Mercury Series on Bodyshops, Fraud, and Indentured Servitude
Mercury Series on Bodyshops, Fraud, and Indentured Servitude
Date: Thursday, September 18, 2003 2:34 PM
JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
It's been a long time since the Mercury did good investigative
reporting on H-1B but these articles were worth the wait. There is one
thing missing - very little mention was made of the impact all this
fraud is having on American workers. These articles try to make the
case for allowing foreign workers to get green cards but that will not
be "manna from heaven" for unemployed U.S. citizens.
During the lobbying for the current legislation, high-tech
companies set aside their desire for green-card reform for
the more pragmatic goal of an increase in H-1Bs.
''We'd love to see the green-card process streamlined,'' said
Mary Dee Beall, Hewlett-Packard's official in Washington, D.C.,
in charge of H-1B matters. ''Since HP's practice in hiring
foreign workers is for them to become permanent residents,
it would be manna from heaven if that would happen.
The last article does mention training for American employers, but the
hypocrisy of the employers is never questioned:
''You don't want your help desk being manned by a computer
science graduate,'' said William Aspray, executive director
of the Computing Research Association.
Companies don't seem to have a problem hiring H-1Bs with fraudulent
degrees and experience, so why do they have a problem hiring
overqualified Americans that were displaced? Most of the companies
interviewed said that the fraudulent H-1Bs eventually learn enough to
do a good job, and yet they constantly complain that American workers
don't have enough training.
These documentaries are excellent despite the obvious oversight on
Americans because they explain how the H-1B bodyshops indenture their
employees and routinely exploit and defraud both the visa holder and
our immigration system. If you wonder why fraud is rarely investigated
these articles have the answer to that:
The Immigration and Naturalization Service has only 40
staffers at its service centers nationwide to investigate
fraud in H-1B and all other visa applications.
But the ability of the INS to detect and prevent fraud is
limited and won't improve with the added workload that comes
with the higher cap on H-1Bs. Visa applications of all types
exceed 4 million each year, and the INS requires its workers
to process a certain number of H-1Bs every day, said Jimmie
Ward, assistant director for operations at the INS California
center. When it comes to spotting phony middlemen, he said,
''It's like the finger in the dike."
Two issues are worth reviewing before you read these articles:
1) Benching
H-1Bs are supposed to working or they lose their visa status. Benching
is the practice of putting H-1Bs into a layoff status. Companies were
only allowed to bench H-1Bs for 30 days. AILA convinced Congress to put
a loophole in the law that allows for 60 day benching but this isn't
enough for the bodyshops. This rule is routinely flaunted by bodyshops
because the INS discourages benching but rarely enforces the rule.
2) Liquidated Damages
If an H1B worker leaves his company that company may sue him for
liquidated damages. These damages are whatever the company says the
project will lose when this employee leaves. The threat of being sued
for liquidated damages further indentures the H-1B to his or her
employer. The first article describes how bodyshops indenture their
H-1Bs by forcing them to sign contracts with monetary penalties if they
leave the job before a specified period of time. This is illegal but
the bodyshops have learned that it's easier to defend these cases in
court if they're claimed as compensation for ''liquidated damages.''
*** One more thing ***
I would like to get a copy of the Indian movie "Dollar Dreams". Contact
me if you can help.
http://www.siliconvalley.com/mld/mercurynews/news/6796950.htm
H-1B Boom
http://www.siliconvalley.com/mld/mercurynews/news/6797668.htm
Workers desperate as visa demand rises
http://www.siliconvalley.com/mld/mercurynews/news/6797567.htm
Visa exposes workers to abuse and fraud
http://www.siliconvalley.com/mld/mercurynews/news/6796950.htm
Posted on Wed, Sep. 17, 2003
H-1B Boom
MIDDLEMEN THRIVING IN LUCRATIVE INDUSTRY WHILE FOREIGN WORKERS COMPLAIN
OF ABUSE
By Sarah Lubman
Mercury News
The high-tech industry's voracious demand for workers has spawned a
lucrative new middleman industry, complete with its own hierarchy,
opportunity and abuse.
The creation of such an industry was hardly the aim of the H-1B. But by
now, among the visa's biggest users are the hundreds of contractors,
ranging from large public companies to tiny job shops, that obtain
visas and find work for foreign engineers.
While many middlemen have good reputations, others, often smaller ones,
treat their foreign workers as cheap commodities and have become known
derisively as ''body shops.'' Such shops, whose names are circulated
among workers on e-mailed blacklists, are reviled for illegally
underpaying workers, holding their passports, and intimidating them
with contracts that demand tens of thousands of dollars if they leave
for another employer too soon.
These contractors say they are defending themselves against H-1B
workers who otherwise want to jump ship for better opportunities. But
the foreign workers quickly see that middlemen often make promises they
don't keep.
Shailesh Grover, 31, who is now director of intranet services at Next
Card Inc. in San Francisco, was promised a $42,000 annual salary by a
labor contractor who then tried to pay him just half. Grover came to
California in 1996 as an H-1B worker, sponsored by Ravel Software Inc.,
a now-bankrupt contractor. Ravel brought Grover here and put him up in
a two-room apartment with six other H-1B workers.
But Ravel didn't have a specific job for Grover, or for many of its
other H-1B engineers. It shopped them to other placement firms, which
in turn farmed them out to large clients.
Along the way, each firm would get a commission, which was added on to
the hourly rate charged to companies.
Ravel documents show that it charged commissions of as much as 70
percent over the base cost it paid for a programmer. While that's how
job contractors make their money, workers often resent it.
Worse yet, while Grover waited for work, Ravel tried to pay him half of
their agreed upon rate. More aggressive than many other workers, Grover
refused to accept that. He demanded -- and received -- his full salary,
and urged others to do the same. Ravel Chairman Bhutendra Patel said he
wasn't aware of people being underpaid.
