Date: Sun, 6 Jul 2008 23:51:56 -0700 From: Norm Matloff To: Norm Matloff Subject: it's not just Tata--it's Cisco! (and all the others) To: H-1B/L-1/offshoring e-newsletter The enclosed article tells an interesting story, illustrating how companies are becoming ever more brazen in their use of foreign labor, here and overseas. You should read it--but I won't comment on its main content. Instead, I wish to focus on one passage: # Nielsen's layoffs also drew attention from CNN's Lou Dobbs, who has railed # against the H-1B program. India offshore providers are major users of the # H-1B visa, with Tata getting 797 of the visas in 2007. Opponents cite the # visa's use in outsourcing to counter tech industry claims by Bill Gates and # others that the visa is used to hire "the best and the brightest" foreign # graduates of U.S. universities. Congress is currently struggling to find a # middle ground through legislative efforts to give a Green Card, or # permanent residency, to foreign nationals who receive advanced degrees from # U.S. universities. This is a standard line from the industry biggies, the Intels, Microsofts and so on: "Yes, there is abuse of H-1B by the Indian body shops, but we are responsible users of the program, hiring mainly foreign students at U.S. universities." This is extremely misleading. Aside from the fact that there is no reason why the foreign students should be the "good" H-1Bs while the ones imported directly from India are "bad," the central point is that the mainstream industry firms widely abuse the program too. A case in point was shown in my posting earlier today, with Cisco Systems. Cisco ran a job ad specifying that only American workers could apply--yet referred all applicants to one M.E. Clarke, who turned out to be with Cisco's immigration law firm, Fragomen, Del Rey, Bernsen & Loewy, LLP. It was a fake ad with a fake claim that the job was open only to Americans. This is a great, immediately understandable, public example that I will use frequently from now on, but all of us in this business have seen this happen many times over the years. When "TubeGate" came out--the videos of a well-known Pittburgh immigration law firm showing its clients how to exploit loopholes in H-1B and green card law--I published a partial list of the firm's clients, and pointed out that these were mostly mainstream firms in and around Pittsburgh, such as Westinghouse, Marconi, PNC Financial Services, Bayer, and so on. See http://heather.cs.ucdavis.edu/Archive/CohenAndGrigsbyPrevailingWage.txt WashTech has exposed several major incidents of duplicity by Microsoft regarding H-1B and offshoring. See http://heather.cs.ucdavis.edu/Archive/MicrosoftClaimBelied.txt http://heather.cs.ucdavis.edu/Archive/MicrosoftClaimBeliedMore.txt Get the picture? It's not just the Indian body shops; it's Cisco, it's Microsoft, it's everyone. As I've said before, it's just like the tax code. Every firm, large or small, takes full advantage of loopholes in the tax code, and they do the same for loopholes in H-1B and green card law. So if Congress is indeed trying to find a middle ground based on the premise that the mainstream American firms are responsible and the Indian body shops are the abuses, this won't solve the problem at all. As I have explained before, the "automatic green card" proposals for foreign students would have just as much adverse impact on U.S. citizens and permanent residents as would increasing H-1B. That so-called "middle ground" approach would in fact likely make things even worse, as it would create its own demand, with more and more foreign students coming here, attracted by free green cards. The above passage also says that we opponents counter the industry's claim that it hires "the best and the brightest" by pointing to the fact that many H-1Bs are used to faciliate offshoring. This is false. We do point to this fact, but as a response to another industry line, "If we can't import H-1Bs, we'll have to export the work itself, sending it offshore"--not as a counter to the industry's argument that the H-1Bs are geniuses. The latter claim is easily seen to be false, by simply looking at H-1B salaries, which (even accounting for underpayment) are nothing like genius-level pay. This has been known in rough form for years, and I quantified it in my recent CIS article; see http://heather.cs.ucdavis.edu/Archive/NotBestBrightest.txt Norm http://www.computerworld.com/action/article.do?command=viewArticleBasic&ar ticleId=9105518 Tax break fuels anger over outsourcing-related layoffs in Fla. Patrick Thibodeau July 01, 2008 (Computerworld) Nielsen Co., the media company known for audience measurement, has given up tens of thousands of dollars in local tax breaks this year