any angst potential clients might have as this case gets more widespread attention. I'm convinced that's a legitimate issue to raise for discussion, so I raised it.

Of course, Infosys is already losing some business -- Union Bank of California cancelled a $20 million contract that would have made it the largest user of Infosys' Finacle platform in the country, and Axis Capital, the client site where Palmer was working when he blew the whistle, dropped Infosys in a heartbeat. But that's not the point. What I think warrants discussion is what's going to happen down the road, when the feds take whatever action they're going to take against Infosys, and the mainstream media starts reporting on Infosys' outrageous behavior. The question I'm raising isn't whether Infosys is going to collapse because of all of this-I think that's very unlikely. The question I'm raising is how much it will lose as a result of the decision it made to vilify Palmer rather than fix the problems he blew the whistle on. My contention is that the potential loss is staggering, but the point is that no matter what the amount is, it could have been so easily avoided if Infosys had just had the decency to do the right thing. Simple as that.

Reply
Mar 14, 2012 8:38 AM Don Tennant Don Tennant  says: in response to sb

See my response to akprn, and understand that the relative share of revenue that IT service providers get from healthcare has nothing to do with the issue I raised in my post. But I understand the thrust of your comment to be that I'm picking on Infosys, and letting other companies off the hook. Let me assure you that the only reason I'm following the Infosys case so closely is that it was at Infosys that Palmer and two subsequent whistleblowers exposed the illegal behavior, and Infosys is the company that is under federal criminal investigation because of the lawsuit that Palmer had the guts to file. Believe me, if somebody at Cognizant or any other company has the guts to blow the whistle on any illegal activity he or she becomes aware of, and has the fortitude to go public with it, I'll be all over it. I promise you that.

Reply
Mar 14, 2012 9:02 AM Don Tennant Don Tennant  says:

Just a general observation: I find it fascinating that so much reader commentary about the Infosys case is a mix of meek "nothing is going to change" acquiescence and "keep quiet until the case is resolved" apologism. On the basis of nothing other than the documented evidence against Infosys that I have disclosed in this blog, the fact that Infosys has engaged in illegal and horribly unethical behavior is obvious. Where's the outrage?

Reply
Mar 14, 2012 11:09 AM George George  says: in response to Don Tennant

I sense desperation in this comment. The outrage is from you and a select few like you. Please don't expect this from too many as it is not such a big issue as you make it out to be.

Reply
Mar 14, 2012 11:12 AM R. Lawson R. Lawson  says: in response to Don Tennant
http://billmoyers.com/segment/david-stockman-on-crony-capitalism/"Just a general observation: I find it fascinating that so much reader commentary about the Infosys case is a mix of meek 'nothing is going to change' acquiescence and 'keep quiet until the case is resolved' apologism."It's amazing how some people have different standards for companies when it comes to (alleged) crimes. When it comes to citizens held accountable for their actions, we have over two million people in prisons. These people are primarily poor minorities serving hard time for mostly non-violent drug related offenses that the public demanded we get tough on. Many of these prisons also happen to be corporate owned for profit enterprises. I think it's time we get smart on crime. We've tried getting tough, and that doesn't seem to work. If you take the crimes of a single corporate leader - Madoff for example - the dollar figure for his crimes if compared with other property crimes would likely exceed the combined value of all other inmates combined. Madoff was able to operate under the "corporate veil" - an institution that enables these criminals. The only reason Madoff was convicted is because he cracked under the pressure and confessed. There were whistle-blowers and they were all ignored. One expert carefully documented his crimes, and he was ignored. Corporations are the new "Welfare Queens". They have their hands out like never before, they are rarely held accountable for their actions, and when they are held accountable the punishment is rarely severe. David Stockman was interviewed by Bill Moyers and I think he explains the problem succinctly as "Crony Capitalism". This interview is worth watching: http://billmoyers.com/segment/david-stockman-on-crony-capitalism/Now Stockman isn't one that can be dismissed as "too liberal" or "not a capitalist". He was the budget director for President Reagan and frankly not a person I would have liked very much during the 80s. Stockman is an avid supporter of free trade and capitalism and believes that industry should be able to survive on their own merits. He doesn't believe in "too big to fail" and would have allowed capitalism to work instead of bailing out the banks. I've been using the word "fascist" to describe the direction we are going, but I think that "Crony Capitalism" is also a proper description - maybe even a better description since it doesn't evoke Nazi goose-stepping in the imagination and better describes the problem. Here is a definition that will help you grasp what all of this means: "Crony capitalism is a term describing an economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, and so forth.". . ."In its lightest form, crony capitalism consists of collusion among market players. While perhaps lightly competing against each other, they will present a unified front to the government in requesting subsidies or aid (sometimes called a trade association or industry trade group). Newcomers to a market may find it difficult to find loans or acquire shelf space to sell their product; in technological fields, they may be accused of infringing on patents that the established competitors never invoke against each other. Distribution networks will refuse to aid the entrant." At this point (post Citizens United) our only option is going to be a Constitutional amendment defining what a person is since the justices weren't able to figure that out by themselves and decided that corporations should have the same rights as people - including free speech and unlimited campaign contributions. For those of us perplexed at groups like NFAP, the ITAA and now TechNet who will say anything and manufacture "studies" to get their way, and are like cock-roaches in our nation's capital, the reason they exist and wield power is because Reply
Mar 14, 2012 11:13 AM R. Lawson R. Lawson  says: in response to Don Tennant

