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Don't Let H-1B Abusers Spoil the Show for Domestic Outsourcers

Don Tennant

In a recent blog post, "Rural Outsourcing CEOs Drive Business with Global Vision," I wrote about some positive developments in the effort to tap the workforce in low-cost areas within the United States as an alternative to offshore outsourcing. Since then, I've learned that for every company that's doing it right, there's probably one that's trying to use the idea to abuse the H-1B visa program.

 

On the positive side of the equation, for example, is Systems in Motion, a Fremont, Calif.-based startup that has an operations center in economically depressed Ann Arbor, Mich. Among the executive team members are a couple of individuals who probably don't fit the profile one might expect of those who lead a domestic outsourcing operation. The CEO is Neeraj Gupta, previously of Indian IT services firm Patni; the chief marketing officer is Debashish Sinha, previously of Indian IT services firm HCL America.

 

In an e-mail exchange today, I asked Sinha about Systems in Motion's policy with regard to hiring H-1B visa holders. Here's his response:

It is not Systems In Motion's business practice to hire fresh H-1B visa holders to work on projects. Our strategic intent is to invest in training and workforce development of domestic resources, because we firmly believe that our global competitive advantage and long term organizational development lies in building a strong foundation of talent. Hiring low cost temporary workers does not lend itself well to this philosophy. However, when we engage in outsourcing contracts, we do give consideration to H-1B visa holders currently in the U.S. and involved in critical service delivery at client sites, to ensure service continuity and de-risk U.S. enterprises from service quality deterioration.

Let me give you an example. We recently engaged with a household toy brand to build an inshore delivery center for Application Development, Testing and Infrastructure Management. The engagement required us to bring service delivery back from a team in Mexico, into our Ann Arbor center. However, the on-site program lead from the incumbent service provider was an H-1B visa holder, who we rebadged into our company to ensure continuity of service.

That practice is perfectly sensible, and is consistent with the response I received when I posed the question to Monty Hamilton, CEO of Rural Sourcing Inc. (see "The Argument for Rural Sourcing: Not Just 'Flag Waving'").

 


And then there's the negative side of the equation. Patrick Thibodeau of Computerworld reported today on the status of the U.S. government's H-1B fraud case against Vision Systems Group Inc., a N.J.-based IT services company. Vision Systems has allegedly set up shell companies in Iowa, an ideal low-cost rural sourcing location, so that it could pay some of its H-1B visa holders lower wages. Unfortunately, the veracity of the allegation against Vision Systems may never be determined, because the government has reportedly bungled its handling of evidence in the case. Regardless, however, it's not too much of a stretch to surmise that there are any number of H-1B "body shops" that are engaging in the practice.


What's important is that we not allow the abusers to create a negative perception of domestic outsourcing companies that have legitimate reasons to occasionally engage the services of H-1B visa holders. What companies like Systems in Motion and Rural Sourcing are doing is a good thing, and they should be given every opportunity to flourish.


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