For educational purposes only.

******************************************************************** These comments below are by Dr. Norm Matloff, an expert on H1B visa abuse

The enclosed article is focused on one particular aspect, but is very detailed. It's definitely one of the better articles I've seen over the years.

One item in particular to note: They also believe a weakening economy will be good for their businesses: U.S. companies will eliminate full-time workers, but will not cancel software projects. The companies will turn to body shops. "I think it's better for us, that's the interesting part of this business," said Sumit Ganguli, an executive with Birlasoft Inc. in Edison.

This illustrates a point I have made repeatedly. I quite often hear from reporters, policymakers, programmers and so on speculation that a downturn in the economy would reduce the industry's usage of H-1Bs. My answer always is to point out that H-1B usage soared in the early 1990s, a period of recession and defense downsizing. DEC, for example, was hiring lots of H-1Bs while laying off lots of programmers and engineers.

By the way, from Rob Sanchez's H-1B database, it appears that Birlasoft (named after the alma mater of the firm's founder) started paying higher salaries to H-1Bs in the year 2000, with typical salaries being around $70K rather than $40K. However, that does not necessarily mean that they are paying fair wages (one would need to look at the skills and years of experience of the workers, data which is not available), but in any case, as the article states, the 1998 law regarding "H-1B dependent" employers has only a minuscule impact. According to immigration attorney Jose Latour, "DOL states that only 50 out of the 50,000 estimated H-1B employers will meet the standard [of `H-1B dependency']."

As I mentioned about 10 days ago, I've been busy with a pressing project and haven't had a chance to send out the backlog of articles I've got. Again, I hope to do this soon.

Norm ********************************************************************

A profitable business: Tech-worker imports http://inq.philly.com/content/inquirer/2001/02/25/front_page/VISA25.htm