billmoyers.com/segment/david-stockman-on-crony-capitalism/

"Just a general observation:I find it fascinating that so much reader commentary about the Infosys case is a mix of meek 'nothing is going to change' acquiescence and 'keep quiet until the case is resolved' apologism."

It's amazing how some people have different standards for companies when it comes to (alleged) crimes.When it comes to citizens held accountable for their actions, we have over two million people in prisons.These people are primarily poor minorities serving hard time for mostly non-violent drug related offenses that the public demanded we get tough on.Many of these prisons also happen to be corporate owned for profit enterprises.I think it's time we get smart on crime.We've tried getting tough, and that doesn't seem to work.If you take the crimes of a single corporate leader - Madoff for example - the dollar figure for his crimes if compared with other property crimes would likely exceed the combined value of all other inmates combined.Madoff was able to operate under the "corporate veil" - an institution that enables these criminals.The only reason Madoff was convicted is because he cracked under the pressure and confessed.There were whistle-blowers and they were all ignored.One expert carefully documented his crimes, and he was ignored.Corporations are the new "Welfare Queens".They have their hands out like never before, they are rarely held accountable for their actions, and when they are held accountable the punishment is rarely severe.David Stockman was interviewed by Bill Moyers and I think he explains the problem succinctly as "Crony Capitalism".This interview is worth watching:billmoyers.com/segment/david-stockman-on-crony-capitalism/

Now Stockman isn't one that can be dismissed as "too liberal" or "not a capitalist".He was the budget director for President Reagan and frankly not a person I would have liked very much during the 80s.Stockman is an avid supporter of free trade and capitalism and believes that industry should be able to survive on their own merits.He doesn't believe in "too big to fail" and would have allowed capitalism to work instead of bailing out the banks.I've been using the word "fascist" to describe the direction we are going, but I think that "Crony Capitalism" is also a proper description - maybe even a better description since it doesn't evoke Nazi goose-stepping in the imagination and better describes the problem.Here is a definition that will help you grasp what all of this means:"Crony capitalism is a term describing an economy in which success in business depends on close relationships between business people and government officials.It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, and so forth."..."In its lightest form, crony capitalism consists of collusion among market players.While perhaps lightly competing against each other, they will present a unified front to the government in requesting subsidies or aid (sometimes called a trade association or industry trade group).Newcomers to a market may find it difficult to find loans or acquire shelf space to sell their product;in technological fields, they may be accused of infringing on patents that the established competitors never invoke against each other. Reply

Mar 14, 2012 11:13 AM R. Lawson R. Lawson  says: in response to Don Tennant
Distribution networks will refuse to aid the entrant." At this point (post Citizens United) our only option is going to be a Constitutional amendment defining what a person is since the justices weren't able to figure that out by themselves and decided that corporations should have the same rights as people - including free speech and unlimited campaign contributions.For those of us perplexed at groups like NFAP, the ITAA and now TechNet who will say anything and manufacture "studies" to get their way, and are like cock-roaches in our nation's capital, the reason they exist and wield power is because they are an ingrained part of crony capitalism.The fight is on multiple fronts.We have a biased and corporate controlled media, as well as a corporate influenced and in many cases a corporate controlled government.It will be very challenging to correct one problem without correcting the other at the same time.And yes, I deliberately posted the link below three times.I would rather people watch that video than read my reply.It's information that everyone needs to arm themselves with so that they understand this problem.

