Indentured servants for high-tech trade
Labor: For a rich fee, companies called "body shops" supply waves of unwitting immigrants to the nation's computer industry.

By Gary Cohn and Walter F. Roche Jr.
Sun Staff

Second of two parts

When Kumar Rajesh was rushed to Shady Grove Adventist Hospital in Rockville, doubled over by kidney stones, he might have expected a fruit basket or a get-well wish from his boss.

Instead, he got a lecture about how the time lost reflected badly on his work record.

Rajesh, then 24, was a systems analyst employed by Tata Consultancy Services, an Indian firm that contracts with U.S. companies to provide computer experts.

He and more than a half-million other immigrants, many from India, are at the crest of a wave of high-tech foreign workers who have surged into the United States over the past decade at the urging of the computer industry and its lobbyists under a program created by Congress in 1990.

It's an effort that has given birth to a multimillion-dollar industry, shuttling high-tech workers for a lucrative fee from continent to continent. Critics call the companies that find the workers "body shops." They say the program, known as H-1B, stems from a patchwork of immigration laws and policies triggered by special interests and fueled by a vast pool of unwitting immigrants in pursuit of the American dream.

"Since I was treated like a bonded slave, I didn't have any other alternative except leaving the company," Narayanasamy Sekar wrote in a personal plea to a Montgomery County Circuit Court judge to explain why he left the company that brought him here.

An investigation by The Sun, in which hundreds of court records and government documents were reviewed and dozens of recruits interviewed, shows that for many foreigners, the promises they hear on the streets of Bombay and New Delhi soon give way to harsh reality. Many who came in pursuit of a dream now find themselves indentured servants.

The investigation found:

In violation of federal law, visa holders often collect a small fraction of the salaries they've been promised while doing make-work projects and refining computer skills.

  • If workers quit, they are frequently sued by employers claiming damages of $30,000 or more.
  • Workers who challenge employers are routinely threatened with being sent back to their homeland.
  • Body shop operators regularly bill U.S. companies at rates three to four times the salary being paid to their foreign workers.
  • U.S. workers have been displaced by less costly foreign labor contracted out to H-1B visa holders.

    Court records show the visa holders are recruited by contractors, then brought to the United States for assignment. If no job is waiting, the worker may be placed by another body shop, which gets a percentage of the fee.

    Revenues have soared for visa vending companies created to bring in temporary foreign workers. Mastech Corp. and Syntel Inc. reported combined revenue of well over a half-billion dollars in 1998, according to filings with the Securities and Exchange Commission.

    Immigration lawyers collect fees of $2,000 to $2,500 for each H-1B application. With a limit of 115,000 H-1B visas per year, that represents some $230 million a year in potential legal fees. "It's the bread and butter for a lot of people," said Kenneth Rinzler, an immigration lawyer in Washington, who said he advises his clients against using H-1B visas.

    The program that brought these workers to the United States was created by Congress in 1990 in response to pleas that there weren't enough American workers to fill certain high-skill jobs. The category was included in the 1990 law that reshaped the country's immigration policies.

    Despite repeated warnings of a critical shortage of high-tech workers, some immigration experts say that there is no crisis and never was one.

    "The evidence is just not there," said Mark Krikorian, executive director of the Center for Immigration Studies in Washington. He said the program lets employers short-circuit the usual rules of a free-market economy, in which wages are driven by demand.

    Krikorian said the program enables companies to obtain high-tech workers at a discount. Companies are willing to pay fees and lawyers, he said, because in the long term, foreign workers save them money on salaries and benefits.

    In effect, Krikorian said, the U.S. government provides a subsidy in the form of visas.

    Responding to industry warnings of an impending high-tech crisis, Congress voted in 1998 to temporarily double the number of skilled workers allowed into the country on visas. Moves are under way to allow in even more workers and to make the increase permanent.

    "Once again, the cap on H-1B visas is preventing American companies from hiring the best and the brightest workers from throughout the world," William T. Archey of the American Electronics Association told a congressional committee late last year.

    Behind the H-1B movement are AEA and another industry group, the Information Technology Association of America, headed by Harris Miller, who once served on the staff of the House committee again being asked to raise the ceiling on the program.

    Under the 1990 law that created the program, a limit of 65,000 a year was set on the number of H-1B visas that could be issued. But lobbyists from Silicon Valley soon warned that 65,000 a year was not enough, due in part to the need to debug computers of problems associated with the year 2000.