''It's worse than a pimp situation,'' Grover said. ''It's embarrassing
sitting in a room, your resume is going from one body shop to the next,
and you don't know until the 10th interview who the end client is.''
Visas belong to job, not worker
The H-1B visa opens the door for middlemen. That's because, like all
temporary work visas, it belongs to the job and only secondarily to the
worker. Some workers are employed directly by major corporations. But
many are brought over and hired as full-time employees of middlemen.
The H-1B contracting industry blossomed in the 1990s. The U.S. computer
industry was increasingly shifting to using temporary staff and outside
contractors. At the same time, qualified engineers were emerging from
other countries, especially India, which was rapidly developing its
software technology sector. While some middlemen specialize in Chinese
and Russian H-1B workers, about 75 percent of H-1B programmers and
systems analysts are from India, according to a recent Congressional
Research Service study.
A recent study by Georgetown University found that based on surnames,
the ''likely ethnicity'' of the chief executives of nearly two-thirds
of the top 100 companies that hired H-1B workers in 1998 was South
Asian: Indian and Pakistani.
For the H-1B job contractor, the pipeline starts overseas, where
middlemen ''shop for bodies'' by advertising in newspapers and on
billboards. The contractor applies for the H-1B visa in the name of a
specific worker for a job requiring certain skills. Usually, the
contractor pays for the visa application, processing fees and the cost
of transportation to the United States, and some provide initial
housing in the United States. Others charge their H-1B workers rent for
lodging in crowded apartments and for daily transportation to and from
the contractor's office.
A worker is hired as a full-time employee of the middleman, which
generally pays salary and benefits. Once here, he is assigned quickly
to the specific job the middleman had contracted to fill, from
programming for a high-tech client to data processing for a bank.
Sometimes he becomes part of a roving army of foreign temps, his life
controlled by the middleman. The contractor may send him to any state
for any length of time, on demand for jobs ranging from systems
integration to data entry. When a given project ends, the ''bodies''
return to the body shop, which places them with the next client. If a
worker wants to hire on with a different company -- for example, a
client that offers a better job -- that new employer needs to apply for
a new H-1B visa.
Some contracting firms collect standard headhunting fees from their
corporate clients. Mostly, though, a middleman makes money by charging
corporate clients an hourly rate for its workers and then paying the
workers much less. Court documents show that middlemen charge $70 an
hour for an H-1B programmer or systems analyst with four to five years
of experience. In Silicon Valley, people in the industry say it can
range from $90 to more than $100 an hour. Of that, the worker typically
is paid based on an annual salary of $60,000 to $70,000 -- a rate that
works out to about $35 an hour.
Given that kind of return and the assurance of steady demand for the
foreseeable future, the number of middlemen has grown rapidly. ''Anyone
in this industry has seen this is a very lucrative industry,'' said
Sanjeev Sahani, who used to work at an Indian placement agency and now
works at Oracle as a senior product manager. ''It has no entry values;
I can set up a shop tomorrow.''
Contractors are supposed to have jobs waiting for their H-1B workers,
and workers are supposed to be continuously employed by a client of the
middleman. Often, though, that's not the way it works.
Some contractors obtain H-1Bs for workers by claiming to be a final
employer, rather than the middlemen they really are. Others have an
initial job for their worker, but when it ends, keep him waiting for
another assignment -- a practice known as ''benching,'' which the
Immigration and Naturalization Service discourages.
The Mercury News spoke with more than a dozen engineers and programmers
across the country on H-1B visas who'd received less pay than their
contract had stated while benched or while working full time. Anu
Gupta, an immigration attorney in Fremont, said she receives two to
three calls a week from workers complaining of exploitation. The
Mercury News also interviewed six programmers who have fought attempts
by job shops to collect as much as $75,000 in compensation for leaving.
Most didn't want to be publicly identified for fear their employers
would retaliate and jeopardize their efforts to become permanent U.S.
residents.
The Department of Labor is well aware of problems in the growing
middleman industry. Complaints from H-1B workers about wages have
increased, totaling 103 in the first eight months of fiscal 2000,
compared with about 50 a year in recent years.
The department has closed 75 cases in the high tech industry, finding a
total of $1 million in back wages due to 326 high-tech workers. A 1996
audit by the department's inspector general found that 19 percent of
H-1B employers were paying less than they had promised.
To determine the current extent of misrepresentation of wages by
middlemen, the INS in July began a study of a random sampling of H-1B
applications.
But naivete and fear leave foreign workers reluctant to challenge their
employers, and the labor department can't investigate unless people
complain, said John Fraser, deputy administrator of the department's
wage and hour division. ''It's a considerable concern to us.''
Tech workers from the Indian subcontinent who haven't had any problems
with their employers tend to regard reports of body shop abuses as
exaggerated, and are more concerned about the difficulty of getting
permanent residency in the United States.
''If you ask a thousand people, maybe you'll find 10 people who were
treated that way,'' said Shailesh Gala, a senior software engineer with
CDI Corp. in New Jersey who came to the country on an H-1B visa and
worked for a year at a job-contracting firm.
Some job contractors say benching happens mainly because tech skills
wax and wane with the market: Y2K repair skills were urgently needed,
for example, but are now passe. Now, it's Java and Web skills that are
hot. Some recruiters on the receiving end of contract tech labor
marketing say the programmers may not measure up in other ways.
''Our experience was that people were technically competent, all right,
but not experienced in the ways of U.S. business or any business to be
able to go in, meet with users and design a solution,'' said Gary
Partridge, president of Partridge & Associates, a Glendale firm that
places information-technology temps with Fortune
To Rahul Roy, president and chief executive officer of MirrorPlus
Technologies, a Sunnyvale software startup, it's all relative. ''People
who come here are a million times better off than in India,'' he said.
