California Outsourcing Bill: Read the Fine Print

One point I’ve been harping on in my comments on the H-1B work visa is that abuse of the visa pervades the entire industry, quite contrary to the common view that I call Intels Good, Infosyses Bad (IGIB). The latter refers to a view that the Indian outsourcing firms such as Infosys are the main abusers of the program while mainstream firms such as Intel use it responsibly. So for those readers who might get excited by a new bill just passed by both houses of the California state legislature, I suggest you consider the details. A victory maybe, but a small one.

The bill was sparked by news that the University of California, San Francisco, a medical branch of UC, had contracted to bring in foreign IT workers in the by-now-familiar pattern: The foreign workers would replace American UCSF employees, but not before the Americans trained the foreigners. Subsequently, after some experience on the job, the foreign workers would take much of the work overseas, where it would be performed from then on.

Later 60 Minutes ran a piece on the matter, of which I was quite critical. Now in defense of the show, I could say that at least their airing of the issue, however misleading, did get the state legislature to finally take action. The body had considered doing so in the early 2000s, but in the end they lost their resolve.

But as the old saying goes, “The devil is in the details.” Here is what the bill says:

The bill would specify that nothing in its provisions would preclude the University of California and the California State University from contracting with a contractor or subcontractor that utilizes workers in offshore operations in circumstances that do not directly result in the displacement of an employee of the University of California or the California State University.

In other words, the bill would allow UC and CSU to gradually phase out their American workers, provided it’s done by attrition. So the current workers (those remaining after last year’s firings) are fine, but as they retire, move to other employers (or likely even other UC/CSU jobs), Americans would not be able to apply to fill the openings, just as I have been warning.

As I have been saying, this stems from too much a focus on the word replace; whether a foreign worker is hired to replace an American or instead of an American, either way the result is that Americans don’t have access to that job. Indeed, UC President Janet Napolitano stated that UCSF would have been fine if it had just gradually phased out the Americans via attrition, rather than replacing them.

So the U.S. tech industry PR people, by deft use of one simple word, has been able to distort the entire conversation, resulting in what I regard as a mainly useless California bill.

I know some readers will disagree. “We finally got those guys!”, some will shout. But actually, those guys got YOU.

14 thoughts on “California Outsourcing Bill: Read the Fine Print

  1. The “replace by attrition” argument goes right in line with the “party line” that there is a “demographic wave” which will eliminate future generations of U.S.-born workers. They seem to think that it’s all-or-nothing; we have to “prepare for the future” by building a procedure that ensures that there is no longer any dependence on U.S. children growing up to be high-tech labor participants.

    So, isn’t it an interesting paradox, that these are the same people who claim that “we must fix U.S. education”? If they really plan and expect to improve U.S. education, wouldn’t they be planning to *increase* their hiring of future U.S. born and educated workers?

    Every step of the way, their decisions show that they simply do not consider it a “viable business model” to hire significant numbers of U.S.-born workers. I would be interested to know where this entire mindset is coming from…. Business schools? Consultants? CEO confabs?


  2. I sure hope the parents of CA kids are watching and thinking about this. A lot of US kids go into CS and EE. A major employer for such folks is the University system. Of course, it is the case that many chairs at CA Universities ACTIVELY and OPENLY pimp for foreign students and foreign visas, which is shameful and wrong. Why don’t parents DEMAND that CA universities promote CA students?


  3. Sadly you are correct. All too often I see many caving in on social media, happy to see ANYTHING approved that isn’t pro-H1B/OPT.

    I feel that we must constantly fight for the correct approach because anything less is nothing but a cover-up.

    Keep up the good fight!


  4. I found a bigger loophole. The bill says the following (emphasis added).

    “This bill would prohibit …… the University of California and the California State University from contracting for services with a contractor or subcontractor UNLESS ….. the contract ….. WILL BE PERFORMED SOLELY WITH WORKERS WITHIN THE UNITED STATES …..”

    So UCSF workers can still can be replaced after training their replacements. The catch is that work that used to be done offsite outside the US now has to be moved to a lower cost location in the US such as South Carolina.

    I guess UCSF could sign a one year contract with an Infosys and layoff the UCSF workers since the offsite work will be done by workers in the US. After one year, UCSF could sign a multi-year contract with another company. This company can use offshore workers since this new contract will not lead to the layoffs of UCSF workers. The workers lost their jobs under the first contract.


  5. The best way to react these kind of actions from any employer or schools, we need to avoid their business (boycott). These schools and employers are getting US grant as tax payers money and their business. They making big profits through outsourcing. These schools are bringing foreign students that is also big danger.. our kids are paying 60k+ for basic bachelor degree but what about foreign students paying.. research…!


    • The government is being petitioned to provide more federally funded grants to provide employment for the glut of foreign students graduating from the Masters and PhD programs.
      How’s that for a kick in the pants. Publicly fund an employment program for universities’ foreign student glut.


  6. I’m watching the Equifax congressional hearing right now. The question no one is asking is about the quality and composition of the IT staff that presided over this massive screw up. I’ll be willing to bet that there was an H1B in there at an important step in this disaster.


  7. A thought about Intels Good Infosyses Bad (IGIB)
    Let’s say PersonA is a white caucasian recent STEM grad, applies and interviews at Intel, but does not get the job. Intel instead hires a cheap H1B.
    PersonB works at a company that hires Infosys to bring in H1B that will be trained and replace everyone.
    Not let’s say that I am a News Reporter that wants to do a story about H1B. Well, I can’t interview PersonA because he or she has no idea why they were not hired and certainly Intel is not going to input anything; but at least with PersonB there is someone I can interview and talk to and discuss things with. SO, in conclusion does the News Reporters story really show that IGIB is a problem, or is it just that you need someone to talk to and interview with in order to do a story in the first place. I don’t feel it would be fair to say that the News Reporter is purposely trying to push forward IGIB ideas, its just that you need someone to interview in order to do the story. thoughts?


    • I’ve never blamed the press for promoting IGIB. Instead, I’ve blamed the Intels, and ironically also blamed many critics of H-1B who are researchers or people with immigration reform organizations.


  8. Particularly galling when it’s universities.
    Not only
    – do we subsidize them with tax-funded grants,
    – as they park billions in tax free endowments, (UC on $10 billion)
    – they also need to pinch pennies by outsourcing?!?!


  9. I thought it was illegal to discriminate based on national origin? If these companies/organizations won’t even consider Americans, much less hire them, isn’t that illegal?


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