billmoyers.com/segment/david-stockman-on-crony-capitalism/

Reply
Mar 14, 2012 12:00 PM ITJob ITJob  says: in response to akprn

This blog is Don's person opinion or his wish list and has nothing to do with any experience or understanding of how IT projects are outsourced. None of the clients have time/money  to dig into analysis of how worst the company in terms of meeting the visa requirement as it is the IT companies headache handle it. May be it could be PR disaster but who cares...when one of the key leadership in Infosys got kicked out for sexual harassment it didn't had any impact (to public visibility at the least) in getting new projects. 

May be it could affect their client indirectly like not able to get resources onsite on time but those are again headache of IT company which agreed to deliver product/service on given day.

Any big fortune 500 could have some or the other issues or investigation related to the company, I doubt any such issue or investigation would have direct effect on getting multi-million dollar projects unless the issue/investigation is directly related to their client. All it takes is field/technology expertise, pricing and past relationship with their client rest is not of great interest to any clients.

Reply
Mar 14, 2012 12:50 PM john80224 john80224  says: in response to Don Tennant

€œWhere€™s the outrage?"

I think it€™s double-edged (though one edge seems much sharper).  On one side, it seems that perhaps the rate of layoffs to support Infosys, et. al. have leveled off or maybe we€™re just more numb to it.  On the other, there becomes a point where it€™s just easier to take your beating and get on with life.

Sorry I can€™t recall where I ran across it, but in the past week or so I saw an article discussing how economies have changed to hurtling toward an Orwellian state and since roughly the 70€™s we€™ve been under a notably and increasingly corporate-owned government.  While 1984 may be a bit more bleak than our actual future, my entire career has spanned about the length of the H-1b visa and my most of my entire life has been in a state where corporations dictate more than €œthe people€.

While times of outrage still come up, the fact - as defeatist as it may sound - is that the frustration and futility of "the system" can be powerful numbing factors.  Had we not seen thousands of unpunished abuses and dozens of ineffective punishments, the mood might differ.  But sometimes it seems the truffula trees have been chopped and that one remaining seed will take more effort than the fruit it will bear.

Reply
Mar 14, 2012 12:56 PM akprn akprn  says: in response to ITJob

@ITJob, completely agree. I used to like the blogs that Don used to write about the issue. Now its becoming more of a propaganda like the one he reported a couple of weeks back. But still, any company involving in unfair practices to get ahead of the curve, should be heavily fined so that others don't follow suit. It applies not only to any visa issues with these Indian IT companies, but any other issues with general large corporate in general. But it does not happen too often.  That's the unfortunate truth we have to live with.

"when one of the key leadership in Infosys got kicked out for sexual harassment it didn't had any impact (to public visibility at the least) in getting new projects. "

Interesting that you brought this up. Its the same guy who is the CEO of iGate Patni now - Phaneesh Murthy.

Reply
Mar 15, 2012 1:10 AM ITJob ITJob  says: in response to Jake_Leone

Your entire comment is your personal opinion on what kind of job an educated person should do which has nothing to do with the article. I don't think an individual persons opinion can define a report which is based on data is flaw or not.

If that is the case for some 11 could be 4 because they like number 4 doesn't make the math 11=2 is flaw.

Reply
Mar 15, 2012 1:13 AM ITJob ITJob  says: in response to st6

Again they can't change the fact (which is the numbers) to prove their point and more over having 8 H1b's (in a period of 6yrs) in that institute can't be treated as biased.

If you have anything concrete in terms of numbers to dispute the study let other know.

