6:30am

Thu October 31, 2013
Business

Infosys $34m settlement touted as victory, but only the tip of the iceberg say observers

Indian technology and outsourcing giant, Infosys, has agreed to pay $34 million to settle a lawsuit with the U.S. government over visa fraud claims.

The company is accused of misusing short-term work visas to bring workers into the U.S and circumvent limits on long-term work permits, such as the H-1B.

A large portion of Infosys’ business comes from the U.S. H-1B visas are supposed to be acquired for guest workers with particular skills needed for highly specialized skills. However, the U.S. only issues 65,000 of these visas each year, and they cost several thousand dollars each.

The B-1 visas on the other hand, meant for workers who are entering the country for a business trip but not to perform actual work, are cheaper and have fewer restriction.

In the settlement, the U.S. government alleges:

“To circumvent the requirements, limitations, and governmental oversight of the H-1B visa program, Infosys knowingly and unlawfully used B-1 visa holders to perform skilled labor in order to fill positions in the United States for employment that would otherwise be performed by United States citizens or require legitimate H-1B visa holders, for the purposes of increasing profits, minimizing costs of securing visas, increasing flexibility of employee movement, obtaining an unfair advantage over competitors, and avoiding tax liabilities.”

Ron Hira, professor of Public Policy at the Rochester Institute of Technology (RIT), says the settlement is a step in the right direction, but it’s just the tip of the iceberg.

There are far too many loopholes that make guest-worker visas easy to exploit, he says.

“The wrong takeaway would be that the enforcement system works and that there are no additional problems. In fact, most of the problems with the visa programs are perfectly legal and are problems that the US attorney’s office wouldn’t be able to do anything about.”

The settlement is being touted as a record fine against a company for this type of infringement, but Hira says it’s unlikely to stop companies from taking advantage of visa loopholes.

He says the fine only amounts to about two percent of last year’s profits for Infosys.

“It’s not going to impact them or their shareholders very significantly, and I don’t think it will act as a deterrent in the future. The real question is will it change the operating mode and model of these businesses, and I think the answer, at least the way I’m reading the settlement agreement, is no.”

Hira says there’s no strict auditing or enforcement system in place to monitor companies when they’re bringing large numbers of guest workers into the U.S.

He says the responsibility for exposing breaches usually falls to whistleblowers, like the Infosys employee who prompted the recent investigation.

Infosys maintains that claims of widespread visa fraud are untrue.