by Stephanie Overby

Infosys Visa Probe: Experts Debate Impact on American IT Workers

Jul 11, 20116 mins
H-1B VisasOutsourcing

Outsourcing industry watchers predict that the federal grand jury investigation into Infosys' use of B-1 business visas could make it harder for all outsourcing companies to bring foreign workers to the U.S. on any kind of business visa--potentially forcing them to hire more American IT workers.

Little is known for certain about the federal grand jury investigation of Infosys and its sponsorship of B-1 business visas.

In May, the Indian IT outsourcing company revealed that it had received a subpoena from a U.S. grand jury to provide records in connection with its use of B-1 business visas. A current* American employee of Infosys alleged that the company was using the easier to obtain B-1 visa—intended to be used for travel to attend a specific event, receive short-term training, or conduct contract negotiations—in a fraudulent manner to import foreign workers to fill company roles stateside that actually required H-1B visas.

“It’s hard to say what the State Department and U.S. Customs and Immigration Service (USCIS) are doing with respect to the investigation,” says Ron Hira, associate professor of public policy at the Rochester Institute of Technology and co-author of Outsourcing America. “Neither agency has been forthcoming.”

Some industry watchers predict that the probe could hamper the IT outsourcing industry’s ability to use of a variety of guest worker and business travel visas, which in turn could lead these companies to hire more American IT workers.

“This could have some serious ramifications with the issuances of temporary work visas for employees of Indian-based service providers and non-Indian service providers seeking to bring Indian staff into the U.S.,” says Phil Fersht, founder of outsourcing analyst firm HfS Research. “While valid H-1Bs and L-1s should still go through, the USCIS has the ability to probe visa applications hard when under scrutiny, and slow down the whole process for all providers, not only for Infosys.”

Any media attention the Infosys case garners, particularly with the 2012 elections approaching and continued high unemployment rates, could drive further visa restrictions. “The publicity surrounding the investigation likely will generate continued Congressional interest and calls for further changes to the H-1B and L-1 programs to limit their perceived adverse effects on U.S. workers,” says Carl W. Hampe, a partner in the immigration law group at Baker & McKenzie. “Companies sponsoring H-1B employees and those seeking the temporary transfer of their key personnel to the U.S. could face more obstacles.”

Recent Visa Reform Initiatives

IT service providers have been facing increased scrutiny of their use of visas to bring foreign workers to the U.S. in recent years. In 2004, Congress passed the L-1 Visa Reform Act, which increased limitations on the visas IT service providers use to bring specialized knowledge workers to client sites.

In recent years, USCIS has been more stringent in its assessment of H-1B visa petitions, reportedly beefing up its anti-fraud auditing efforts. Guidance issued by USCIS associate director Don Neufeld in 2010 required evidence of an actual employee-employer relationship between the visa petitioner and the H-1B employee. The so-called Neufeld memo “represented a significant change in policy and imposed substantial limitations on third party placement of H-1B visa holders. [It] was an example of efforts by USCIS to eliminate so-called [body shops],” says Paul W. Virtue, a partner in the immigration law group at Baker & McKenzie. Now, Virtue says, the U.S. government is turning its attention to B-1 business visitor visa abuse.

*Editor’s Note: A previous version of this story inaccurately identified the Infosys worker as a former employee.

Implications of Infosys Visa Probe on American IT Workers

“The companies and stock market analysts have said that the effect will be that the firms will hire more American workers in lieu of bringing in foreign guest-workers,” says Hira.

Donna Conroy, executive director of Bright Future Jobs, a grassroots lobbying group for IT professionals, thinks the Infosys investigation will be a tipping point in favor of American IT workers. “We are entering a period where foreign workers will be training their replacements. It’s happening in one of our member’s offices right now,” she says. “It’s curtains for the corporate culture that has avoided hiring experienced, highly-skilled Americans and new science and technology grads whom we’ve paid dearly to educate.”

Others say the consequences of the Infosys investigation may be more limited. “I think that the opponents of skilled immigration are getting unduly excited again,” says Vivek Wadhwa, visiting scholar at the University of California-Berkeley School of Information and senior research associate in Harvard Law School’s labor and worklife program. “Infosys may have abused these visas and will likely get slapped on the wrist if it did. [But] we’re talking about a very small proportion of its workforce being on these visas.”

Dr. Lindsay Lowell, director of policy studies at Georgetown University’s Institute for the Study of International Migration, says any fallout will depend on how widespread the alleged visa abuse is. “Will other companies be investigated? The blogosphere suggests the complaints may be there. But the investigation arm tends not to seek out problems,” Lowell says. “Policymakers and companies that play by the rules need to decide if they’ll police the system so that it serves U.S. employers as intended, or let regulations and enforcement slip, which is not in the best long-term interest of the United States.”

Norm Matloff, professor of computer science at the University of California-Davis, says the Infosys investigation is a distraction from the real problem with America’s skilled worker visa program. “The major problem is the legal underpayment of the foreign workers, due to loopholes,” Matloff says. “Investigations of possible violations of the rules distract attention from that loopholes issue.”

Increased scrutiny of visa petitions will be a headache for IT service providers reliant on foreign employees working at U.S. sites, but “it’s not a game changer,” says Fersht of HfS Research. “The leading service providers are quite adept these days at deploying onshore staff—local Americans or Indians already living in the US with valid visas—to facilitate offshore work transition over to locations like India. [They] can work around issues created by prolonged visa applications and tougher guidelines.”

Virtue of Baker & McKenzie is counseling clients to ensure that any employees visiting the U.S. on B-1 visas do not engage in any activities that could be construed as employment and that the employee-employer relationship for any sponsored H-1B and L-1 visa holder is clearly documented. Virtue is also advising outsourcing customers to make sure their contracts are for specific deliverables and not for the assignment of specific personnel, in order to avoid liability in any visa audit or investigation.