Even programmers who have had good experiences, though, describe a
general pattern: Indian tech workers come to the United States thrilled
to make far more than they could ever hope to earn at home. But they
quickly realize how big a cut the middleman is taking. ''Once you've
spent a certain number of years in the U.S. your needs change, you
realize you're worth three times more,'' said one programmer who came
here in 1998 and declined to be named.
Restrictions stall careers
Middlemen often include restrictive clauses in contracts to keep H-1B
tech workers from seeking better-paying jobs. One software engineer
said his contract required him to pay 30 percent of his annual salary
if he joined a client within six months of leaving his employer.
In California, such restrictions often fly in the face of state labor
law and don't stand up in court. Robert Merges, a University of
California-Berkeley law professor who teaches courses on employee
mobility, said middlemen may throw restrictions in anyway to intimidate
workers into staying.
''That could explain why consulting companies put it in standard
agreements with people working on foreign-worker visas who aren't as
sophisticated, don't know it's a useless piece of verbiage and may
actually believe it,'' he said.
Other middlemen have learned that contracts that demand large payments
from workers who leave before a certain period of time are easier to
defend in court if they're claimed as compensation for ''liquidated
damages.''
That's what happened with Kavyananda Sidbatte. A San Jose
software-training and consulting company named Software Technology
Group Inc., or STG, offered him a job in March 1997 and asked for his
passport and original degree certificate for visa processing. Two
months later, STG told Sidbatte that his visa had come through and that
he would be traveling to San Jose.
When Sidbatte arrived in New Delhi, ready to fly to the United States,
STG presented him -- for the first time -- with an employment agreement
that said he would pay $25,000 to STG in liquidated damages if he left
the firm before two years. Sidbatte had already quit his prior job and
was 2,000 miles from his Bangalore home. So he signed, although he
later said he hadn't really understood the implications of the
contract. Only after he signed were his passport and degree returned.
ix days later, he flew to San Jose.
Two years later, the contract he had signed landed him in a
breach-of-contract lawsuit with STG. Sidbatte had been hired at a base
salary of $42,000 and left STG after 13 months to work for a client,
who gave him a $20,000 raise.
STG sued Sidbatte and another H-1B worker in a similar situation,
Srinivas Gaddam, for $25,000 each plus legal costs. During the trial,
STG justified the damages with rupee-denominated receipts for Indian
newspaper advertisements, hotel bills and travel expenses from three
1997 recruiting trips, although Gaddam and Sidbatte were among hundreds
of people interviewed.
CEO Yogesh Vaidya said in a deposition that he had nothing to do with
preparing the original offer letters that hadn't mentioned liquidated
damages.
In the end, the company won: in January of this year, the jury sided
with STG. The two engineers recently reached a compromise with STG to
pay back 60 percent of the damages.
In a telephone interview later, Vaidya said STG held passports and
diplomas to prevent applicants from applying for another visa through a
different employer.
Other companies have, in fact, lost money after prospective hires
shopped around for duplicate H-1B visas.
''I burned my fingers on that,'' said Murthy Avvari, vice president of
Ascendsoft, a medium-sized software projects consultant that uses H-1B
workers in Fremont. Ascendsoft doesn't restrict its workers' freedom
although up to half its prospective H-1B hires fail to show, Avvari
said. Ascendsoft has applied for H-1B visas and waited months for them
to come through, only to discover that candidates had found other jobs
by applying through a different company that used a faster
visa-processing center on the East Coast. ''I ended up wasting my time,
my attorney money.''
When restrictive clauses fail to keep programmers from straying, job
contractors may seek compensation elsewhere. If a worker is hired by
another recruiter or a high-tech company, it is a common job-shop
tactic to charge a commission of tens of thousands of dollars in
''hiring fees.''
''It eats up any placement fee we'd get,'' said Elise Clark, president
of Lloyd-Ritter Consulting in Mountain View, a unit of Personnel Group
of America. ''We've been caught like that a few times. That was a red
flag: Be careful when you work with these agencies, and find out what
kind of contract the programmers are on.''
Middlemen legally are required to pay workers on the bench at the
prevailing wage rate even while they are waiting for work. And many do.
But many others don't. In such cases, tech workers on the bench
typically receive anywhere from half-pay to weekly stipends of $150 for
months. In the worst cases, a worker receives nothing at all. One
24-year-old Punjabi programmer in New Jersey said he paid $400 to sleep
on his employer's apartment floor for two months, was never paid or
placed on a project and never even saw an office. The telephone at the
New Jersey job shop for which he worked has been disconnected.
The practice of benching contract programmers on half-pay or a small
weekly stipend for weeks or months at a time is so common that many
Indian tech workers know of someone, either directly or through friends
and acquaintances, who has gone through it.
Puneet Dikshit, 32, came from Delhi to California in 1994, with a
master's degree in computer science, two years of work experience and
faith in his new employer. What he didn't turn out to have was a
specific job.
For the next three months, he waited for an assignment and received
half the $145 average daily salary he had been promised. Even after he
started working, he received only $60 to $70 a day for several weeks.
''They called it some sort of a transition, and there was ignorance on
my part about the law,'' he said.
After a few months, he wised up. He quit to join another Indian-run job
contractor despite what he characterizes as ''harassment'' to stay on
from the middleman company that hired him, ICIM International Inc.
The chief executive of U.S. operations for ICIM at the time was Arun
Tolani, who said he doesn't remember the case and never paid a
transitional salary, and that the company has always complied with the
law. (ICIM changed its name this year to Zensar Technologies Inc.)
Dikshit stayed with his new employer until this year, when his visa ran
out. Now he lives with his family in Alberta, Canada. Under the new
legislation, he probably could have stayed.
