H-1B visas: A mess that could get even worse

Our broken visa system is bad for U.S. IT workers and the guest workers who are misled, underpaid, and exploited

It's bad enough that American workers are losing jobs to foreign labor imported via the broken H-1B visa system. Now there's even more evidence that unscrupulous companies are exploiting the hopes and labor of foreign workers who obtained those visas as they searched for better jobs and better lives.

Two of those workers, an MBA student named Vimal Patel and an Indian software programmer Prasad Nair, were featured in an investigative story on the H-1B mess in the current issue of BusinessWeek. Their stories have a lot of complications, and Patel -- who wound up working at a gas station -- apparently committed a relatively minor violation of the law. But those young men and many others paid thousands of dollars to companies that promised them jobs that ultimately didn't materialize or turned out to be for significantly less money than they had been led to expect.

[ InfoWorld's Bill Snyder argues why the H-1B visa has got to go. ]

Aside from humanitarian concerns, is there a reason why you should care about these guys? There is. With layoffs continuing to decimate the technology industry -- about 100,000 IT workers lost their jobs in the last 12 months -- employers can still bring in as many as 85,000 H-1B workers, including 20,000 who hold advanced degrees from U.S. universities. And now some of the outsourcers are preparing to move jobs to Mexico if visa regulations get tighter. The system works against U.S. workers, and it leaves plenty of room to exploit foreign workers. It's broken and needs to be fixed.

Visa fraud rate of 20 percent
The cases of Patel and Nair mirror a pattern of lawbreaking and exploitation by employers uncovered last year by the U.S. Citizenship and Immigration Services (USCIS). Indeed, the agency found evidence of fraud or other violations in 20 percent of H-1B visa petitions.

The Justice Department took notice and brought suit against a number of companies, including Vision Systems Group, Cognizant Technology, and Patni Computer Systems.

Sen. Charles Grassley (R-Iowa) has been one of Washington's most outspoken critics of the H-1B visa. In a letter last week to USCIS director Alejandro Mayorkas, Grassley said the agency should be asking "companies up front for evidence that H-1B visa holders actually have a job awaiting them in the U.S.," so they will not end up being "benched," or unpaid until work is found.

"Employers need to be held accountable so that foreign workers are not flooding the market, depressing wages, and taking jobs from qualified Americans. Asking the right questions and requesting the necessary documents will go a long way in getting out the fraud in the H-1B program," Grassley wrote.

Talk of depressed wages is not just hot air. A recent study found H-1B visa use is reducing IT wages in some fields, including programming, by as much as 6 percent. That comes from research by Prasanna Tambe, an assistant professor of information, operations, and management sciences at the New York University's Stern School of Business, and Lorin Hitt, a professor of operations and information management at Wharton School of the University of Pennsylvania.

IT services to Mexico? It could happen
It's worth remembering that the globalization of IT services (along with many other sectors) is very far down the road. Indian firms are reportedly laying the groundwork for a move of some services to Mexico and Canada should U.S. regulations become too strict.

A report in DNAIndia quotes Apurva Shah, a Mumbai-based analyst: ""Companies such as TCS, Infosys, and others are setting up delivery and development centers in Mexico and Canada, which are close to U.S. This helps firms save on costs as well as serve U.S. customers from those locations, since people from Mexico and Canada do not need H-1B visas under the North American Free Trade Agreement (NAFTA)."

I have no idea how reliable this report is, and there are many jobs that could not be done offsite. But moving at least some of the work now done in the United States by H-1B visa holders is certainly plausible, and I'll bet that Indian techies working in Mexico will be paid even less than now.

As for Patel, he's facing deportation, and Cygate Software and Consulting, the company that brought him to New Jersey on allegedly false pretenses, is facing a criminal charge.

H-1B: A solution in search of a problem
When H-1B first became law in the 1990s, the premise was simple and made sense: The growing technology industry couldn't find enough skilled workers to fill key jobs. In response to lobbying by the industry, Congress permitted companies to hire foreign workers under a new provision of immigration law that established fairly liberal quotas for skilled workers.

Fair enough -- but that's no longer the case. With thousands of highly skilled and experienced IT workers looking for jobs, it's hardly plausible to talk about a labor shortage. No doubt there are exceptions. But not 85,000, which is the total number of H-1B slots available this year and last.

There needs to be a moratorium on H-1B entrants to the labor market. But before we point fingers at the foreign-born workers who come here to better their lives and support their families, we should condemn the companies that exploit them.

(Patrick Thibodeau, a writer for our sister publication Computerworld, has done a great job covering this issue, and I've used some of his reporting here.)

I welcome your comments, suggestions, and tips. Reach me at bill.snyder@sbcglobal.net.

This story, "H-1B visas: A mess that could get even worse," was originally published at InfoWorld.com.