3 BusinessWeek articles

Date: Monday, June 09, 2003 10:41 AM

JOB DESTRUCTION NEWSLETTER

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Three BusinessWeek articles have appeared that are worth reading.

Article 1:
Doctors from India, Pakistan, and Romania were imported to work in
several Florida clinics. Much to their surprise they were treated as
indentured laborers and some of their pay was ripped off.

Article 2 and 3:

Both of these articles claim the Indians are fighting protectionism in
the U.S. by taking the moral high ground on free trade. The authors
never asked what the moral high ground is but we can assume that it
means India is fighting to keep H-1B limits high, L-1 visas unlimited,
and outsourcing uninhibited.

That's all very well and good except it was revealed that India's
NASSCOM launched a major lobbying effort in Washington with help from
U.S. public relations firm Hill & Knowlton.

Hiring Hill & Knowlton obviates any notion of moral high grounds.
NASSCOM is fighting very dirty because Hill & Knowlton are experts at
duping the American public. For that reason all of us should be on red
alert because Congress usually believes everything Hill & Knowlton say
- especially if they flash enough money around.

Hill & Knowlton, the lie-for-hire PR firm, became infamous during the
Iraq invasion of Kuwait. They were hired by Kuwait to concoct a story
to whip up support for Operation Desert Storm. The daughter of the
Kuwaiti ambassador to the UN wept as she told Congress about the horror
of dying infants. Th PR scheme by Hill & Knowlton was proven to be a
fraud but it was very successful at fooling Congress and the gullible
American public that believes everything if it's on TV.

Hill & Knowlton was hired by NASSCOM to strong arm the assemblypersons
in the NJ legislature into opposing the anti-outsourcing bill. Once
again, Hill & Knowlton triumphed.

Just type Hill & Knowlton into your favorite search engine to learn of
their many immoral hijinks.

JUNE 16, 2003

WORKPLACE

Skilled Workers--or Indentured Servants?

As jobs dry up, abuse of power over visas is on the rise

In 1998, Mohan Kutty, a Malaysian-born doctor who has practiced
medicine in Hudson, Fla., since he immigrated to the U.S. more than 20
years ago, decided to open five clinics in rural Tennessee. To find
physicians to take such hard-to-fill posts, he sponsored work visas for
17 doctors from a variety of countries, including India, Pakistan, and
Romania. But when they showed up for work, Kutty paid them just half
the $80,000 a year he had promised -- and fired several after they
hired a lawyer to help them out.

Last fall, a Labor Dept. judge ordered Kutty to pay the doctors a total
of $1.04 million in unpaid wages. The clinics have since closed, and
some of the doctors have found work at other Tennessee health-care
providers. "The violations were serious and pervasive, and there is
little evidence of good-faith efforts to comply with the law on the
part of Dr. Kutty," the judge said in her ruling. Kutty has appealed
the decision, saying the law was unclear, but was unavailable for
comment. Through their lawyer, the doctors declined comment.

Such stories have become increasingly commonplace these days.
Immigrants have long complained about employers who cheat or abuse them
and threaten to have them deported if they protest. Generally, the
problem has been confined to the lowest rungs of the workforce, such as
Mexican farm hands who enter the country illegally. But nowadays, the
weak economy has sparked an outbreak of abusive treatment among the
legions of white-collar employees who flocked to the U.S. on perfectly
valid visas during the late-1990s boom. Usually, theirs are cases of
employers who don't pay full salary or benefits. Often, like Kutty, the
employers are immigrants, too, so they know how the system works.

Indeed, labor law violations involving workers on H1-B visas, which are
designed for skilled employees, have jumped more than fivefold since
1998, according to the Labor Dept. Back-pay awards for such employees
have soared by more than ten times (charts). In response, agency
officials have stepped up H1-B investigations. They agree there could
be thousands of H1-B workers who don't file complaints because they
fear the loss of their visa. "We take very seriously this fear about
coming to the government to complain," says D. Mark Wilson, deputy head
of the Labor Dept.'s Employment Standards Administration, which
enforces labor laws.

The spreading problems stem from the stagnant economy, officials say,
which is driving some companies to cut costs by unscrupulous means. At
the same time, the scarcity of jobs has left many skilled immigrants
more dependent on their employers and less willing to quit if trouble
starts. The abuses have been particularly widespread in high tech,
which used H1-Bs to bring in tens of thousands of programmers and other
professionals when companies were desperate for help during the boom.
But with the jobless rate among computer scientists and mathematicians
at 6%, vs. a mere 0.7% in early 1998, many workers are more vulnerable.

Experts point out that the U.S. work-visa system gives employers
tremendous power over immigrants. More than a million people are
employed in the U.S. under visas for skilled workers. While the rules
for each visa type differ, all require immigrants to get a U.S.
employer to sponsor them. So if employers yank their sponsorship --
which they can do for almost any reason imaginable -- the immigrant
often must return home and try to find another sponsor -- an arduous
task. "They don't have the usual rights that U.S. workers have," says
Eileen Appelbaum, a professor of labor economics at Rutgers University.
"You're essentially an indentured servant."