Mercury News staff writer Pete Carey contributed to this report.
http://www.siliconvalley.com/mld/mercurynews/news/6797668.htm
Posted on Wed, Sep. 17, 2003
Workers desperate as visa demand rises
PREDATORY CULTURE OF FRAUD, ABUSE EMERGING IN INDIA
By Mark McDonald
Mercury News
They come from cities and villages all over southern India, arriving in
the pre-dawn darkness to find a place in line on the sidewalk. They
wait quietly, snoozing in the humidity or eating from little packets of
rice and paper cups of homemade yogurt. Every now and then, fidgeting,
and just to make sure, they re-check their papers and passports.
By mid-morning, when the side door to the U.S. Consulate General
finally opens, there are several hundred people in line, and sometimes
as many as 2,000. Many have come to apply for an H-1B visa, the
category that allows certain specialty workers to live in the United
States for as long as six years at a time. H-1B applicants must be
sponsored by U.S. companies, and virtually all the H-1B visas given to
Indians are for positions in high tech.
There's an unmistakable desperation among those in line, a desperation
due in part to a limit on the number of H-1B visas available each year.
Regardless of his or her place in line, everyone's application will get
reviewed and processed, but still, nobody wants to risk getting
squeezed by the visa cap. For many Indians, an H-1B holds the promise
of a lifetime of savings in exchange for a few years of work in the
United States.
On the face of it, this exchange seems fair enough: U.S. tech firms get
a steady supply of qualified Indian engineers and programmers, while
the workers get prime-time salaries, cutting-edge experience and First
World comforts.
In October, Congress raised the limit on the number of H-1Bs available
each year to 195,000 for the next three years. It also changed some
requirements and raised some fees to help the Immigration and
Naturalization Service speed up processing and handle a huge backlog of
applications. But the new legislation failed to tackle abuse in the
middleman industry, which has grown with every expansion of the H-1B
program.
That abuse in the United States has its counterpart in India, where the
appetite for H-1B visas has spawned a predatory culture of fraud and
forgery that labor, police and diplomatic officials are only beginning
to address. In some cases, unscrupulous employment consultants take
advantage of well-meaning visa applicants. In other cases, unqualified
applicants are funneled into the United States by middlemen who help
them fake academic degrees and pad their resumes in order to win H-1B
visas. The U.S. State Department estimates that one-fifth of the H-1B
applications it received in India last year contained false
information.
Sunil Raj is one of those who succumbed to the frenzy. He said he was
duped by two New Delhi firms into spending his life's savings of $6,000
-- an enormous sum here, equivalent to a dozen years of pay for the
average Indian -- for a training course, an H-1B visa and a guaranteed
software job in the United States.
Raj, 30, quit his job as a marine engineer and got a little bit of
training as a programmer. His H-1B visa came through, but the
''guaranteed'' job turned out to be a fiction. Raj decided to go to the
United States anyway, leaving his pregnant wife behind in Mumbai,
formerly Bombay. He camped out with a string of relatives in four
states, missed the birth of his daughter, and spent 11 months out of
work. He applied at two dozen companies, he said, but they all needed
immediate help. None were willing to wait three or four months for the
transfer of his visa from his previous company, a delay that should
ease under new legislation passed by Congress in October.
Worker left bereft
Finally, broke and broken, Raj returned to India. ''I have lost a year
of my life, but what's worse is that I've lost hope,'' he said. ''I
won't ever try to go back to America, not after this experience.''
Raj's application was largely legitimate, although he should have had a
real job waiting for him stateside. He was simply too smitten, he said,
with his own dreams and ''the management sweet talk.''
''There are lots of unscrupulous guys out there,'' said T.
Venkateswarajan, the head of Track International, a small but reputable
recruiting firm in New Delhi. For 300,000 rupees ($7,000), he said,
unscrupulous firms will obtain an H-1B using false documents.
''Everybody knows it's a racket, but it happens everywhere. Every tech
worker in India wants the U.S., by far. It's jobs in the U.S. that are
driving this whole thing.''
Many of those jobs in the United States are a perfect fit for India's
well-educated, English-speaking, technically inclined workforce.
And the vast majority of H-1B workers are legitimate. Some have
attended graduate school in the United States, and many are hired
directly by major U.S. companies for jobs requiring advanced skills.
Indeed, with so many top-flight workers heading to the United States,
some experts in India worry that India might be heading for a high-tech
''brain drain.''
But U.S. consular officials said last year that 21 percent of H-1B
applications it received contained some kind of fraudulent information
-- forged college degrees, doctored resumes, phony work experience or
phantom job offers. That figure more recently dropped to 11 percent,
with an additional 3 percent of applications categorized as
''suspect.''
''It's easy enough to go out and buy a whole package of phony documents
off the street here, and, quite frankly, some of them look pretty
good,'' said Clyde Jones, chief of consular services in Chennai
(formerly Madras), the busiest of the four consular offices in India.
''Each city has its own ghetto where you can get these things.''
Experts say the visa fraud is most rampant in southern India, which is
the hotbed of the country's high-tech boom. Hundreds of Indian and
multinational computer companies have headquarters in the south,
particularly in the cities of Bangalore, Chennai and Hyderabad -- which
advertises itself as ''Cyberabad.''
H-1B applications from the region are processed at the U.S. Consulate
General in Chennai, which issues more H-1Bs than any other consulate in
the world -- about 30,000 last year out of the worldwide total of
115,000. Indian nationals received 44 percent of all H-1Bs issued
worldwide last year, virtually all of them for high-tech jobs.
Most of the checking of the documents in H-1B applications is done at
INS offices in the United States, although consular operations like
Chennai, which has a three-person anti-fraud unit, also can sniff out
fake degrees or doctored resumes, and then recommend further INS
scrutiny.
The consular staff in Chennai, which handles as many as 1,000
applicants a day, consists of just five American supervisors and 15
Indian staffers. They work amid a sea of laundry tubs that are stacked
on the floor, in hallways, on desks and atop filing cabinets -- green
tubs for H-1Bs, red for previously rejected applications, teal for
visas that don't require personal interviews, blue tubs for everything
else.
