H-1B loophole may help California utility offshore IT jobs

It is the second major utility in a year to announce IT outsourcing

Southern California Edison is outsourcing part of its IT operations, and the jobs may be going overseas.

Edison (SCE) is working with Infosys, which is based in India, and iGate, a New Jersey-based company with major offshore centers, as it prepares to lay off workers, according to U.S. government records.

SCE said it is still actively evaluating outsourcing vendors, "and expects to select vendor partners by mid-year." It didn't say which vendors are in consideration.

Northeast Utilities, last fall, announced it was outsourcing part of its IT operations to Infosys and another Indian-based IT services giant, Tata Consultancy Services, and cut about 200 jobs. SCE isn't disclosing how many jobs may be cut, but the Los Angeles Times reports the number is in the hundreds.

NU employees have been training their replacements as a condition of their severance, a process that will likely occur at SCE, if it goes forward with its plan.

Edison said it expects to pick a vendor by mid-year.

The evidence pointing to offshore outsourcing, and to Infosys and iGate as at least two of the vendors, is based on government records. Edison runs some of its IT operations in Irwindale, Calif. As part of the hiring process for H-1B visa-holding workers, outsourcing vendors file a Labor Condition Application (LCA), a U.S. document with salary information and the address of the visa workers' worksite. There were as many as 130 LCAs filed by Infosys alone in the past year for the Irwindale address associated with SCE's offices, according to a large sampling of those filings collected by visa data analysis firm MyVisaJobs.

H-1B rules make it relatively easy for offshore outsourcing companies to replace U.S. workers, despite a rule to curb it.

If H-1B workers comprise 15% or more of an employer's workforce, the employer is classified as "H-1B dependent" by the U.S. government and subject to additional requirements. All the major offshore firms, including Infosys and iGate, are H-1B dependent.

H-1B dependent firms are required to take "good faith steps to recruit U.S. workers for the job for which the alien worker is sought" as well as to "offer the job to any U.S. worker who applies and is equally or better qualified than the H-1B worker," according to the government rules. But there's an easy workaround.

H-1B-dependent employers are exempted from U.S. worker protection rules if the H-1B worker is paid at least $60,000 or has a master's degree.

An annual salary of $60,000 is low for an IT professional, especially in the high-wage region of Southern California. The National Association of Colleges and Employers reported this month that the average starting salary for new college graduates -- nationally -- in computer science was $61,741.

The offshore companies, iGate and Infosys, both pay wages of more than $60,000 a year and therefore aren't obligated to meet the H-1B dependent rules.

Ron Hira, a public policy professor at the Rochester Institute of Technology, said H-1B-dependent firms are required to make three attestations: They must make a good faith recruitment of American workers prior to filing an LCA; they can't replace their American workers with H-1B workers; and they can't replace American workers employed with a client's company.

But Hira calls the $60,000 threshold and master's degree exemptions "a huge loophole."

The H-1B dependency rules were put into law about 15 years ago, and were "part of the quid pro quo of the major increase in the H-1B quota," Hira said.

Companies that fell below the 15% threshold for H-1B workers could avoid good faith recruiting and could also legally displace their American workers with H-1Bs, Hira said. "The rationale was that the only employers that abused the H-1B program were 'dependent' upon them," he said.

Hira said there has been no effort by the government to enforce the dependency rules. "This is remarkable given the hundreds of thousands of visas that have been granted to H-1B dependent firms since the regulations took effect," he said.

IT services firm iGate employs about 30,000 people. At the end of last year, it had more than 4,000 professionals in the U.S., nearly 50% on H-1B visas. Infosys employs more than 160,000 globally. It doesn't provide a specific U.S. headcount.

In a statement, Edison said its outsourcing efforts and assessment are at different stages in select business units across the company, "and various alternatives are being explored to achieve operational and service excellence. SCE's Information Technology (IT) unit is one example."

The utility said it "has yet to finalize employee reduction numbers or percentages at this time. However, SCE is exploring several ways to support impacted employees including career development workshops that feature interviewing and resume writing, job fairs with SCE vendors, and other transition opportunities with SCE."

In 2011, two IT managers at SCE were fatally shot by an employee who took his own life.

Following the shooting, there was an audit of internal operations by an outside risk management firm, Incident Management Team, which looked at conditions in the IT organization ( PDF report).

One observation in the report was that "employees perceive managers to be more concerned about how they 'look' from above, and less concerned about how they are viewed by their subordinates. This fosters an unhealthy culture and climate by sending a message to employees that it is more important to focus on how things look from the top than how they actually are down below."

Mari Keefe, Computerworld's editorial project manager, contributed research to this report.

This article, H-1B loophole may help California utility offshore IT jobs , was originally published at Computerworld.com.

Patrick Thibodeau covers cloud computing and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov or subscribe to Patrick's RSS feed. His e-mail address is pthibodeau@computerworld.com.

See more by Patrick Thibodeau on Computerworld.com.

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1 Comment



A few weeks ago a liars posted articles about how H-1b supposedly creates 5 jobs for every visa.

And we were missing out on 400,000 jobs because we haven't flooded the market with H-1bs for the Outsourcing Companies.

My God! Do they think we have IQ of zero?

It's clear by this example (one of hundreds of thousands), that if we had unlimited numbers of H-1b visas, the Offshore Outsourcing companies would have taken them all.

And 4-5 million more jobs would have been lost in this last "Great Recession".

The reality is that most H-1b visas are used by Offshore Outsourcing companies. To remove millions of jobs from the United States.

And no one, in office today, seems to care about the U.S. working person.

In the U.S. today, we have the equivalent of the Great Oklahoma job grap. No cares about the citenzry of the United States. Heck, average people can barely aford to feed, clothe and house themselves in the United States, they don't have any money to influence the "Public Idiots" Politicians.

No one is thinking, or feeling. It's all about freakin campaign contributions, and they say, or vote on anything just for that money.

No one, not Joe Biden who speaking in complete ignorance said that H-1b offered protection for U.S. workers. Well Joe Biden, before you start thinking you have any kind of future after VP, answer this.

Where in the heck is the protection you talked about? Do you see a lick of protection for U.S. workers from H-1b workers in this SCE case??

Well if you don't see it, don't worry, it was never there you idiot.

Joe Biden cannot be allowed to stay in office he's a complete idiot.

And what about Obama, who bald-faced said that the people he talks with (Big-Big campaign donors) are saying that they need more H-1b visas, to the lady in Texas who asked simply why we are we talking about raising the number of H-1b visas, when my husband (an experienced engineer) can't get a job?

What about all the completely idiotic Republican house member, who want to pass an unlimited, standalone, H-1b bill. What a bunch of complete traitorous idiots.

Have you ever heard the statement, "We have to hang together or surely we will hang separately." ?? WTF is wrong with the Replican house, what planet are these idiots from.

The only thing good about Obama being elected is that it resulted in stalement. So the politicians can't trade your job for fist full of campaign donations.

And you know, if the facts in any one of hundred thousand cases didn't clearly show what a complete an dirty lie the statement that H-1b visas create jobs is. You know these same "Public Idiots" we call politicians would be doing political ads for the Outsourcing Companies. And your job as fireman, policeman, ... janitor, would be fair game for someone coming in on an visa.

The politicians don't care about your ability to care for you family, they are so busy trading your job for a fist full of campaign dollars.

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