Reply
Mar 15, 2012 1:35 AM st6 st6  says: in response to ITJob

When you have people researching information to prove something that that they themselves contribute to directly, I think there is a huge conflict of interest. Would you believe in the safety of a product that the manufacturer tells you is safe or that an independent testing body tells you is unsafe ? I view this report with a great deal of skepticism as I would any such study produced by a people who have a vested interest. How many times have we heard a drug is "safe" by the manufacturer , only to be pulled from the market when some rather unfortunate side effects that the manufacturer suppressed happened.

Reply
Mar 15, 2012 1:50 AM st6 st6  says: in response to st6

I forgot point out this laughable starting point  that completely discredits that "study". H1-B workers are paid more than US workers ? Trust me, Corporate America is not lobbying for a visa program that they have to pay more for. Does that make any business sense at all ? Right. I have a bridge that I want to sell you.

Reply
Mar 15, 2012 3:08 AM Jake_Leone Jake_Leone  says: in response to ITJob

The flaw is equating "better skilled" with "more educated".  This is an incorrect assumption, and my experience with hundreds of H-1b workers through the years is at odds with this unproven assumption.

The units of the two don't match.  Better skilled is a measured item, that requires time on the job to determine, it is a measure of the ability to apply, practically, one's full knowledge, and passion for a profession.  More educated is a value assigned by Universities usually in terms of course units acquired usually to meet a degree requirement in usually abstract knowledge or often outdated computer technical information.

And it is not just my experience.  How often, in this blog and in the news, have we seen that the H-1b worker must be trained by the worker they are replacing.

If you look around the programming industry you will see a significant percentage of programmers out there with a degree in something other than Computer Science (or no degree at all).  So again, better-educated is not equivalent to better-skilled, and this is a fundamental flaw in this report. 

To eliminate this bias, and have an accurate picture, you need to test the workers, and review job performance, cheap studies tell us nothing and actually cloud the picture of what actually happens when the worker meets technology.

The reality (and it is proven by U.S. government data) is that many people coming in on an H-1b are of ordinary talent, possessing only a bachelors degree.  Does that mean there are not extraordinary people who have a bachelors degree, of course not, no doubt there are a few, unfortunately very few.  But why can't they just stay in their home country and start competitive businesses.  Competition drives hiring in the tech companies that are already fat with cash.  Would Oracle's ERP offering be as good, without competition from SAP? 

The majority of people here on a Visa are taking starting jobs.  Jobs that require only a high school education and a willingness to continue learning.  The very jobs that we need to build our local IT talent pool.

Reply
Mar 15, 2012 3:10 AM st6 st6  says: in response to st6

I wonder then how this research finds contradictory data on what H1-B workers are paid vs permanent resident workers:

The Value of an Employment-Based Green Card

The need for and role of highly skilled immigrant workers in the U.S. economy is fiercely debated. Proponents and opponents agree that temporary foreign workers are paid a lower wage than are natives. This lower wage partly originates from the restricted mobility of workers while on a temporary visa. In this article, we estimate the wage gain to employment-based immigrants from acquiring permanent U.S. residency. We use data from the New Immigrant Survey (2003) and implement a difference-in-difference propensity score matching estimator. We find that for employer-sponsored immigrants, the acquisition of a green card leads to an annual wage gain of about $11,860.

www.springerlink.com/content/f4j5202272646520/

Reply
Mar 15, 2012 3:38 AM George Alexander George Alexander  says: in response to st6

In my experience, you are correct because a person on an H1-B visa is tied to a particular company unless they get a greencard (the process for changing sponsoring employers while on H1-B is a big hassle and risky and some people avoid it though a lot more take the risk). The problem is that state governments have an outdated wage criteria which is used in the Labor Condition Application (LCA). An H1-B applicant must get an approved LCA with the minimum wage requirement to work in that state and in most cases, the wage requirement in the LCA does not match the market rate. Indian outsourcers take advantage of this situation while companies like Microsoft, Google, Facebook, Yahoo etc pay very attractive premiums which are far higher than the LCA because if Microsoft doesn't hire a person who can tackle their hiring process, Google will and if Google doesn't, facebook will.

When I got my EAD (Employee Authorization Document - work authorization that does not require sponsorship prior to getting greencard) and changed companies, I was able to shop around and demand upto a 20% increase depending on the location. I'm now working as a contractor so the potential is even higher.

When an employee is able to easily leave and join another company or even contract on his own, wages will reflect real market standards.

