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Outsourcing January 31, 2008, 5:00PM EST

Are H-1B Workers Getting Bilked?

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Jude says it advocates for contract workers who file complaints, although no Patni workers have done so.

State Farm has turned increasingly to Patni and is now its No. 2 client. Dick Luedke, a State Farm spokesman, says that visa workers receive fair treatment. "Working conditions at all our State Farm locations are monitored and maintained without distinction of State Farm or vendor employee," he says. "We of course negotiate how much we pay the vendor; what the vendor does to get the work done is up to the vendor." According to the Goel suit, State Farm paid Patni "in excess of" $100,000 per worker.

State Farm has had layoffs as it has brought in Patni workers. Outplacement specialist Challenger, Gray & Christmas says the insurer has let go 10,000 workers nationwide since 1995, though Luedke says only one quarter of those were "involuntary severances." He says Patni employees have not replaced staffers and the insurer's own IT staff has risen from 5,500 in 1995 to 5,900 in 2007. Luedke says State Farm doesn't track how many outsourced workers it uses.

George Moraetes is a U.S. worker who believes he was affected by the H1-B program. A specialist in info tech security, he worked at State Farm from 2002 to 2004, when the company declined to extend his contract. Now in Chicago, he's unable to find a staff position in his specialty. "The whole industry is being outsourced and contracted," he says. "The American IT worker is a dying breed."

Moraetes has empathy, not anger, for employees such as Goel who come to the U.S. on H-1Bs. "The workers are living in squalor," he says. "I feel sorry for them."

The H-1B program could get an overhaul later this year. Senators Richard J. Durbin (D-Ill.) and Charles E. Grassley (R-Iowa) have proposed reforms because of what they consider widespread abuse. "There are simply too many loopholes that companies can use to get around the original intent of the H-1B visa," says Grassley in an e-mail.

As for Goel, he hasn't given up on his dream of living in the U.S. He's in California with another employer serving as his visa sponsor. His case is expected to go to trial later this year.

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More Harm Than Good?

In his paper "Outsourcing America's Technology and Knowledge Jobs," Ron Hira, a Rochester Institute of Technology assistant professor, argues that U. S. visa programs for overseas workers hurt the wages and job security of U.S. tech workers. Expanding the number of visas, Hira contends, "would directly lead to more offshore outsourcing of jobs, displacement of American technology workers, decreased wages and job opportunities, and the discouragement of young people from entering science and engineering fields."

Business Exchange related topics:
High Skill Work Visas
Global Outsourcing
Employment Law

Herbst is a reporter for BusinessWeek in New York.

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