More Disagreement with Me over ‘Intels vs. Infosyses’

I’ve been harping on the “Intels vs. Infosyses” issue for a long time. I maintain that the Intels, i.e. the mainstream U.S. firms, are just as culpable in abusing foreign tech worker program as are the Infosyses, the largely Indian and Indian-American rent-a-programmer firms. (IBM is an “Infosys” too.) I’ve also argued that the distinction between the two types of firms not only is inaccurate, but will lead to legislation that leaves American programmers and engineers in even worse circumstances than they are in presently.

Alas, this is a hard sell, partly because the Intels and their allies (e.g. universities who want lots of foreign students) are pushing the “Intels Good, Infosyses Bad” idea in expert PR actions. But the larger reason I’ve had trouble in getting this point across is that the abuses of the Infosyses are much more visible. Recently, these misdeeds have been highly visible, due to firms like Disney and SCE laying off American ITers and replacing them by foreign workers. Another way the Infosyses are so visible is that many U.S. programmers have had the bitter experience of walking into a job interview, finding that the interviewers are all Indian and getting the feeling that only Indian foreign nationals need apply. (Indian-American applicants have no chance either.)

Take this comment on my blog by Roy Lawson:

…there is evidence that foreign outplacement firms have been the most egregious of abusers. We have identified key harms as being underpayment, replacement of qualified Americans, and age/gender discrimination. American and Indian firms alike have done all of those things. The data indicates foreign staffing firms pay the least and discriminate the most against Americans.

But the problem is that there is NO such evidence, because the Intels’ actions are hidden. They don’t overtly use foreign workers to REPLACE Americans, but they hire foreign workers INSTEAD OF Americans. Even a 10-year-old could see that the net adverse impact is the same.

My research on the Intels does show underpayment of the foreign workers. Please read my papers.

As to age/gender discrimination, all the lawsuits I know of against tech companies have been against the Intels, not the Infosyses. Indeed, the book Inside Intel documents how a management consultant hired by Intel advised the firm to jettison its older workers and henceforth hire mainly young ones. Intel has formal job categories called New College Graduate and Recent College Graduate, and earmarks jobs accordingly. I’ve shown similar job ads from time to time here from other “Intels,” e.g. Facebook. HP even invented a bizarre new job title, Junior Software Engineer. And guess which new grads the employers prefer?

In terms of discrimination against Americans, I’ve explained that the Intels are actually worse than the Infosyses, because a major goal of the Intels in hiring H-1Bs is to obtain immobile labor through the green card process — a process that the Infosyses almost never participate in. And the result is that the Intels prefer foreign workers over equally-qualified Americans.

If you are not familiar with the case of David Huber, who naively applied for a job at Cisco that turned out to be reserved for foreign workers, or if you haven’t watched the “Tubegate” videos, or if you haven’t read the presentation by immigration lawyer David Swaim (who designed Texas Instruments’ immigration policy) urging employers to hire foreign students instead of Americans because of immoblity — all of which involve the Intels and not the Infosyses — then you don’t know anything about H-1B.

The only claim Roy makes above that’s correct is that the Infosyses tend to pay at Level I in the prevailing wage system, while the Intels tend to hire somewhat more sophisticated workers, paying at Level II. But they are both underpaying at their respective levels. And by that underpayment, an American of a given level will always be less attractive to employers than the equally-qualified foreign applicant. This is the bottom line, folks — the American loses the job to the foreign worker. The fact that it doesn’t happen via overt replacement is irrelevent. Again, even our hypothetical 10-year-old observer could see that.

And it matters — a LOT. I’ve been predicting that upshot of this Intels vs. Infosyses distraction is that a bill will be enacted that (at least cosmetically) punishes the Infosyses while rewarding the Intels, with the result that there are NO net job opportunity increases for U.S. citizens and permanent residents. Congress will then declare victory over H-1B abuse, and move on to other issues. If the new Durbin/Grassley bill passes, all those Republican presidential candidates clamoring for H-1B “reform” will suddenly clam up, problem solved.

Remember, the Intels include firms like SCE and Disney too. Even if Congress were to completely ban the Infosyses — it won’t happen, as they have political clout too — SCE for instance would have its pick of foreign students, in the numerous colleges right there in its back yard, Southern California — 10 CSU campuses, just to give a quick example. Google may not want to hire them but SCE will. And SCE will hire from the higher-level local schools too, such as hiring a foreign student majoring in Geography at UCLA who has had some IT classes. (I’ve seen this happen a lot.)

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28 thoughts on “More Disagreement with Me over ‘Intels vs. Infosyses’

  1. I know this goes against the main thrust of this post, but I couldn’t believe it when I saw it. There is a company called Rave Infosys in the Fort Lauderdale metropolitan area that has the following text on their careers page (http://www.raveinfosys.com/software-career/): “We are always on the lookout for young, dynamic and go-getters who have zeal to perform and are committed to excel.”

    While I agree with Professor Matloff’s point that the Intels are the greater problem, I don’t understand how the federal government isn’t having a field day prosecuting discrimination cases against the Infosyses in every jurisdiction.

