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Infosys Investigated For Misusing B-1s

The can of worms might just be opened. Infosys Technologies filed that it has been subpoena’d by a Grand Jury in the US, to provide information about its B-1 visas to employees. A U.S. Employee filed a lawsuit against INFY after he refused to help issue temporary B-1 visas for certain workers, and this seems to have broadened into a Grand Jury investigation.

The "whistleblower", Jack Palmer Jr, was hired by the US as a Principal Consultant and has said that his managers asked him to write invitations for B-1 visa applicants, stating for legal purposes that they were coming for the short-term. According to WSJ:

Mr. Palmer alleged that Infosys managers asked him to write welcome letters for employees coming on B-1 visas to back up the case that they were on short-term visits for legal purposes, rather than stating the reality–that they had full-time jobs lined up in the U.S. The complaint says Mr. Palmer “was concerned about the accuracy of the letters and the legality of these employees working in the United States.”

He blew the whistle with the human resources department and refused the write the letters, the complaint says, after which company managers chastised him on a conference call for “not being ‘a team player.’”

B-1 visas are essentially business visas. They’re usually clubbed with "B-2", or pleasure visit visas and the official stamp is B-1/B-2. Here, my software background comes into play. Typical B-1s are issued for 10 years. Each visit must be for a specific reason – a conference, a visit to a customer, or something of that sort. Each visit will be "stamped" at the port of entry into the U.S. with an exit expiry date – usually a few days after you plan to leave, but a maximum of three months. Obviously, three months at a time is enough to do most business related activities.

What you’re not allowed to do is to work for money. You could attend a conference. You could meet customers. But if you get paid, or model for a fashion show, it’s work. For that, you need an H-1B. And you need an H-1B even if you do work at a customer’s office. Obviously you might help solve a few problems, but it shouldn’t be that you’re there from Day 1 coding, and leave on Day 90 after you’re done coding.

But that is exactly how most software companies in India work. They send people to the US on short term B-1 visas, and get them to actually do work. The client pays for this work, usually to the company, which pays its employee back home. The usual compensation is: full Indian salary in your Indian account and a per-day allowance of $50-$60 to the US. Hotel costs are paid by the customer directly or indirectly.

The average Indian Software Engineer who’s being sent there is probably getting Rs. 600K per year. If you send him on a 90 day trip, he gets to a) experience foreign travel and b) earn $4500. Sure, he has expenses, but damn, he will live on Maggi if he needs to and save at least $3000 = Rs. 140K which is pretty big.

I know. I’ve done this. (except save that $3000; let’s face it, I love life too much. Also they have great steaks) I was working for a large company when I was sent on a three month B-1 visa to the US, where I worked – I actually compiled code, built stuff etc. for the customer. I found out when I was there that working on a B-1 was probably illegal, but the maximum I could get was deported which was totally acceptable. (Boston area in winter? I’ll take a traffic-snarled Bangalore any day)

So if it’s illegal why do companies do it? It’s cheaper. The clients are billed $200 per day (or so) which is cheaper than hiring someone with that skill locally. Plus, no insurance. No retirement benefits. And no taxes because the US entity is either paying per-diems in cash, or paying the Indian company. The Indian co doesn’t need to deduct Indian taxes on the per-diems it pays out, because they are effectively a reimbursement. It’s all very cost-effective. Lastly, it’s faster; once you have a B-1, you can keep going for 3 months whenever required.

But the point is: It’s wrong. And everyone’s doing it. Clients pay for such visits and no US taxes (or indeed Indian taxes on the perdiems) are deducted. Work is done. It’s so bloody easy to prove, because it is done on such massive volume that there is no way to hide it.

Now, has Infosys violated the spirit (and perhaps the letter) of the law by sending people to work on B-1s? I wouldn’t be surprised if everyone here, even those with a infosys.com email address, are nodding their heads. But if they are indicted, does it open a can of worms? I think it depends on what happens.

  • If Infy is found guilty and fined lightly, or even found innocent, nothing will change. Life goes on as earlier.
  • If there are big damages or worse, if the B-1 visa system is overhauled entirely, the entire Indian software ecosystem is screwed. They will not be able to deliver, because no matter what they say, the work they do has to be fronted by someone in the US. With tougher-to-get B-1s, everybody will hurt.

The counter argument is that US H-1B requirements are onerous and time consuming – the WSJ article talks about a guy that came to India to get married, applied for a new H-1B visa and after two months, got rejected. So they would rather send people on a B-1, especially when it’s short term.

But try and reason out why H-1B’s are difficult to get. Because for one, there’s 10% unemployment in the US, they want companies to hire locally. For another, we want to send too many people there, way beyond the 65,000 limit.

More from CW:

Macmanus’ letter also indicates that the State Department may be getting ready to remove or substantially change a provision in its rules that now allows workers to use a "B-1 in lieu of H-1B visa" if specific criteria are met.

(Macmanus represents the State Dept).

This B-1 in lieu of H-1B is a different visa – although I did qualify for the purpose – than the B-1. That’s not the one being mentioned here, I think – it’s the regular B-1.

In effect, this case will impact everyone; even US companies from the Googles to the Microsofts may be at the receiving end of a negative decision. Will that influence the US jury and change its mind? Will that be the clinching piece? We’ll have to wait and see.

Disclosure: No positions on any Indian IT stocks. But increasingly, going short seems to be a good idea.

  • US Embassy says:

    We have requested Indian government to arrest and deport you since you have confessed to be involved in illegal use of B1 Visa 🙂

  • prashant says:

    ha ha ha.. I have just returned from US in March after working there for 3 months on B1 visa … This rot is spread too deeply and everyone knows about it..

  • abc says:

    Well well well…. You couldn’t have been more honest & brutal than this, on this issue. Except for a minor miss.
    In my opinion, in this context, even the really big global guys of IT who have BIG shops here in India are in the same boat as Infy or any other Indian IT company is.
    This whole incident is also li’l bit of american bull shit about being righteous and being of whistle blower nature. Because a good number of these BIG global companies are american MNC’s and have been operating in this model since loooong time. And every time probably a american manager has been writing these kind of invite letters for their Indian counterpart.
    Not too tough to guess those companies, isn’t it ??
    Regards
    abc

  • sriram says:

    After all, the US government has to pander to two constituencies –
    1. the department of labor (and through them the voters)
    2. the corporate lobby
    What better way than to prescribe tight regulations and then see the other way when corporates bend them like Beckam.
    Not to mention another irony of captialism: “Allow free movement of goods, not of people (labour). ooh, terrorism, security threats – bring on the propaganda.”

  • Spark says:

    Hi Dipak…Nice article about Infy… thanks for sharing it…