Within the realm of visa fraud, there are two basic scenarios: either
the visa applicant tries to cheat by falsifying his application, or the
applicant himself is cheated by an unscrupulous training school or an
employment consultant known derisively as a ''body shop.''
Most individual applicants are hardly sophisticated enough to fake
their way into landing an H-1B on their own, in part because companies
-- not individuals -- must initiate the visa application. To that end,
there is now a whole complement of fraudulent training courses, visa
''facilitators,'' interview coaches, document forgers and phony shell
companies that prey on ambitious young Indians dreaming of tech jobs in
the United States.
Here's how the scheme works at its most basic:
A shady recruiter in India takes several thousand dollars from Mr.
Unqualified Dreamer to provide him with some hurry-up computer training
and an H-1B visa. A fake degree and a phony resume are thrown together,
and then the recruiter pays a shell company in the United States to
offer the applicant a job as, say, a computer systems analyst.
The U.S. company has been set up to provide the illusion of a real
employer at the other end of the visa pipeline. Such companies are
often run by Indians living legitimately in the United States on H-1Bs
or green cards. The offer letter is written on the shell company's
letterhead, and if the offer appears genuine to an INS examiner in the
United States, then the application probably will be approved.
There has been an explosion of computer-training schools all over
India, thousands of them, in big cities and small towns, with sexy
names like EduSoft, TechnoCampus or the Software Finishing School. In
reality, many of these ''schools'' consist of little more than a
sweltering office, a few dusty computers, some photocopied training
manuals and an ill-prepared instructor.
Unregulated by state or local governments, the schools purport to give
quick and cutting-edge training in the latest computer skills. And so
strong is the urge to become computer-savvy and visa-eligible that many
Indians can't see the fraud for the stars in their eyes.
A few standard-bearers
''In Hyderabad, particularly, there are lots of fly-by-night operations
coming into training because they see big bucks,'' said Sudip Banerjee,
chief executive for operations at Indian software firm Wipro. Wipro
hires hundreds of tech workers each month, and obtains H-1Bs for those
who are sent to work in the United States for Wipro clients. ''We're
very careful about who we take, because there just aren't any standards
for anyone claiming to be a 'training school.' ''
For a time, training in the programming language COBOL was all the rage
at the pop-up schools. Then it was C++, then ERP, then SAP -- all the
acronyms that correspond to the latest and hottest skills being
demanded by tech firms in the Silicon Valley and elsewhere.
The schools boldly tout their courses with newspaper advertisements
that feature the Statue of Liberty or roadside banners festooned with
billowing American flags. The ads use seductive words such as
''passport,'' ''careers'' and ''fortune.''
But training courses are now promising much more than just training:
More and more there are the additional guarantees of both an H-1B visa
and, say, a $50,000-a-year software job in the United States. All too
often, however, the training turns out to be haphazard, the visas don't
come through or the jobs don't actually exist.
A new movie in India captures the frenzy -- and questions the wisdom --
of the headlong rush by young Indians toward jobs in the United States.
The film is called ''Dollar Dreams.''
''My case is dollar dreams, yes, but I'm not blaming the U.S., I'm
blaming the middlemen here in India who take advantage of us,'' said
Raj, the Mumbai man who says he was victimized by a training-school con
in New Delhi.
Stars in their eyes
Raj emptied his bank account of $6,000 for a training course arranged
by a company called ProEnhance. Another Delhi-area company, FCS
Software Solutions, was to provide the actual training, which was to be
followed by a job at the New Jersey branch of a Milpitas company called
Ace Technologies.
The initial training was incomplete, Raj says, and he eventually had to
file a police complaint just to get the company to start working on his
visa application. Even though the visa did come through, there was no
job waiting -- not in New Jersey, not in Milpitas, not anywhere.
But Raj headed overseas anyway, paying his own way and hoping to catch
on with some other computer firm stateside. He traveled throughout the
East and Midwest looking for work, but nothing materialized. He finally
retreated back to India last summer.
Raj isn't entirely defeated. He and his lawyer are continuing to press
a case in Consumer Court against ProEnhance and FCS, although
ProEnhance is already out of business, and FCS denies any complicity in
the case. The chief executive officer of FCS says his firm has no
relationship whatsoever with Ace Technologies, the New Jersey company
that was supposed to supply Raj with the job.
''We're totally separate companies,'' FCS owner Dalip Sharma told the
Mercury News in an interview at the company's headquarters in Noida, a
New Delhi suburb. ''There's no business relationship there at all.''
But FCS's own corporate literature says it's a wholly owned subsidiary
of Ace Technologies and, further, that it acts as ''the arm for Ace
Technologies for filling their demands for software professionals . . .
in the U.S.''
And one other thing: Sharma and the owner of Ace Technologies are
brothers.
Chandra Shaiker of Ace Technologies said his brother's company is
independent and any company literature to the contrary is wrong. He
said Ace Technologies has no relationship with ProEnhance. ''We have
heard the name, but we have not ever dealt with that company.''
Many job contractors are genuine enterprises that find qualified Indian
techies to work on a contractual basis at companies in the United
States.
And most H-1B applicants know precisely how the visa system works, how
the shady consultants operate and how the risks can stack up against
them in the United States. In their desperation to get overseas, most
applicants readily sign restrictive contracts that bind them to
consultants.
But questionable linkages like that of ProEnhance, FCS and Ace
Technologies are not uncommon in the H-1B process. Some of them combine
shady training courses with the unscrupulous ''body shops'' that either
defraud Indian workers outright or falsify documents to procure H-1B
visas for unqualified applicants who are willing to buy their way to a
visa.