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  2. Great to see this discussion continued. My primary argument that “Infosys is worse” isn’t that their misdeeds see the light of day more, but that the nature of their business is more harmful irrespective of their use of H-1b visas.

    For the sake of argument, let’s stipulate that Infosys and Intel are more or less equal abusers of the H-1b program. Even so, my argument that Infosys is worse still stands because their core operations are offshore business process outsourcing. The H-1b is an enabler of offshore outsourcing.

    Having actually been employed by Intel and even engaged in activism against their practices over 15 years ago Intel isn’t a company I like – I watched way too many people box up their personals and unceremoniously escorted out during mass layoffs to have fond memories of that company. But I also see a need of being intellectually honest and my opinion is that offshore outsourcing firms cause more harm because H-1b visas enable the displacement of additional workers. Meaning for every 1 H-1b worker {n} jobs are created in India or elsewhere offshore. And {n} is higher for Infosys than Intel because moving jobs to India is where their greatest profit margins are found. The last thing Infosys wants to do is hire more experienced Americans that work faster than less experienced Indian workers. Infosys earns far greater profit margins through a cheap and mediocre workforce because most contracts are billed by the hour. You find those money makers in India, not the USA. The H-1b visa is a conduit to that high margin low cost workforce.

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      • What I would say to the hypothetical ten year old is that more moms and dads will have jobs if offshore outsourcing firms aren’t able to game the system using H-1b and L-1 visas. Maybe not *his* mom or dad because the legislation is weighted towards correcting the problems offshore outsourcing firms create not the problems created by American firms.

        Certainly the legislation could be better and should be better when it comes to addressing abuses originating from American firms. So to that end I think your points are constructive and well received. We should demand more from politicians, not just half measures that ignore half the problem.

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          • I think the claim that the H-1b and L-1 visa is a “gateway drug” for offshore outsourcing (to use another analogy) stands on its own. Where do you see that claim falling short? What information do you have negating that H-1b visas when used by offshore outsourcing firms impact more than just the one job taken by the visa holder?

            There are armies of tech workers in India working in the front lines for American IT shops. Those workers are enabled by feet on the ground here (H-1b visa holders quite often). If that worker were not an H-1b or L-1 visa holder and instead a more costly American it would change the dynamic and overall cost of offshore outsourcing.

            These issues are connected and you can’t think of them in isolation from each other.

            If you drive the cost to go offshore up, the bottom line is that more American jobs will be created as that savings incentive to offshore shrinks. We are talking about key factors driving IT spending behaviors in IT departments. The more spent in the USA the more moms and dads that will have jobs.

            If I’m repeating myself, it’s because I don’t see the flaw in my logic. Can you point it out?

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          • Roy, imagine yourself as a CEO or other executive that is currently relying on offshoring, via the Infosyses. What will you do if this bill is enacted? You’ve got a plethora of choices.
            The most obvious solution is to shift from an Indian Infosys to IBM or Accenture (or many other U.S. firms that will want to cash in on the (SLIGHT) clipping of the Infosyses’ wings. Result: No new jobs for Americans.
            Or you stick with the Infosyses. Not all of them will be able to get all the H-1B visas they want, but for the most part they’ll be able to do so, and make up the slack with L-1s. As near as I can tell, the L-1 “reform” parts of the bill are cosmetic.
            Or, you hire foreign students, who now will have priority for visas under the bill, and will likely have extended OPT rights under the current White House initiative. The foreign students can liaison for offshoring just like the current imported H-1Bs do.
            Please tell me if you disagree with any of these scenarios.

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          • What R. Lawson is trying to say is that if Intel hires one H1B, one American did not get hired. If Infosys hires one H1B, perhaps 10 Americans lose their jobs, because that one H1B here is the liason to a whole group of workers back home.
            I too have had the fun of being laid off from Intel.

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    • If you look at the LCA database, it quickly becomes apparent that most of the big American companies are chiseling on the H1-B wages. They will file applications which claim that the average salary for a Software Engineer in San Jose is $85k, when it is really something like $120k.

      Companies like Infosys, HCL, and Wipro are in a different category. It is routine to see applications which claim that the average salary is $49k. HCL actually has a guy working in Sunnyvale for $29k. (It is pretty obvious that the DOL does not even read this stuff before approving it. . .)

      So, the bottom line is this:

      Indian body-shops really do pay a LOT less than the American companies.

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      • Dave, you may have missed my point about Level I vs. Level II.

        The average Infosys H-1B salary is well below that of the Intels, no doubt about it, but the same is true for quality of the workers. I’ve been pointing this out for years.

        In addition, under the Durbin/Grassley bill, the SCEs and Disneys would operate business as usual, e.g. by hiring foreign students, as I explained.

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  3. I agree with everything you have said here with one exception.

    We have issued 2,,592,463 more LCA applications for H-1B, H-1B1, and E-3 non immigrant visas than we have created jobs in the computer and mathematical occupational group since 2000.

    Lets END all non immigrant visa programs so that Americans in America can get back to work using skills that they have spent decades acquiring.

