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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Mar 30, 2010 1:52 PM R. Lawson R. Lawson  says:

I agree, that approach is sensible.  My problem with the H-1b visa is two-fold.

First, it is ripe for abuse and littered with loopholes.  Legislation introduced by Senators Durbin and Grassley, as well as Congressman Gutieriez, plug many of those holes.

Second, the nature of the H-1b visa is one of "indentured servitude".  No legislation that I am aware of changes the inability of H-1b workers to participate in the free labor market with out fear of losing their status.  In short, H-1b visa holders don't have the same negotiating power that citizens and greencard holders have. 

Mar 30, 2010 5:08 PM Indian_H1B Indian_H1B  says: in response to R. Lawson

I think you have mentioned the indentured servitude angle many times and it makes a lot of sense. I do want to clarify that the true tethering happens at the greencard sponsorship stage. If greencards didn't take 9 years as they take for many Indian applicants, there would be no need for employees to stick it out with an abusive employer. The H-1B in itself does not prevent the employee from walking out the door and seeking another job on an H-1B.

If the greencard process were not tied to the duration of time you spent with an employer, but rather with aspects such as how long you have worked in the US, what your current income is, how educated you are and if you have invested in the US (say buying a home), I strongly suspect that a large part of the indentured servitude would disappear. Bodyshops (especially Indian run ones) are still capable of finding new loopholes, but the vast portion of the abuse can be alleviated.

Mar 30, 2010 5:17 PM Indian_H1B Indian_H1B  says: in response to Indian_H1B

On second thoughts, I do know of a few ways that Indian bodyshops exploit, even on H-1B. For example, they can bench employees without pay when projects run dry and threaten them of dire consequences should they consider leaving (expose to the USCIS that employee receive payment for a duration of time). The employee's only escape mechanism is to quickly find a different H-1B sponsor, for the longer they put up with the masochistic agreement, the more screwed they are.

Another example is to retain the employee's H-1B approval. How that becomes a bargaining chip is that the transfer of H-1B from the abusive employer to a new one requires a copy of the H-1B approval. Sleazy Indian bodyshops are capable of never telling their hapless employees what their approval numbers were and never provide them with a copy. I have had acquaintances pay 10s of 1000s of dollars just to get the H-1B approval from the abuser so that they can transfer.

These are glaring examples of how F-ed up the H-1B system is. They should however be easily able to remedy them by holding the employers to task. The USCIS is sadly disfunctional.

Ultimately though, the greencard proves to be the true dog collar. Bodyshops can milk their clueless H-1Bs for years using it.

Mar 30, 2010 6:14 PM yoyome yoyome  says: in response to R. Lawson

There is no needed rural outsourcing. For the last two weeks, I am applied new Jobs. Most of the recruiters called me to pay a senior Software Developer for $20/Hours. It is even cheaper than India Outsourcing rate. Thanks for more H-1B visas. The price is close to flipping hamburgers rate.

Don! you are such a naive and bird head person. I don't understand why you keep poking the H-1B topics over and over again. Why don't you get a real life. How can you stop H-1b Abusers? as longer all American companies love them and including you (the NASSCOM slave writer) the H-1B visas will never going away instead it will increase more and more.

Revolution is the only way...

Mar 30, 2010 6:25 PM R. Lawson R. Lawson  says: in response to Indian_H1B

Indian_H1B, you make many valid points.  I think the "American" thing to do (that use to be a positive statement) is to give workers full mobility on the labor market. 

If we grant you permission to work in our country, you should be able to work for any company of your choosing and quit jobs without fear of losing your H-1b, or resetting your perm process. 

Employer sponsored visa programs are, in my opinion, inherently evil because of the upper hand given to corporations.  Corporations should not be in the immigration loop because they have financial incentive to corrupt it. 

I would like to see Don expose more of the abuses that go on.  People need to understand that abuse does occur, and it impacts them either directly or indirectly. 

I would encourage any H-1b holders who have experienced abuse first hand to contact Don directly.  Tell us what you experienced.

Mar 31, 2010 7:39 PM B B  says:

Employers can legally discriminate against qualified Americans by firing them without cause and recruiting only H-1B guest-workers to replace them.  The U.S. Department of Labor (DOL) has said:  'H-1B workers may be hired even when a qualified U.S. worker wants the job, and a U.S. worker can be displaced from the job in favor of a foreign worker.'  Some companies that discriminate against American workers are so brazen that their job advertisements say 'H-1B visa holders only.'  And some companies in the United States have workforces that consist almost entirely of H-1B guest-workers.      

Mar 31, 2010 7:52 PM ConcernedAboutUSTech ConcernedAboutUSTech  says:

I have seen what the H-1B visa does to the American hi tech worker - it creates a barrier - there is no trust because an American never knows when they may be legally replaced by an H-1B.  It is impossible to have any true feeling of dedication to a company or the projects you work on when this is the case. If this is the desired effect, then it has been achieved, and it is a big loss.  Many very creative people are just not going to put themselves in an environment where they are considered so disposable.

I am amazed at anti-American additions to our immigration code about "specialty workers" and shortages are allowed to remain there.   We all know there are no shortages, and H-1B is all about cheap labor.  The most talented Americans are not even interested in this career path now - too bad the greedy companies that don't know how to appreciate the best asset they have - their workforce.

Too bad they ruined it for everyone else.


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