BENGALURU: In a worrying development for India’s IT industry, the US government has launched an investigation against Tata Consultancy Services (TCS) and Infosys — the two biggest players in the space — for possible violations of H-1B visa regulations.
The matter looked serious enough for the country’s IT industry association Nasscom to promptly come down heavily on the move. Nasscom described it as an attempt by some to tarnish the contributions made by Indian IT service providers in maintaining the global competitiveness of US companies, which in turn has helped create jobs for Americans in the US.
READ ALSO: At Disney, American workers forced to train their H-1B replacements
The New York Times reported on Thursday that the US department of labour had opened an investigation against TCS and Infosys for “possible violations of rules for visas for foreign technology workers under contracts they held with an electric utility Southern California Edison (SCE).”
It said the power company had recently laid off more than 500 technology workers and said there were claims that many of those laid off were made to train their replacements who were immigrants on the temporary work visas brought in by the Indian firms.
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The same publication had reported earlier this month about Disney firing 250 employees but requiring them to train the foreign immigrants, mostly Indian, replacing them before they left the company.
The investigation could be worrying because a previous federal investigation that was initiated in 2011 had led to Infosys being fined $35 million (Rs 219 crore then) by the US government. The charge then was that the company had misused easy-to-get B1 visas, which are meant for short business visits, to bring workers to the US for long-term stays.
Asked about the investigation, Infosys said it was committed to complying with US immigration laws. “The US department of labor (DOL) regularly selects a percentage of visa and labour condition applications for extra scrutiny in this industry, and we work closely with the DOL to assist them in this activity in the ordinary course of our business. We have received no indication of any broader investigation of Infosys visa practices,” it said.
A TCS spokesperson said the company maintains rigorous internal controls to ensure it is fully compliant with all regulatory requirements related to US immigration laws. R Chandrasekhar, president of Nasscom, said Indian IT companies were fully compliant with US visa regulations. “Immigration is a politically-charged issue and we need to make sure that technically-skilled immigrants don’t become collateral victim of politics that goes on in the US,” he said.
He said attempts by some quarters to portray the contribution of Indian IT companies negatively “would have serious detrimental impact on the strategic partnership and mutually beneficial economic and trade relationship that the two countries are striving to nurture.”
The precise nature of the allegations in the latest issue is not clear. But activists in the US typically argue that those on H-1B are often not paid the minimum salary as required by law, and that often H-1Bs are brought in even when similar talent is available in the US, which again is said to be violative of regulations.
But Cyrus Mehta, founder and managing attorney of New York law firm Cyrus D Mehta & Associates, wrote in his blog last week: “Lower costs, as is commonly believed, is not the driving factor in hiring H-1B workers. The employer has to pay the higher of the prevailing wage or the actual wage it pays similarly situated workers, and so it is generally difficult for an H-1B worker to replace a US worker because they are cheaper.”
Data shows that salaries that top Indian IT companies pay to those on H-1Bs are invariably higher than $60,000.