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Summary:

The feds are expected to announce a record $35 million fine on Infosys for visa fraud later on Tuesday.

Passport immigration stamp

The U.S. is about to impose a fine of roughly $35 million on Infosys for immigration infractions, according to several reports. Infosys reportedly gave workers easy-to-obtain visitor — not work — visas before assigning them to big corporate clients across the country. The news was first reported by the Wall Street Journal (registration required) early Tuesday morning.

The issue is that H-1B visas — which allow foreign nationals to work for long stretches in the U.S. — are in short supply. Infosys apparently brought workers over under much easier to obtain B-1 visas, which cover shorter visits. That allowed Infosys to undercut competitors’ pricing. Infosys reportedly reached a settlement with the U.S. Attorney for the Eastern District of Texas. Infosys told the Journal it is cooperating with the probe.

Update: Earlier this month, Infosys acknowledged the probe in its second quarter financial reports. On October 11,  it said it was:

“in discussions with the U.S. Attorney’s office and other government departments regarding a civil resolution of the government’s investigation into the Company’s compliance with Form I-9 requirements and past use of B-1 visas. Based on the status of those discussions, Infosys has set aside a reserve of $35 million including legal costs. Because the discussions are ongoing, Infosys cannot provide additional details at this time.”

Immigration reform has long been a hot button issue among U.S. tech companies.  Many tech executives say limits on H1-B visas restrict their ability to hire top talent from outside the country. They tend to couch this in high-flying words about easier access to top technical talent is good for the country. The suspicion, however, is that they really want a  steady supply of affordable but highly trained labor.

Bangalore-based Infosys has about 30,000 employees in the U.S., according to this CBS news report. 

Update: Reached for comment, an Infosys spokespersons emailed this response:

“In response to reports attributed to Justice Department officials, Infosys is in the process of completing a civil resolution with the government regarding its investigation of visa issues and I-9 documentation errors. The resolution has not been finalized.”

Update: Infosys just sent a revised comment denying

“any claims of systemic visa fraud, misuse of visas for competitive advantage, or immigration abuse. Those claims are untrue and only unproven assertions. The Company’s use of B-1 visas was for legitimate business purposes and not in any way intended to circumvent the requirements of the H-1B program. No criminal charges have been filed against the Company and no court rulings have been issued.”

I will add comments from the U.S. agencies when they are forthcoming.

I’ve reached out to both Infosys and DHL and the State Department for comment and will update this report as needed.

Note: This story was updated at 6:57 a.m. PDT with Infosys comment and again at 7:54 a.m. with a revised comment.

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  1. Infosys brings in almost 8 billion a year in revenue. A fine of $35 million is not even a drop in the bucket to them.

    The abuse of the temporary visas (B-1, H1-B, etc) is widespread and has been going on for over a decade. The big Indian IT services companies are the worst abusers, but US services companies do it too.

    I believe it has a very large negative impact on US IT workers by artificially depressing wages.

    Anyway, nothing substantial will ever happen. When it comes to the US government, doing what is right for the American citizens is always the last priority. Even foreign companies have a higher priority.

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    1. I agree that U.S. companies are also abusers. in fact i’ve heard that some of them are now trying to untangle themselves from contracts w/ big outsourcers not so much because it looks bad (it does) but because these deals are really not profitable anymore. related story? i don’t know. but i’ll look into it.

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      1. Oh I think the entire IT outsourcing business model is being disrupted. Many people focus on the enterprise IT hardware market when they think of cloud disruption, but it is going to have just as big of an impact on the services businesses as well.

        More and more software is going S-a-a-S which eliminates the need for implementation, and management services. It also greatly scales back on the amount of configuration as S-a-a-S is much more of a “one size fits all” approach.

        If you look at the largest areas of IT outsourcing they revolve around the critical business applications like ERP, CRM, HCM, etc. All of these applications now have S-a-a-S competitors. That’s why the legacy companies like SAP and Oracle are in a state of panic, buying up S-a-a-S companies left and right. Its because S-a-a-S companies like Salesforce and Workday are “eating their lunch”. They (SAP, Oracle, IBM, Microsoft, etc.) will either offer all of their software products in the cloud within the next few years or they will go out of business.

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      2. One more more interesting topic for you, Barb. Many large US corporations do not work with independent IT contractors directly – only if you come from one of their “approved” vendors. Guess, who are these vendors? There are many more , smaller bodyshops who, as well, employ the same schema: find a proxy in Company B, make him interested in your proposition , become a preferred vendor of Company B.

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    2. Gatis Baltgailis Friday, January 17, 2014

      More than 1 million immigrants became legal permanent residents of the United States in 2012. While business in europe is growing faster than ever. Check out the opportunities in Latvia

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  2. This abuse is well known in corporate IT. Infosys and iGate routinely rotate out staff to the US, keeping a pool on site. These “tourist” spend their 3 month visit working at the US site, crammed into cheap apartments with their coworkers. They have bypassed US Labor laws and frankly the US DOL doesn’t care.

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  3. There is no such thing as hitech talent overseas. Poor Indians are looking to earn whatever, however, whereever, in dollars and perform menial jobs as H-1B’s This is the biggest fraud!!! In USA ALL types of hitech workers are UNEMPLOYED! tHIS IS HEAP PAID, FALSE TITLE JOBS SUCH AS NANNIES, UNDER GUISE OF hIb WITH PHONY ACADEMIC DEGREES.

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  4. infosys IS THE BIGGEST FRAUD FACTORY WITH THAT bugger pREMJI A gUJJU FRAUDSTER

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    1. You mad bro? Premji does not belong to Infosys; he belongs to Wipro.

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    2. Mike at least get your facts right. Azim Premji is the CEO of wipro not infosys.

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  5. I am sure offshoring industry experts and government policy makers are sure to spend time analyzing the implications of Infosys DOJ saga. Wonder if we will learn from the lessons here?

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