Bulking up resumes
The whole process of fraud typically starts with resume falsification,
especially the embellishment of work experience. If a job applicant
doesn't have the right skills for a job opening in the United States,
many consultants are quick to add some fictional torque to an
underpowered resume.
When Ashish Singh was looking for a U.S. tech job, three separate
recruiting firms in India pressured him to doctor his resume.
Specifically, they wanted him to delete his master's degree and replace
it with two or three years of non-existent software experience.
''I didn't like that,'' said Singh, 26, now a software engineer at
Mirror Plus Technologies in Sunnyvale. Outraged and offended, he
refused to go along with the demands. ''I was proud of getting my MBA.
It was on my resume in bold.''
Degree forgeries are another large part of visa fraud. Small rings of
forgers are busted now and again, but Indian police and consumer
agencies have been unable to control the abuses.
Forgeries were so out of control in southern India a few years ago that
the Chennai consulate had to appeal to Indian software firms and trade
associations for help. What they came up with was code-named Project
Olive, for Online Information Verification Engine -- a database of
legitimate graduates from colleges in the city of Hyderabad and the
tech-crazy southern state of Andhra Pradesh.
Jones, the Chennai consular chief, credits Project Olive and his
anti-fraud unit with the sharp reduction in visa fraud over the past
year.
Throughout Andhra Pradesh, became a favorite victim of the forgers.
Fake Osmania degrees were found easily enough by whispering to a few
well-connected stall-keepers at the sprawling Laad Bazaar in Hyderabad.
They were so widely copied and circulated that the school's legitimate
graduates were virtually blacklisted and routinely had their visa
applications delayed or denied.
Sudip Banerjee, the operations chief at Wipro, helped develop Project
Olive.
''We ranked universities on their credibility,'' Banerjee said, ''and
when you would see Osmania in someone's file, a red flag would go up.''
Osmania sent the names of all its tech and engineering graduates to the
Project Olive database, the better for the consulate to be able to
verify degrees. And the school also developed new diplomas.
''We knew there was a big problem with people forging our diplomas,''
said D.C. Reddy, the vice chancellor at Osmania. ''The diplomas were
printed on normal paper, cheap paper. But we worked with the police to
take timely measures, and the diplomas now have watermarks, holograms
and other security features.''
If diplomas and resumes can be faked, so, too, can job offers.
Advice: Keep tabs
An H-1B applicant might have a legitimate college degree and the
required two years of appropriate high-tech experience. But the third
part of the document equation is a job offer from a U.S. employer.
In about half the cases of H-1B fraud in India, U.S. officials say, the
offer letter is phony.
Experts say the INS is simply too understaffed to check to see if every
job offer is real. And the Department of Labor isn't authorized to
investigate job offers, only working conditions after a job has begun.
''If it was up to me, I'd give the Labor Department more authority to
check on the body-shoppers and whether the jobs really exist,'' said
Jones, the Chennai consular chief.
Jones said most of the bigger companies have a good track record with
his office. Indeed, applicants from the largest tech firms usually
don't have to personally appear at the consulate as part of an
''express visa'' program. Jones said 235 companies are on the express
visa fast track.
''I'm not worried about Microsoft and Cisco or the other big
companies,'' said Jones. ''It's the start-up companies that may or may
not exist: Somebody's got a basement and a computer, and they're hiring
25 people as 'computer consultants.' ''
Mercury News Staff Writer Sarah Lubman contributed to this report.
http://www.siliconvalley.com/mld/mercurynews/news/6797567.htm
Posted on Wed, Sep. 17, 2003
Visa exposes workers to abuse and fraud
NEW LEGISLATION EASES WORKER SHORTAGE, BUT DOESN'T FIX PROBLEMS
By Pete Carey
Mercury News
When Congress last month nearly doubled the number of H-1B visas for
temporary foreign workers for the next three years, Silicon Valley's
high-tech companies cheered. But the lawmakers' quick fix did nothing
to tackle the fraud and abuse that plague the program and little to
prevent backlogs that leave workers and companies in limbo.
Congress ''didn't belly up to the board this time,'' said B. Lindsay
Lowell of the Georgetown University Institute for the Study of
International Migration in Washington, D.C., who recently completed a
study of the H-1B, which has brought in nearly 300,000 high-tech
workers since 1992.
Instead of just increasing the number of temporary workers who ''have
limited rights and can be deported at a whim,'' Lowell said, Congress
should have overhauled the system for giving H-1B workers green cards,
which grant permanent residency. ''What they've done will exacerbate an
existing problem.''
Under pressure from the tech industry, Congress raised the limit on
H-1B visas to 195,000 per year from 115,000. But Mercury News reporting
nationwide and in India found that underlying vulnerabilities remain:
Some U.S. labor contractors intimidate and underpay H-1B workers, yet
the Department of Labor lacks broad investigative powers. The
Department of Labor has recovered more than $1 million in back wages
due more than 300 information technology workers. Officials say they
could do more if they could subpoena business records and respond to
leads beyond workers' complaints.
H-1B visa fraud is not uncommon, ranging from academic degrees faked
overseas to phony job offers in the United States. The Immigration and
Naturalization Service has only 40 staffers at its service centers
nationwide to investigate fraud in H-1B and all other visa
applications.
INS processing of H-1B visas has repeatedly stalled under months-long
backlogs, causing uncertainty and disruption for workers, their
families and companies. By raising the cap, the INS will have tens of
thousands more applications to process, and officials say that, at
best, the backlogs will run into next year. Although the new
legislation raises fees, that won't be enough to upgrade systems,
including a computer system so outmoded that the agency literally lost
count and issued an extra 20,000 visas by mistake last year.