    The steps showing how I arrived at those numbers can be found via the following link:

    http://keepamericaatwork.com/we-have-issued-235793-more-lca-applications-for-h-1b-than-we-have-created-jobs-in-computer-and-mathematical-since-2000/

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  4. I disagree that in the cases of Disney and SCE, these companies would have done the same thing via direct sponsorship. For one, it IS illegal to directly lay off U.S. workers only to bring in H-1b to replace them. But it is not illegal to lay off U.S. workers then outsource the work as a contract with a “consulting company.” If the consulting companies could not use H-1b and L-1, then the cost advantage to doing this would be minimized.

    But even with no H-1b, companies will contract out work. It’s just that they would be contracting it out to other U.S. workers.

    Durbin/Grassley’s bill of limiting H-1b to 50% is outrageous insult. By paying $60k they are still not deemed “H-1b dependent,” and could fill much of the other 50% with even cheaper L-1.

    For some reason industry, and Congress, does not seem supportive of PG’s proposal to make the floor wage of H-1b $100k. This supports Norm’s position that it’s not about top skill, it’s about cheap skill.

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    • Kim, again, you have to explain to our hypothetical 10-year-old why it’s better for SCE to hire foreign workers INSTEAD of Americans than to use foreign workers to REPLACE Americans. Look, SCE could still treat the foreign students as “contractors,” hiring them one or two years at a time as “interns” under OPT.

      Good point about the L-1s. Durbin/Grassley does tighten up on L-1 a bit, but only a bit, not enough to prevent most Infosyses from continuing business as usual.

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    • >For one, it IS illegal to directly lay off U.S. workers only to bring in H-1b to replace them.

      No, I don’t think it is, the law says nothing about firing or replacing. If a business wants to fire Tom and hire Harry in most places today “at will” laws prevail, and if Harry is an H-1B then so be it.

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  5. I must have missed Ted Cruz’s new H-1B plan over the weekend:

    http://hotair.com/archives/2015/11/13/ted-cruz-releases-immigration-plan-suspend-issuance-of-h-1b-visas-for-six-months-halt-legal-immigration-if-unemployment-is-high/

    While it appears to hit both the Intels and the Infosyses, it sounds like it’s just a temporary concession to deflect from his support for increasing H-1B caps in the past.

    Professor Matloff, would you consider posting an analysis of Cruz’s plan as you’ve done for some of the other candidates?

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    • There is no way that a President Cruz would be able to do something drastic like suspending H-1B for 6 months. I’m not even sure what he means by that; the visas are doled out once per year.
      In addition, Cruz, just like the other politicians, has bought into the Intels Good, Infosyses Bad notion.

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      • Agreed Norm. ” Initiate an immediate 180-day investigation and audit of the H-1B visa program and enact fundamental reforms of this program to ensure that it protects American workers.” It means nothing. What is there to “investigate and audit”?

        The problems are well known: Flawed prevailing wage calculation, no requirement to transparently first recruit and hire qualified U.S. workers, the preference of employers for indentured workers that are more likely to stay through grueling projects; Foreign entities – and hiring managers – that use H-1b to hire almost exclusively from their own nationality – if not friends and relatives.

        Still, Rubio seems worse.

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      • I think he picked 6 months because he knew that time frame would be over long before the once per year time rolled around.

        As a Texan that has written his office begging for help in getting back to work, I do NOT trust the crapweasel to put it nicely.

        The only person Cruz wants to benefit is Cruz himself.

        Cornyn is just as bad.

        The only one that offered to help was Lamar Smiths office and I’m not sure they are doing anything other than hitting the delete button on the emails as they happen, but at least they responded.

        The only position I would vote for Cruz is as President of Latrine Duty

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    • Cruz is picking up a fair amount of static even in the political venues where he is otherwise popular, specifically about his H-1B position. It is a big hole in his boat. He is a hypocrite on immigration and corporate interests due to his H-1B position, and perhaps this is his first acknowledgement.

      And it is not enough. What on Earth does, “If unemployment is high” mean, when we have 94,000,000 Americans “not participating” in employment, and the BOL still claims “unemployment” is just 5%? Tell you what, let’s hear Senator Cruz explain this in a long speech on Youtube, or at the next debate (not for many weeks), and we’ll see. But he’s going to have to foreswear his previous legislation. Explicitly.

      The thing is, there is NO WAY to salvage any part of the H-1B program. It was conceived to destroy American wages and jobs, and that’s what it does, in part or in whole.

      If Cruz (or Fiorina, or any of these mooks) wants to have a chance at being elected without being called names on virtually every political forum, they will have to REVERSE, publicly and loudly, their previous actions. And of course that would piss off Zuckerberg and his minions. So I don’t see it happening.

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  6. Require employers of H-1B visa employees post a bond equal to the worker’s salary, health insurance for the employee and his/her family and the employer’s FICA contributions. There are too many reports of H-1B workers not being paid properly. If the employer needs the worker, this is a relatively small price to pay.

    Do away with the multi levels of employer to client. There is no way an employer can control the work of an employee with two or three vendors between the employer and the H-1B worker.

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