Sunday, February 25, 2001 _________________________________________________________________ A profitable business: Tech-worker imports By Bob Fernandez INQUIRER STAFF WRITER A federal program enabling U.S. corporations to hire overseas for specialized jobs has spawned a niche industry of consulting firms that is recruiting and then feeding tens of thousands of Indian high-tech employees into the U.S. labor market. This year alone, 200,000 foreign workers are expected to arrive in the United States under the H-1B program, many for software or other technology jobs in corporations that maintain they otherwise would face a critical personnel shortage. To provide these workers, consulting firms - some of which are known as "body shops" - recruit talent in India and prepare those recruits for U.S. employment. Half the H-1B holders are Indian, the federal government says. The firms, a surprisingly high number of which are based in central New Jersey, lodge the H-1B visa holders when they arrive in the United States, place them in jobs, and take a cut of their pay. "It's a very profitable business," said Hari Polavarapu, business director for Numbers Only Inc., a central New Jersey company that provides U.S. firms with H-1B workers and is attempting to develop its own technology products. "It's a cash cow . . . for this business. You don't need an office. You could have a laptop and do it from your home." The H-1B program - which federal lawmakers expanded in October by 70 percent to 195,000 visas per year - has sparked criticism that it gives jobs that American workers could fill to lower-paid foreign workers, and that it is rife with fraud. As more companies have begun laying off employees, critics of the program have raised concerns that the lower-paid foreign workers will be retained while higher-paid American workers are displaced. "I've got a lot of people who are convinced that [H-1B] is being done by industry to keep wages down," said Paul Kostek, past president of the Institute of Electrical and Electronics Engineers, a professional organization that campaigned hard against expanding H-1B. "The system is such a mess that we are calling for a complete reform," he said. "If these people are so important to our national interests, then why are we bringing them in under temporary visas?" That technology-rich San Jose, Calif., has benefited from the H-1B program is not a surprise. In annual Labor Department data showing the regions from which applications for H-1B employees are coming, Silicon Valley tops the list. (More than 90 percent of all H-1B applications, which are called certifications, are approved.) But an Inquirer computer analysis of 606,000 H-1B certifications filed from late 1996 to early 2000 shows that central New Jersey ranks second in the rate of approvals sought by companies intending to hire workers with the visas. Many of these companies are owned by Indian Americans and hire Indians almost exclusively. They act as employment agencies, farming out H-1B workers as contract employees for software projects lasting anywhere from two months to two years. In central New Jersey, they have flourished in an enclave known as Little India, in Edison and Iselin, establishing offices in homes, strip plazas, and even a furnished executive suite in a local hotel. There are clusters of body shops in metropolitan areas throughout the nation, federal data show, including the Silicon Valley, Pittsburgh, Detroit, and smaller cities. "This isn't rocket science," said Lew Wheeler, chief executive officer of Rapidigm Inc., a software consulting firm in Pittsburgh. "You have this tremendous shortage here and you have these Indian software engineers making $10,000 in India and they can come over here and make $75,000." Rapidigm, a privately held company with $350 million in annual revenue, has 2,700 employees. About 1,300 of them are in the United States on H-1B visas, and nearly all are Indian-born, Wheeler said. H-1B workers earn their bosses monthly profits of $1,000 to $3,000 each, said Harish Pandya, a body shop operator in Iselin. This is money the body shop operator makes after he pays the H-1B employee a salary ranging from $35,000 to $55,000 per year. Future Technologies Inc., a computer consulting firm owned by Rajeev and Asha Saxena, a married couple, was launched five years ago and now has 125 employees. It is based in a former law office in Rahway. More than half of Future Technologies' staff hold H-1B visas, Rajeev Saxena said. "If I find a good person I hire them and then go and find a contract," he said. The H-1B program was created in the 1990 Immigration Act and was intended to allow U.S. companies, hospitals and universities to hire foreign specialists in genetics, cancer research, plastics, factory management and other occupations. By the mid-1990s, it had transformed into a pipeline for software toilers from India. In October, Congress opened the H-1B visa spigot when it increased the limit to 195,000 visas per year, from the previous limit of 115,000. In 1998, the limit was 65,000. H-1B holders are expected to have college degrees, though one is not required, and must have a U.S. corporate sponsor, which can be a body shop. They are allowed in the country for six years. Federal lawmakers cited studies, financed by the technology industry, that showed a mounting labor shortage, and said the economy would be in crisis if they did not expand the program. But critics say a shortage has been nearly impossible to document with accuracy, and the studies rely heavily on anecdotes. Rep. Lamar Smith of Texas, chairman of the House subcommittee on immigration and claims, has said the program makes it too easy to hire foreign workers. H-1B "does not require all but a small handful of firms to make good-faith efforts to recruit U.S. workers before hiring foreign workers," the Republican told Congress in opposing the program's expansion in late 2000. "It allows all but a small handful of firms to lay off American workers and replace American workers with foreign workers." The Labor Department, responsible for H-1B oversight, has attempted to clamp down on what it calls "H-1B