    Under U.S. immigration law, workers with H-1B visas can stay in the United States for up to six years. After that, they can apply for permanent resident status but cannot remain in the H-1B program unless they leave the United States for at least a year. Under the law, foreign workers are to be paid salaries comparable to those of American workers in the same jobs.

    INS officials say many of those temporary workers become permanent U.S. citizens under other immigration programs.

    As a result of the lobbying effort, the immigration law was amended in 1998 to raise the annual cap on H-1B visas to 115,000. It will remain at 115,000 in 2000, then drop to 107,500 in 2001 and to 65,000 in 2002.

    Powerful allies

    The industry groups and the companies employing H-1B workers have a powerful ally in the American Immigration Lawyers Association. AILA members have thrown their financial muscle and support behind the congressmen who play a key role in determining the fate of the program.

    Sen. Spencer Abraham, chairman of the Senate Immigration Committee, has been a speaker at AILA's national conferences and held a series of fund-raisers in tandem with AILA events.

    When AILA met last summer in Seattle, the Michigan Republican held a $500-a-plate breakfast at the hotel where most of the conventioneers were staying. He held a similar fund-raiser during an earlier AILA conference.

    Campaign finance reports show AILA members donated $11,450 to Abraham in 1998, the year his committee voted to double the H-1B program. Abraham's campaign committee also reaped donations from executives of Mastech and Syntel, two of the biggest H-1B companies. His committee reported contributions of more than $17,000 from executives of Microsoft Corp., a major user and supporter of the H-1B program.

    Serving on Abraham's staff is Stuart B. Anderson, a former official at the Cato Institute, a conservative Washington think tank, who while there wrote a controversial study frequently cited by supporters of the H-1B program as justification of the need for foreign high-tech workers.

    Abraham's role in boosting the H-1B program earned him the Cyber Champion Award last year from the Business Software Alliance, a group representing some of the nation's largest software firms. The annual award is given to a member of Congress "for tireless efforts" on issues critical to the high-tech industry.

    Records at the Securities and Exchange Commission show how big the program has become.

    With revenue of nearly $400 million per year, Mastech Systems Corp., based in Oakdale, Pa., has reported that about 35 percent of its work force comes from the H-1B program. INS records show Mastech near the top of the annual list of companies taking part in the program.

    Mastech's customers include some of the country's largest corporations, including GE Capital, which announced in August that it was buying a $30 million stake in Mastech and that it would buy $122 million in services from the firm over the next three years. Mastech once had a contract to do work on the White House computer system. GE Capital also has used H-1Bs from Tata Consultancy. Tata now has 29 such workers assigned to GE units.

    'It was my dream'

    "USA or your money back," reads one ad in a Bombay paper. "State of the art facility," reads another. Others guarantee top salaries, medical insurance and challenging assignments.

    Recruiters for the body shops "promise you everything under the sun," said a 27-year-old computer programmer who answered an ad in a Bombay newspaper three years ago.

    When he spotted the advertisement promising a challenging assignment and a top salary, he saw the chance he had been waiting for -- a chance for the American dream.

    "I was learning things in India but there was no way I could use them. There's too much talent there. For me there was no possibility of growth. I was earning $250 a month," he said. "In India, that's real good money."

    After a 10-minute interview at a Bombay hotel, he was told that he had the job with an American high-technology consulting firm.

    By going to work for the New Jersey firm, he could get a job in the United States and, just as important, the visa to make it legal. Eventually, he hoped, he could become an American citizen.

    "I always wanted to come here," he said. "I don't know why, but it was my dream."

    The programmer, who asked that neither his name nor his company be given for fear of being sued, soon discovered that the reality was far different from the promises.

    On arrival in November 1997, he found himself in cramped quarters in a single-family home with 14 other programmers. He found that his initial salary would be $500 a month -- not the $1,000 a week he was promised -- and that $200 would be paid as rent.

    He learned that his resume, the one officially submitted to U.S. officials as part of his visa application, listed training in several areas that he never had received.

    "I saw this resume only after coming to the United States. When I saw it I was shocked for a minute, as it contained stuff that I never worked on. I was told not to worry about it, he said, "as it was done 'to get me here.' "

    'On the bench'

    Later, he complained to his boss about being "put on the bench," when a project in the Midwest came to a sudden end. A worker on the bench gets a reduced salary or none at all. Instead of performing a challenging job, the worker spends the day doing busy work, honing programming skills or trying to find a new assignment.

    When the programmer complained, his boss was not happy.

    "He said, 'I'll send you back to India. If you talk about this, I'll send you back,' " the worker said in a recent interview.