after signing an outsourcing deal with an India-based offshore provider. The move, which has drawn negative reviews from local officials, came after the company announced it would lay off 117 workers at its global technology center Oldsmar, Fla. Although companies that hire outsourcing firms often try to limit the release of information about layoffs through employee nondisclosure agreements tied to severance and public statements, Nielsen was unable to do so in this case. That's because it received property tax breaks in 2001 to build a $100 million global technology center in Oldsmar. The tax breaks were pegged to the number of high-wage jobs -- those that paid at least $52,000 -- the company created. That forced Nielsen to disclose hiring details at that facility, effectively putting the employee count of the facility on the local political radar. In April, when the layoffs were reported locally, Oldsmar city council members responded angrily to the move, according to the minutes of one meeting (download PDF). One council member accused the company, its largest employer, of "making a joke of the tax incentive program," and another charged that Nielsen "had abdicated their responsibility as a corporate citizen." Adding fuel to the fire were local media reports, which publicized the layoffs and the council's reaction. Nielsen had about 1,200 workers at the facility when the incentive agreement was reached, an employee count that gradually grew to 1,700. But last October, Nielsen announced a 10-year outsourcing agreement valued at $1.2 billion with Tata Consultancy Services in Mumbai. The move was designed to allow Nielsen to integrate and centralize IT systems. That deal was followed this year with the news that 117 employees would be laid off. Although 50 of those workers have been hired by Tata, Nielsen last week announced it was cutting anotherr 170 jobs -- and some of those affected are training Tata employees to do their work. The company expects to have about 1,300 employees by year end at its facility, with the addition of another 250 or so contract workers. Gary Holmes, a spokesman for Nielsen, said the decision to pull out of the incentive program followed the Oldsmar city council's "second thoughts about the agreement" and the impact of all the attention on the layoffs. "It became kind of an emotional issue," Holmes said. Nielsen's layoffs also drew attention from CNN's Lou Dobbs, who has railed against the H-1B program. India offshore providers are major users of the H-1B visa, with Tata getting 797 of the visas in 2007. Opponents cite the visa's use in outsourcing to counter tech industry claims by Bill Gates and others that the visa is used to hire "the best and the brightest" foreign graduates of U.S. universities. Congress is currently struggling to find a middle ground through legislative efforts to give a Green Card, or permanent residency, to foreign nationals who receive advanced degrees from U.S. universities. Under the original 2001 agreements, Nielsen has received some $3.1 million in tax incentives for its Oldsmar facility, which includes $1.7 million in breaks from the state and $1.4 million from Oldsmar and Pinellas county. The local incentives run to 2016 and will depend on how many high-paying jobs remain in place during each year of the agreement. Holmes said Tata is helping the company move away from proprietary systems toward an infrastructure that integrates a variety of reports and data on one platform. No additional layoffs are planned this year, he said. Whether the issue of tax incentives is a closed matter, remains to be seen. After being asked about the issue, Oldsmar Mayor Jim Ronecker said in an e-mail that there are "continuing discussions' with Nielsen. He declined further comment. Despite the recent layoffs, local officials said the incentive program had done its job. Nielsen could have built its technology center somewhere else, said Mike Meidel, director of Pinellas County Economic Development. And even with the layoffs, the company had hired enough employees to continue to qualify for the tax incentives. "The incentive did everything it was intended to do," said Meidel. "We have more employees here today at higher wages than when the incentive began." Greg Rublee, an Oldsmar council member, said that Nielsen, by ending the tax incentive agreement, has "prevented anyone from looking over their shoulder." He criticized the H-1B visa program, saying it was never meant to be used as a way to replace U.S. workers. While the Tata employees are supposed to be paid prevailing wages, that pay doesn't account for retirement and other benefits that U.S.-based employees receive. "IT people all over the country should be fearful of this," he said.