The H-1B visa program is no longer working the way it was supposed to,
and the green-card system is breaking down. The H-1B was created to
help companies cope with periodic shortages of labor by temporarily
hiring experts from abroad for specific jobs that couldn't be filled
locally. In fact, many companies now rely on the H-1B as a way to
assure a pool of available, flexible, and often cheaper workers. And
workers use it as a circuitous route to a green card. ''If we could get
the immigration service to function, a lot of pressure would come off
the H-1B program,'' said Rep. Zoe Lofgren, D-San Jose, a member of the
House immigration subcommittee and a leader of the drive to increase
the H-1B visa cap.
H-1Bs have become valley mainstay
With the H-1B, Congress in 1990 updated a previous temporary work visa
by adding a time limit and a cap on the number of visas issued each
year, and no longer requiring that visa holders promise not to try to
stay permanently. Today, industry likes the visa because it solves
short-term hiring difficulties, and foreign workers love it because of
its promise of U.S. citizenship
Proud of their contribution to the high-tech boom and the strength of
the U.S. economy, H-1B workers have become a fixture in many Silicon
Valley workplaces. Possibly 100,000 H-1B workers live in Northern
California today, putting in the long hours demanded by the high-tech
industry's hectic pace, and even going on to found or co-found major
companies. About 420,000 H-1B workers are in the United States now, as
many as half of them computer specialists, according to the Georgetown
study.
Nearly half the top 100 companies that used the most H-1Bs in 1998 were
based in California and New Jersey, with 14 percent based in San Jose,
according to another Georgetown study. Four-fifths of the top companies
were in the information technology business.
Some of the most sought after H-1B workers are employed directly by
large U.S. companies, such as Silicon Valley's Cisco Systems and
Oracle, which make them permanent employees. Others are hired by
recruiting firms -- middlemen -- that bring in software specialists
from India, China, South Africa and Europe, and then hire them out as
temps to dot-com start-ups or banks and other businesses that need
workers for software design or back-office operations.
By raising the cap and eliminating some red tape in October, Congress
thrilled many immigration lawyers, industry leaders and foreign
workers. ''I'm very, very happy about this bill,'' said Anu Gupta, a
Fremont immigration lawyer. ''It's not going to solve all the problems
overnight, but does go a long way.''
The new legislation changes some requirements that workers and
companies found onerous. Many workers had complained that H-1B
regulations resulted in a kind of indentured servitude in which workers
were tied to their original employer by their visas and green-card
applications, unable to complain or leave for a better job because
their visas were at risk.
Under the new rules, an H-1B worker can move to a new job as soon as
his or her new employer applies for a new H-1B, rather than waiting
months until the application is approved. Green-card applicants in the
final stages of the process also can switch employers without having to
start their application over again. While they wait, they can apply for
year-by-year extensions of their H-1Bs when they expire at the end of
six years, instead of having to leave the country. And green-card
processing should be faster because Congress also made available more
cards to the countries with the highest demand, currently India and
China.
Less red tape, but problems remain
The new rules should help companies like Intel Corp., which testified
at a hearing this year that it had spent $200,000 moving a valuable
H-1B worker to Malaysia after his visa expired.
They should also help H-1B workers like Asif Siddique, who spent much
of this year holed up in his apartment, not working, while he and his
wife waited to find out if his green card was approved or if he would
have to leave the country.
By enabling workers to switch employers without delay, the new rules
respond to complaints that H-1B workers are ''indentured.'' But even if
the new law is put into effect quickly and efficiently, -- which
previous revisions have not been -- it is still the employer that
sponsors the green cards, which can take three to four years to obtain.
And it will be the employer that files for the one-year H-1B extensions
in the meantime.
And even for workers who don't seek green cards, it is risky to change
employers: If a worker switches jobs as soon as his new employer files
for a new H-1B visa, he takes a chance that the new visa won't come
through. If it doesn't, the worker has to leave the country.
''The umbilical cord is still there,'' said Murali Krishna Devarakonda,
a founder of the Bay Area chapter of Immigrants Support Network, which
lobbied Congress for changes to the visa.
That means workers still can be intimidated by unscrupulous middlemen.
The new legislation fails to bolster enforcement of laws against
exploiting and underpaying foreign workers while they are here. An
employment lawyer in San Jose, Phil Griego, said he has received
increasing numbers of complaints from H-1B workers about employers for
the past six months.
''You can't go after these employers because they are just mom-and-pop
operations, and they close up and disappear,'' he said.
Bruce Burns is a San Jose immigration lawyer who has received a couple
of dozen complaints from foreign temps in the past 18 months about
middlemen that were keeping up to half the worker's promised prevailing
wage. The new legislation will help H-1B workers switch jobs more
freely, but some workers will still have to contend with contracts that
force them to pay $10,000 to $30,000 in ''liquidated damages'' for
leaving.
''To say you have to pay something equivalent to several months to a
third of your year's salary is unconscionable,'' Burns said.
Visa fraud merits little attention
Another problem is visa fraud, which starts abroad and in Silicon
Valley. Phony resumes are a common sight at U.S. consular offices
overseas. According to the State Department, one-fifth of the H-1B
applications received in India last year contained fraudulent
information, this year, 11 percent.
In the United States, the INS tries to identify companies that use the
H-1B in illegal immigration scams or that charge H-1B workers
exorbitant fees for bringing them here and then leaving them stranded,
with no jobs.
''I had one relative come; he's working in a pizza shop,'' said one
East Coast programmer and critic of the H-1B. ''He came on an H-1B,
with falsified papers.''
But the ability of the INS to detect and prevent fraud is limited and
won't improve with the added workload that comes with the higher cap on
H-1Bs. Visa applications of all types exceed 4 million each year, and
the INS requires its workers to process a certain number of H-1Bs every
day, said Jimmie Ward, assistant director for operations at the INS
California center. When it comes to spotting phony middlemen, he said,
''It's like the finger in the dike. We try to identify as much as we
can.''
Resume padding also occurs in the United States, effectively subverting
the intent of the H-1B program.