    Though federal officials say benching is illegal, H-1B visa holders say the practice is common.

    After months on the bench, the programmer began the complicated process of finding another job and the even more tedious task of getting a new company to sponsor him for a visa.

    By summer he succeeded, moving on to a similar job in the Midwest. But the fight over his benching and unpaid salary, which he estimates at $10,000, goes on. He filed a complaint with the Department of Labor, but has been warned that the investigation could be lengthy.

    "The alien software professional is viewed by the body shop owner as the goose that lays golden eggs," the programmer said, "and you don't have to feed the goose."

    Another H-1B visa holder arrived from India last year after being promised a job in California. Instead, he spent months reporting to the office trying to line up work.

    "We go to the company office every day and try to line up business. We get $500 a month plus the apartment, but no other money," he said. "They told me,'You don't want health insurance. It's just a pain in the neck.' "

    He also was required to sign a contract. "They don't give it to you till the last minute. They tell you your flight is leaving in a half-hour. You don't even have a chance to read it.

    "They put an advertisement in the paper. They'll promise to pay you, no matter what. It's all lies. You really don't know who you are going to work for."

    Asked why he didn't hire a lawyer, he replied: "How can you hire a lawyer when you can't even pay for basic living expenses."

    More than three months after arriving in the United States, he was sent on a paying assignment in New Jersey.

    In fact, many H-1Bs live in fear of being sued. It is a fear that is well-founded.

    Court records show that Mastech has sued dozens of former workers who tried to leave for other jobs. The lawsuits accuse workers of failing to comply with an agreement to stay with the firm for pe-

    riods of one to two years. The lawsuits seek damages ranging from $10,000 to three months' salary.

    John Brendel, Mastech's general counsel, declined to discuss the lawsuits.

    'No big deal'

    Among those Mastech sued was Roy Mani, who came to the United States in late 1997 after being recruited in India.

    "They made me an offer but then kept me waiting for six months," he said. When he got the call that a job was waiting, he was told he had to leave immediately. He was handed a document to sign, but had no time to read it.

    The document was an employment contract under which he agreed to pay Mastech $10,000 in damages if he failed to stay with the company for at least 18 months and to give the firm at least six weeks' notice of quitting.

    He was surprised by the agreement, he said, because in India, there are no restrictions on leaving a job. "They never said that if you sign this and leave, then we will sue you. They just told us we had to sign it. They said it was 'no big deal.' "

    Mani said recruits have no idea what they are agreeing to, and that a disclosure requirement is needed.

    Mani said he hired a lawyer, but the attorney told him it would be best to settle the lawsuit. He expects to have to pay $10,000 and the lawyer fees.

    "It has happened to a lot of people. They [Mastech] don't care what your experience is."

    He said H-1Bs feel helpless. "We cannot do anything."

    Mani said his assignment for Mastech was in Omaha, Neb., where he worked for a communications firm at an annual salary of $48,000. He said he earned a little over $20 an hour, while Mastech was charging the firm $70 to $80 an hour.

    He said he left because they kept playing games with his pay.

    "I'd send them a time slip and they'd pretend they didn't get it. I'd send it again and they still wouldn't pay," he said. "I faxed it again and I still didn't get paid. I got angry and they started threatening me."

    It was only after moving to Milwaukee and settling into his new job that he found out that he had been sued and that Mastech had obtained a default judgment for $10,000 against him in Pittsburgh, though he had never lived or worked there.

    "I never got any notice" of the lawsuit or a hearing, he said. "I don't know how they can do this."

    Mastech officials declined to discuss the Mani case or those of any other former employees.

    Records at the Allegheny Court of Common Pleas in Pittsburgh show that Mani is one of dozens of former Mastech employees being sued for $10,000 in damages and travel and training expenses the firm says it incurred. In one such case, Mastech sought nearly $50,000, including $28,200 in training fees.

    Gap in billing and pay

    In a case heard in June, a Mastech official testified that the company was billing a Nebraska firm $110 an hour for the services of an employee being paid $26 an hour. Mastech sued the employee, Som Partha Pratim, when he left for another firm.

    Mastech sought about $50,000 to recover what it said it had spent on Pratim, and income lost because of his departure.

    Pratim's attorney, Kimberly J. Kisner, filed a counterclaim against Mastech, seeking back wages. The case was settled out of court. Terms were not disclosed.

    In another Mastech lawsuit, a former employee said company officials "tailored and tampered" with his resume to get him an assignment at an accounting firm. Srinath Nagabhirava said he was placed in "a totally new environment in which I haven't had any skills or experience."