dependent" companies through tighter enforcement of labor laws. But the agency has said it does not have the staff to closely police the program. In September, Labor's wage and hour division found that TEJ Technologies Inc. in Scotch Plains, N.J., had underpaid three H-1B employees. It ordered the company to pony up $52,224 in back wages. TEJ's address is a yellow split-level residence on a one-acre lot, a few miles from Little India. There is a children's swing set in the backyard, and a basketball hoop in the driveway. From here, TEJ filed for labor certifications to bring 38 foreign workers into the United States, saying it would pay them between $37,300 and $53,000 per year. Three other companies in central New Jersey, in addition to dozens throughout the nation, were ordered to pay back wages to H-1B employees in the last year. As Congress raised the limit on H-1B visas in the fall, the economy was shifting into a slower gear, and dot-com and other technology companies unleashed wholesale firings. Lucent Technologies Inc. in Murray Hill, N.J., the struggling telecommunications equipment company that says it will eliminate 16,000 positions through asset sales, retirements and firings, employs 2,000 H-1B workers, the company said. H-1B workers and employees who are U.S. citizens will be evaluated equally when layoffs are weighed, Lucent spokesman John Skalko said. Other companies that have used H-1B heavily and now are eliminating staff include Motorola Corp. and Nortel Networks. The H-1B program is not letting the U.S. labor market respond naturally to a persistent shift toward technology occupations, David Smith, the AFL-CIO's policy director, said. "We'd find more people looking to change their skills and take these jobs if the [wages] were showing a scarcity," Smith said. He said wages in the computer fields in the late 1990s were flat as employment soared. One reason for the Central Jersey concentration in H-1B visa holders is that old-line Northeast companies in finance, insurance and drugs have hired them. The second reason is Central Jersey's Indian business community, which has moved into body-shopping. Indian businessmen and businesswomen use contacts in their homeland to find candidates. They pay $3,000 to $6,000 to cover U.S. visa fees, to transport the visa holder to the United States, and to prepare the candidate for a job. That could include computer training. Some body shops ask their H-1B workers to sign agreements saying they will stay with the company for a number of months, enabling the body shop to recoup its initial investment. Federal lawmakers and businesses have portrayed H-1B workers as ready for high-tech employment when they arrive at the airport. But State Department officials found widespread fraud in one audit of H-1B applicants in the consular office in Chennai, India, which issues the most H-1B visas in the world. Applicants were claiming academic degrees they did not hold, the audit said. The audit was limited in scope and quickly phased out for budgetary reasons, leading critics to charge that it revealed only a glimpse of a program riddled with applicants making false educational claims. Body shop operators say they are supplying skilled workers in a tight labor market, providing fuel for the U.S. economy. They say the H-1B visa holders will travel to projects around the country and take assignments that U.S. citizens will not. They also believe a weakening economy will be good for their businesses: U.S. companies will eliminate full-time workers, but will not cancel software projects. The companies will turn to body shops. "I think it's better for us, that's the interesting part of this business," said Sumit Ganguli, an executive with Birlasoft Inc. in Edison. Birlasoft, the U.S. subsidiary of an Indian conglomerate, and a partner sought approvals with the Labor Department to hire at least 1,300 people through the H-1B program in the late 1990s. It has 400 employees, a "significant percentage" of them H-1B visa holders, Ganguli said. When the H-1B program was conceived, proponents did not believe it would become a vehicle to hire only foreign workers, said Charles Keely, professor of international migration at Georgetown University. "I don't think you'll find anybody who thinks this is the way the program should go," Keely said. He called the H-1B visa holders "a mobile workforce. You can hire and fire what you need. It's the kind of workforce in the past that we had in the construction trades." Keely said the incoming tide of H-1B visa holders has hurt U.S. workers by having their work transferred to lower-cost foreign employees. But the availability of cheap, skilled labor generated more jobs in the U.S. economy than would have been produced if the program did not exist, he said. Oak Tree Road in Iselin contains an Indo-Pak convenience store, vegetarian restaurants, Indira's sari shop, and the Bombay Chat House. The heart of Little India is a veritable H-1B hiring hall. On virtually every block is a body shop. In the basement of the Don Krempa real estate agency is Fortuna Technologies, which sought to hire 266 workers using H-1B visas in the late 1990s, saying it would pay its hires $38,500 per year, Labor Department data show. Raj Consultants runs its business a few blocks away, from a converted home. It sought to hire 163 foreign workers, telling the government it would pay many of them $45,000 per year. From Suite 300 of the Woodbridge Hilton, in furnished third-floor executive offices, eight companies sought approvals to hire hundreds of foreign workers on H-1B visas. Around the corner is an office building in Woodbridge that houses 12 companies that have attempted to bring in foreign workers on visas over the last several years. Polavarapu, of Numbers Only, works from the building. He said Central Jersey is swamped with visa holders in need of work. "There's a lot of people available here," he warned. "There's a lot of supply." _________________________________________________________________ Bob Fernandez's e-mail address is bob.fernandez@phillynews.com. ¸ 2000 Philadelphia Newspapers Inc.

-- K. (infosurf@yahoo.com), February 26, 2001