Three former executives of an Indian-run labor contractor said their
boss automatically added two years of experience and phony skills to
the resumes of its hundreds of H-1B employees as soon as they arrived
in the United States in order to charge companies an additional $30 to
$40 an hour.
''Fortunately, they are very bright people and in general are capable
of faking it out in the field, and eventually they become very good
workers,'' said one former executive, who asked not to be identified.
''But it is straight-out fraud against the customers, and it gives the
industry a bad name.''
Ward, of the INS, said he has heard of such cases but has not received
complaints.
New rules increase work for INS
Visa processing is also overloaded, and some INS officials are upset
that more work is coming their way. In addition to the near doubling in
the number of H-1Bs available for the next three years, another 30,000
to 50,000 applicants who didn't get visas last year because the cap was
reached in March will receive them right away. Thousands of additional
family members will come along each year as will H-1B visas sought by
universities and non-profit organizations, which will no longer be
counted within the cap.
Congress created a new account to pay for reducing the backlog, but has
yet to fund it. To pay for the increased workload, Congress raised the
application fee to $1,000 from $500 and allotted the INS and Labor
Department each 4 percent of the fee rather than the current 1.5
percent. But that additional $32.50 per application in fees will barely
pay salaries for more staff.
To handle the added work, the INS will also need to hire and train new
employees, add new offices and retool its computer systems. The fee
increase ''is not going to help with the dramatic improvements in
systems and technology that are needed,'' said William Yates, head of
the Immigration Service Division of the INS.
An increase in green-card applications has also swamped the Labor
Department. A department official said that since 1998 it has been
receiving tens of thousands more applications for work certifications,
the first step in getting an employment-based green card.
INS and Labor Department backlogs aren't just a matter of paperwork.
They take an enormous toll on temporary workers and their families
because they prolong the uncertain wait for a green card.
Cry for help
''Please help me,'' wrote Benedict Teck-Choy Chong, 37, of San Jose in
an affidavit accompanying a lawsuit filed this year against the INS for
delays in processing green cards.
''There is a terrible uncertainty about holding on to a job in an
economic climate in which companies can crash overnight or be bought
with unprofitable divisions pruned away,'' he explained. Chong got his
green card and dropped the lawsuit.
The rising tide of visas, applications for green cards and other
paperwork has swamped the INS, especially during peak periods.
''We have files everywhere,'' said a staff member at one of the busiest
of the four INS centers during a heavy backlog earlier this year. ''In
trailers, warehouses, in storage places, we have them in the aisles,
four high, throughout the whole building.
''I was going into the bathroom the other day, and there were files
lined up on the wall by the restroom. I opened the door, and I heard a
girl say to another, 'Hey, Mildred, here's that box from Portland we
were looking for.'''
The INS service center in Laguna Niguel at times this year was the most
overworked in the country. With the increased cap, ''backlogs are going
to build up immediately,'' Ward said. ''Everyone's going to be
complaining again.''
While the H-1B has brought talented, educated people to Silicon Valley,
its impact on American and permanent-resident computer programmers is a
contentious issue.
Cutting corners
Labor officials say some companies use the H-1B, a specialty worker
visa, to bring in run-of-the-mill programmers who will work for less
than a fair wage.
''Most of them have less than a master's degree,'' said Peggy Taylor,
legislative director of the AFL-CIO office in Washington, D.C., citing
an INS survey. ''Well, what are you using these visas for?''
Many jobs don't require the advanced skills of a computer science
graduate, several studies have found.
Some companies and universities are trying to help train workers
locally for such jobs. Cisco Systems is underwriting a series of
two-year courses in networking, now taught at 4,000 schools in 80
countries. George Mason University in Virginia offers courses to
non-computer science students for jobs in information technology.
''You don't want your help desk being manned by a computer science
graduate,'' said William Aspray, executive director of the Computing
Research Association.
Retraining for older high-tech workers could also be a way to fill some
of these and more advanced programming jobs. Retraining is fundamental
to the industry, but most companies would rather hire up-to-date temps
from abroad than take on the considerable expense of retraining,
programmers say.
''Half of what you know becomes obsolete every 36 months in a
technology market,'' said Dominique Black, head of a personnel
placement firm in Redwood City. ''That means you need to be
significantly retraining about 20 percent of your time.''
Some high-tech employers say they don't see many older unemployed
American programmers looking for permanent jobs.
''In Silicon Valley, anyone out there who's not on a visa -- hardware
engineers, programmers -- is now going toward contract work and wants
$150-plus an hour,'' said Margo Sanders earlier this year when she was
corporate staffing manager for 3Com Corp. in Santa Clara. The H-1B
engineer wants to become a permanent employee, she said.
But getting H-1B workers green cards is a big problem that will
continue despite the new legislation.
''I don't think they seriously addressed the fact there's a real
imbalance between the number of people they are letting in on H-1B
visas and the number of people who are able to get green cards,'' said
Carl Shusterman, a Los Angeles immigration lawyer.
If the past is a guide, at least half the H-1B workers will apply for
green cards, some of them with spouses. That could burden the system
with 160,000 green card requests each year, said Georgetown's Lowell.
But the annual limit of green cards available for temporary workers of
all kinds -- not just H-1Bs -- and their families, is just 140,000.
Some analysts say the H-1B needs to be redesigned into two kinds of
work visas: one a short-term permit for specific projects and another
that would lead directly to a green card in two or three years.
During the lobbying for the current legislation, high-tech companies
set aside their desire for green-card reform for the more pragmatic
goal of an increase in H-1Bs.
''We'd love to see the green-card process streamlined,'' said Mary Dee
Beall, Hewlett-Packard's official in Washington, D.C., in charge of
H-1B matters. ''Since HP's practice in hiring foreign workers is for
them to become permanent residents, it would be manna from heaven if
that would happen. But that would be a major reform of the immigration
process.''
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