    Nagabhirava said he and other H-1B visa holders were threatened and discriminated against when they initiated efforts to become permanent U.S. residents.

    Mastech denied both charges.

    Another Mastech employee, Guromurthy Thanukunoori, said he was forced to work 50 to 55 hours a week, sometimes 13 or 14 hours a day while on an assignment with Wal-Mart.

    "I had a supervisor who was always harassing and threatening us. He said, 'If you don't work the 12 hours, I'll throw you out of this country,' " Thanukunoori said. "I had just gotten married, and I didn't want to work those hours."

    He said Mastech, after promising to underwrite the cost of health insurance, later began charging him $95 a month for it.

    Thanukunoori said he waited until the Wal-Mart project ended, then submitted his resignation in May 1997, so the company could not claim it had lost revenue because of his departure.

    Weeks later, Mastech filed suit, alleging that Thanukunoori breached the contract he had signed in India in 1996. The company sought $10,000 in damages, repayment for training and travel expenses, and $15,000 for lost billing.

    Unlike most, he hired a lawyer. The company did not deny that he was required to work extra hours, but said it never promised he would work a 40-hour week.

    The case was eventually settled for $1,000, Thanukunoori said.

    Asked in a recent interview whether employees were routinely forced to work 50 to 55 hours per week, Brendel, the Mastech attorney, said: "We're project based. The clients have deadlines. And when they come, everyone at the project site is working those hours. That wouldn't be typical day in and day out."

    Brendel acknowledged that the firm requires employees to sign contracts. Asked if American workers were required to sign the same contracts, he said theirs were "similar but not identical."

    Brendel said that in the lawsuits Mastech has filed, no judge has found the company agreements "unreasonable."

    Tata Consultancy Services, or TCS, which is based in India and has U.S. operations in Rockville, ships workers worldwide. Its parent firm is India's largest conglomerate. In 1998, Tata had 2,000 workers with H-1B visas on assignment in the United States. The firm had 490 H-1Bs approved in 1997. Records at Tata's Rockville office show that their largest customer in the region is the National Association of Securities Dealers, which has 32 H-1B visa holders assigned to its headquarters.

    Like Mastech, Tata has sued dozens of workers who left the firm for other American jobs. Many lawsuits were filed in Montgomery County Circuit Court. Tata, according to its records and those on file in the court, assigns dozens of its H-1B workers to area businesses, including the Nasdaq stock exchange, USF&G Corp. and the Maryland offices of IBM.

    Maternity discouraged

    For women who have signed with Tata, having a family can be a problem.

    Court records show that part of Tata's agreement with former employee Veena Achar states: "Tata Consultancy Services will not incur any expenses arising due to pregnancy. Maternity is not encouraged due to the high cost of insurance and other related expenses."

    Tata sued Achar, who had been assigned to work for IBM in Bethesda and Gaithersburg. According to court records, the case was settled with Achar agreeing to pay the firm $7,500 in damages for breaking her employment agreement. Her attorneys had argued that she was "a person of limited financial means whose limited income is needed to support her family in India."

    Under the settlement, Achar, who now lives on the West Coast, made a $3,000 down payment and paid the rest in $200 monthly installments.

    Thomas Patton, a Washington attorney whose firm represents Tata, declined to discuss specific cases but said the provision discouraging pregnancy is no longer included in employment agreements.

    Patton also defended standard Tata contract provisions that entitle the firm to collect up to $30,000 in damages if an employee leaves an assignment before its completion.

    Because of the "huge investment" Tata makes in training, Patton said, workers are told when they are hired about the possibility of foreign assignment and the provisions of the employment agreement.

    "They tell them right up front they may be posted overseas," Patton said. "They tell them before they are even hired. They also tell them that they are expected to return to India at the end of their deputation." He said recruits are told that Tata may sue if they leave assignments prematurely.

    "No one is forced. No one makes them sign the agreement," said Patton. "If they want to be hired by TCS, they do have to sign the agreement."

    Like Mastech's attorney, Patton denied that Tata was a body shop. "We have a close relationship with our employees," he said.

    Asked why Tata employment contracts require workers to agree to return to India on completion of their U.S. assignment, Patton said it was not intended as a threat, "but because we want to be good corporate citizens. TCS does not want to aid and abet any notion that it is engaged in back-door immigration."