Reply
Mar 15, 2012 3:49 AM edward moore edward moore  says: in response to Jake Leone

I totally agreed to the previous point it is indeed destructive towards an economic point of view.Various IT companies should not use these visa system for finding. It would definitely harming an economy as well as an individual.

www.pass-drug-test-how-to.com/Pass_A_Drug_Test">pass a drug test

Reply
Mar 15, 2012 5:41 AM George Alexander George Alexander  says: in response to Don Tennant

>>On the basis of nothing other than the documented evidence against Infosys that I have disclosed in this blog, the fact that Infosys has engaged in illegal and horribly unethical behavior is obvious. Where's the outrage?

I think most supporters and critics alike are accustomed to news like this by now. For eg, during the Quran burning incident and one's before that, Afgans used to protest violently and their outrage leaked into public places. During the recent murder of 16 civilians by a US soldier, there were no street  protests or revenge attacks. On interviews with various local leaders, they responded that they got used these cycles and people have given up. There is a sense of acustomization to the chaos. I not fan of Infosys or any of those outsourcing companies. But I'm not surprised at all that such things are happening.

It isn't hard to notice that government and corporations are in colusion on many things though they put a face of independence and opposition. The ends are always the same. Lobby groups do the talking. Today's announcement that SAIC will settle (read: close a deal) for $500 million for corruption in their implementation of IT services and solutions lends credence to this. Issues with SAIC were noticed as early as 2002 when SAIC was to overhaul the FBI's IT systems after they got a bad rapp from 911. Instead of handing SAIC criminal convictions that would have permanently barred them from government contracts, the government agreed to a settlement.

Also, part of SAIC's issue had to do with improper handling of whistleblowers:

"In the deal, entered by an SAIC Inc. attorney before a federal judge in Manhattan, the multibillion-dollar contractor acknowledged it had failed to properly investigate a 2005 whistleblower complaint and had employed managers who disregarded employee concerns and missed or ignored warning signs."

http://www.washingtontimes.com/news/2012/mar/14/tech-firm-tied-to-nyc-payroll-scandal-to-pay-500m/

On a side note, I'm sure there won't be any outrage on this whistleblower issue.

And after all this, the best part is this one:

"The company, which is facing a shareholder lawsuit over the case, continues to receive contracts worth hundreds of millions of dollars from the federal government."

I understand the idealist's point of view. But being realist, I for one don't expect anything substantial to happen out of the lawsuit against Infosys. I hope something hard does come down. But this is a world where power and money talks. I've already jolted down my expected results somewhere in this blog. There will be a lot of hoopla, money exchanging hands and a shake up. After that, back to business.

Remember 2008? The people's ideal was Obama. He was like Jesus. And Jesus got elected. When the people's and union's favorite hero appoints GE CEO Jeffrey Immelt as the head of the Council on Jobs and Competitiveness and every other politicians applauds the decision, the common man shouldn't miss the irony at play. When Obama personally calls the Yemeni president and forces him to not release a Yemeni journalist critical of the US when the Yemeni president was just about to, you know that the foreign policy is still the same.

Idealism is good. But it's the reality that sticks on. Besides, what happened to the Occupy movement? I don't hear about them even on KPFT or Democracy now.

Reply
Mar 15, 2012 5:42 AM George Alexander George Alexander  says: in response to Don Tennant

>>On the basis of nothing other than the documented evidence against Infosys that I have disclosed in this blog, the fact that Infosys has engaged in illegal and horribly unethical behavior is obvious.Where's the outrage?

I think most supporters and critics alike are accustomed to news like this by now.For eg, during the Quran burning incident and one's before that, Afgans used to protest violently and their outrage leaked into public places.During the recent murder of 16 civilians by a US soldier, there were no street protests or revenge attacks.On interviews with various local leaders, they responded that they got used these cycles and people have given up.There is a sense of acustomization to the chaos.I not fan of Infosys or any of those outsourcing companies.But I'm not surprised at all that such things are happening.

It isn't hard to notice that government and corporations are in colusion on many things though they put a face of independence and opposition.The ends are always the same.Lobby groups do the talking.Today's announcement that SAIC will settle (read:close a deal) for $500 million for corruption in their implementation of IT services and solutions lends credence to this.Issues with SAIC were noticed as early as 2002 when SAIC was to overhaul the FBI's IT systems after they got a bad rapp from 911.Instead of handing SAIC criminal convictions that would have permanently barred them from government contracts, the government agreed to a settlement.

Also, part of SAIC's issue had to do with improper handling of whistleblowers:

"In the deal, entered by an SAIC Inc.attorney before a federal judge in Manhattan, the multibillion-dollar contractor acknowledged it had failed to properly investigate a 2005 whistleblower complaint and had employed managers who disregarded employee concerns and missed or ignored warning signs."

www.washingtontimes.com/news/2012/mar/14/tech-firm-tied-to-nyc-payroll-scandal-to-pay-500m/

On a side note, I'm sure there won't be any outrage on this whistleblower issue.

And after all this, the best part is this one:

"The company, which is facing a shareholder lawsuit over the case, continues to receive contracts worth hundreds of millions of dollars from the federal government."

I understand the idealist's point of view.But being realist, I for one don't expect anything substantial to happen out of the lawsuit against Infosys.I hope something hard does come down.But this is a world where power and money talks.I've already jolted down my expected results somewhere in this blog.There will be a lot of hoopla, money exchanging hands and a shake up.After that, back to business.

Remember 2008?The people's ideal was Obama.He was like Jesus.And Jesus got elected.When the people's and union's favorite hero appoints GE CEO Jeffrey Immelt as the head of the Council on Jobs and Competitiveness and every other politicians applauds the decision, the common man shouldn't miss the irony at play.When Obama personally calls the Yemeni president and forces him to not release a Yemeni journalist critical of the US when the Yemeni president was just about to, you know that the foreign policy is still the same.

Idealism is good.But it's the reality that sticks on. Reply

Mar 15, 2012 5:42 AM George Alexander George Alexander  says: in response to Don Tennant
Besides, what happened to the Occupy movement?I don't hear about them even on KPFT or Democracy now.

Reply
Mar 15, 2012 10:40 AM ITJob ITJob  says: in response to R. Lawson

Came across another research article on H1b...not sure about the credibility of the authors...

H-1Bs: How Do They Stack Up to US Born Workers?

by

Magnus Lofstrom

Public Policy Institute of California and IZA

Joseph Hayes

Public Policy Institute of California

ftp.iza.org/dp6259.pdf

People who don't like reading..here is the abstract

ABSTRACT

H-1Bs: How Do They Stack Up to US Born Workers?

Combining unique individual level H-1B data from U.S. Citizenship and Immigration Services (USCIS) and data from the 2009 American Community Survey, we analyze earnings differences between H-1B visa holders and US born workers in STEM occupations. The data indicate that H-1Bs are younger and more skilled, as measured by education, than US born workers in the same occupations. We fail to find support for the notion that H-1Bs are paid less that observationally similar US born workers; in fact, they appear to have higher earnings in some key STEM occupations, including information technology.

Reply
Mar 15, 2012 12:20 PM Jake_Leone Jake_Leone  says: in response to ITJob

The key flaw is this:

"The data indicate that H-1Bs are younger and more skilled, as measured by education"

IT was once (and could be again) one of those professions where there were 2 paths. One is let's get master's degree and the other (use to be) let's spend 10,000 hours learning the job (while at the same time performing a useful support role).

I have known a great many people who came in under H-1b, it is surprising how many wind up in mundane IT jobs such as script debugging, QA, technical support. So despite receiving more university level education, they wind up in jobs that can be taken up by average U.S.high school graduates.

I know, I am just a high school grad, and I have been doing IT work for 20 years. I am the master of java object programming in my department, apparently my company (I learned this recently) is one of the top ten Bay Area software companies.

Well hey, the 10,000 hour rule (and constant studying outside of work hours) has made me just such a person. For many of the H-1b workers I have known, apparently, all the education in the world didn't tell them what they really wanted to be doing. Or more ironically, that they detest IT work.

Tell me what's a bigger waste? A person with a Master's degree in Computer Science coming to the U.S.on an H-1b, starting out in Dev, demoting to QA, finally quitting after 7 years of near constant training by his employer (and becoming a U.S.citizen), going off to Wharton to get a Master's in business, winding up doing print magazine ads. I have seen just such a scenario play out.