    Booming revenues

    Syntel, an H-1B firm based in Troy, Mich., has seen its revenues grow along with the program. Annual revenue has climbed from $70 million in 1994 to $92 million in 1995 to $124 million in 1997 and to $160 million in 1998. Two-thirds of its workers hold H-1B visas.

    Clients include Ford, DaimlerChrysler, Kmart and the state of New Mexico.

    When Syntel took over data processing for American International Group, the insurance giant fired the 250 U.S. workers who had been doing that job.

    Allegations by foreign workers of widespread abuses in the H-1B program come as no surprise to government officials who regulate it.

    "Visa fraud is not inconsequential in this program," said John Fraser, deputy administrator of the wage and hour division of the U.S. Department of Labor. "Our ability to look into what is really going on is very limited by the law. There's a lot of ambiguity about what the program is supposed to do." Fraser said the program is often used to convert people from student visas to temporary employment status. "Unfortunately, it is also used by job shoppers in the people business to bring in large numbers of entry-level folks."

    Although the 1998 expansion of the program included provisions designed to protect American workers from being displaced by cheaper foreign labor, the federal government has yet to issue regulations to enable their enforcement. Even when it does, the provisions will apply to only a tiny percentage of the companies using H-1Bs.

    Fraser said the restrictions apply only if H-1B holders comprise 15 percent of a firm's work force.

    'Within our borders'

    The restrictions require so-called H-1B dependent firms to prove that they first made efforts to fill jobs with American workers before turning to an H-1B.

    "Our view has been that these standards were inadequate," Fraser said.

    Former Labor Secretary Robert B. Reich, who fought expansion of the H-1B program, said that even if there were a proven need for high-tech workers, the answer should be "within our own borders."

    "You can teach people these skills," Reich said, adding that the H-1B program should be limited to the extremely high-skilled, "like nuclear physicists."

    "Even if there is a shortage," he said, "there are people within our borders who can be trained. All we are doing is undercutting our own work force."

    Reich said audits while he headed the agency showed that misgivings about the program were well-founded.

    "Our fear was that H-1B was being misused. The audits later showed it was. A lot of people were being brought in with skills that Americans either already had or could easily acquire. It may be good for the companies, but not for the workers," said Reich, who now teaches at Brandeis University in Massachusetts.

    INS officials who share responsibilities for policing the H-1B program acknowledge difficulties in enforcement of the law.

    "There has been some fraud," said William Yates, a deputy executive associate commissioner at INS.

    "The real appeal" for employers, said Krikorian of the Center for Immigration Studies, "is that the employee can't job hunt. It really is an indentured servant program. In practice, the H-1Bs are indentured to that company.

    "They are making decent money, but they can't go across the street. They are stuck. If the employers really wanted more workers, they would just put in for more green cards. They want folks who can't leave."

    Referring to body shops, he added: "It's really just a gimmick. This whole concept of renting out H-1Bs is outrageous. It's the equivalent of renting out your slave to the next plantation."

    Former Rep. Bruce A. Morrison, who chaired the House immigration subcommittee in 1990 when H-1B was created is equally critical.

    "Our system is based on the power of people to look out for themselves," he said. "That's all destroyed by indenturing our workers."

    Claim and counterclaim

    Rajesh, the H-1B worker with kidney stones, couldn't just take time off to see a doctor.

    He worked as a systems analyst for GE Information Systems in Rockville, a unit of General Electric Co., under assignment from Tata.

    Though doctors urged him to seek medical care the next day, he reported to work instead and again on Saturday to make up the time lost at the hospital.

    He quit his job with Tata in August 1997. But his involvement with the firm didn't end there. On May 28, 1998, Tata filed suit, accusing him of violating an employment agreement, and seeking $30,000 in damages.

    Rajesh filed a counterclaim, accusing Tata of violating the Family Medical Leave Act in denying him time off for his illness and, later, his wife's. He also alleged that Tata took his federal income tax refund.

    According to the counterclaim, Tata filed Rajesh's federal tax return, then cashed his refund check. "When employees complain about Tata retaining the income tax refund checks, employees are immediately ordered returned to India," the counterclaim states.

    Tata did not deny that Rajesh asked for the time off, but said he did not qualify for coverage under federal law because he had not worked for the company for a full year in the United States. Tata's lawyers said Rajesh should not receive credit for the year and a half he worked for the firm in India.

    The company contended that the deductions from his paycheck and the handling of the tax refund were legal.

    The lawsuit was eventually settled, with Rajesh agreeing to pay the firm an unspecified amount. Rajesh is barred under the settlement agreement from discussing the case.


    Originally published on Feb 21 2000