If the guy loved business, he should have stayed back home, started a competing business. That, who knows, might be competitive against our software companies (many of which are sitting on huge multi-billion dollar cash stockpiles). Thus forcing our companies to add competing features, and so hiring more engineers, likely more U.S.citizens (and using some of their cash surplus towards this effort).

We have been beating up on the U.S.engineering workforce for more than a decade, and it shouldn't be a surprise that people are not entering the field when all the Starting Jobs are taken up by people on a Visa, all the older workers are forced to train their replacements (replacements also here on a Visa), when companies are allowed to have 90+% of their engineering workforce in the United States on a Visa.

We put all the competition on the back of the worker. U.S.IT workers rock, Apple is revenge of the older IT worker (and 700,000 elves). And when companies are stockpiling hundreds of billions of dollars, it is a clear sign they are facing no competition, they have huge net-profit-margins, and have no motivation to increase the features provided to the consumer. And it should be no surprise that we all allowing a huge waste of talent and human lifetime go to waste as a result.

I had a few starting jobs, for example Game Tester, ETL work (using the classic big tape drives)...If these jobs weren't available, what would I be doing now. Maybe Real Estate or Insurance Adjuster...what a waste that would have been.

Listen the U.S.is running a Trillion dollar deficit, there are at least 12 million unemployed Americans. Ironically, corporations are stockpiling billions in cash that is going unused.  Reply

Mar 15, 2012 12:20 PM Jake_Leone Jake_Leone  says: in response to ITJob
When you pile the competition on the worker and not the big businesses (that apparently are just stock piling the cash), that is exactly what you get.

Curtailing the Visa use will do 2 great things, One - more workers will stay home and be motivated to start competitive businesses (that compete against the companies with the huge stockpiles of cash). And Two - open up more starting jobs for U.S.citizens, which are desperately needed to motivate people to enter IT, and have the opportunity (that I had) to master it.

Reply
Mar 15, 2012 12:49 PM st6 st6  says: in response to ITJob

Somebody already posted this "study" under another topic on this blog. They also brought up the fact that this so called institute hires H1-B employees as researchers. I doubt you are going to get an unbiased study

www.h1bwage.com/employer.php?q=270297&;sortby=2

Reply
Mar 15, 2012 12:55 PM Bob Bob  says:

As much as I appreciate your continued coverage of this, and share your outrage, I would like to illustrate why people are skeptical that anything will come of this

Perhaps the most infamous smoking gun of this horrible abuse, is the immigration lawyer seminar on how not to find an american worker.  google youtube perm fake, for a refresher, if you've forgetten

after an investigation by Senator Grassley and congressman Lamar Smith, where did that guy at the podium end up?

www.cohenlaw.com/attorneys/detail/Attorneys/Lawrence-M-Lebowitz.aspx

right where he was, they didnt miss a step, didnt even throw him under the bus as a symbolic gesture before resuming the exact same process - didnt seem to affect him at all.  but how many tech workers have lost their jobs in the same time period?

if there were a canary in that coal mine, he would have been it, and he's still singing loud and strong

I cant think of anyone, besides a few very, very minor players, who've ever been punished over this.  but hundreds of thousands of innocent citizens have, and still are

according to this article, you've got a lot better chance at being invited to the White House if you're from Infosys, than any American tech worker does

www.littleindia.com/politics/5903-guess-who-039-s-coming-to-dinner.html

Reply
Mar 21, 2012 6:53 AM SS SS  says:

When it comes to Vendor selection, the single most important aspect that customers look for is the offerrings from the Vendor and whether it would help them achive their goals. Infosys seems to be well placed with a robust platform for assiting in ICD-10 transition.. and customer wouldn't look beyond this when it comes to making the choice... As we can see here, some have already made the choice...

www.newswiretoday.com/news/92273/

Reply
Mar 25, 2012 11:40 AM jrogers222 jrogers222  says:

Post a comment

 

 

 

 


(Maximum characters: 1200). You have 1200 characters left.

 

null
null

 

Subscribe to our Newsletters

Sign up now and get the best business technology insights direct to your inbox.