That's pretty much how Ekambar Rao Kodali felt when he ran into
problems with his job as a systems analyst. The Hyderabad (India)
native felt lucky to score an H1-B visa in 1997 that allowed him to
move to the U.S. and work for Atlanta-based Softpros Inc. The high-tech
consulting firm paid him $4,400 a month, but by the time the economy
soured in 2001, his paychecks had already started to come in late, and
Softpros didn't keep up its payments on his health insurance, Kodali
says. He finally quit in frustration late that year but was forced to
move back to India with his wife and three-year-old when the job he had
been offered at another company fell through.

In February, Kodali returned to the U.S. after finding work with yet
another high-tech consultancy. But the new position -- and his H1-B
visa -- expire at the end of the year. He left his family in India,
where he will have to return unless something else turns up. "I worked
for [Softpros CEO Chand Akkineni] as hard as possible, but he took
advantage of me," says Kodali. Akkineni, also a Hyderabad native,
concedes that he sent out paychecks late, but he denies that he failed
to keep up insurance payments.

An H1-B worker's options are few. For example, federal law prohibits
employers from forcing H1-B workers to take unpaid leave, yet experts
say the practice has become widespread. "You're told, 'If you don't
want to do it, fine. You're going back,"' says John W. Steadman,
president-elect of the Institute of Electrical & Electronics Engineers.
Vigorous law enforcement would help, but until the job market improves,
skilled immigrants will remain at the mercy of their sponsors.

By Brian Grow in Ocala, Fla.

http://www.businessweek.com/smallbiz/content/jun2003/sb2003066_8575.htm

JUNE 6, 2003

NEWS ANALYSIS

A New Battle Over Offshore Outsourcing

In the latest escalation of the debate about U.S. outfits' use of
foreign programmers, legislators say India is stealing American jobs
It has been a rough few months for India's IT-services companies. With
a slow global economy and increasing competition from multinationals on
their own turf, their profit margins have been sliding. So the last
thing they need is a trade spat with the U.S. But that's just what
they're getting. Alarmed by the loss of jobs to foreigners, American
lawmakers are trying to limit the outsourcing of tech services and
other white-collar work abroad account. Says a top IT executive in
Bangalore: "When bad news starts coming, it comes in truckloads.'' The
U.S. accounts for 70% of India's software services exports. (For a
small-business perspective on the offshore IT debate, go hereand here
for BW Online columnist Christopher Kenton's experience with offshore
programmers -- and then check out the angry reaction those articles
inspired.)

The momentum against the export of white-collar U.S. jobs has been
building for months. Congress in early June began considering bills to
close an immigration-law loophole where foreigners can service U.S.
clients using guest worker visas. Representative Nancy L. Johnson
(R-Conn.) has asked that large insurance companies disclose how much of
their IT work is being done by foreign workers in the U.S.

At the state level, legislatures in Maryland, Washington, Connecticut,
Missouri, and New Jersey are considering laws banning outsourcing of
government tech-services contracts to low-wage developing countries.
Even if they don't pass, though, they might make a U.S. company think
twice before outsourcing more work to India and elsewhere.

HIRING LOCALLY. The Indians are fighting back by taking the moral high
ground on free trade. N. Narayana Murthy, chairman of the premier
Indian software company Infosys Technologies (INFY ), points out that
India opened its markets to U.S. consumer goods and services, so it's
unfair for Washington to erect protectionist barriers. "When you have
these kinds of noises, it creates the impression that you preach these
things when it suits you,'' he says.

India's software association, Nasscom, has launched a major lobbying
effort in Washington with help from U.S. public relations firm Hill &
Knowlton, while New Delhi has appointed a representative in its embassy
there as part of India's campaign against the protectionist wave. They
are talking up India's software prowess, with the goal of convincing
Americans that both countries gain when they cooperate.

Nasscom Vice-President Sunil Mehta argues that while India sells $6.75
billion worth of software services to the U.S., the industry
contributes more than twice as much to the American economy by way of
hardware and software purchases, customer savings, and U.S. taxes paid
by Indian workers. "The Indian IT industry is making U.S. companies
globally competitive,'' Mehta says.

The industry also argues that it's actually creating jobs, not stealing
them. As they expand into the higher-end tech-consulting business,
India's top three IT companies, Wipro (WIT ) Tata Consultancy Services,
and Infosys, are hiring more U.S.-based marketing and consulting
executives. Nasscom claims Indian IT has been especially kind to New
Jersey, having created 1,600 jobs there in the past four years. Of
course, as the Indians admit, if they hire too many high-priced
American workers, they could erode their cost advantage.

"THE INDIA SOLUTION." Indian executives are betting that simple
economics ultimately will prevail. Indian software services deliver
cost savings of more than 60% to U.S. companies, says C. Srinivasan,
who heads offshore operations in India for Electronic Data Systems (EDS
), the consulting and outsourcing company based in Plano, Tex., which
plans to employ 2,500 in India by yearend. And despite the potential
political heat in the U.S., he expects the outsourcing trend to
continue. "In the next three to five years, the India solution will be
a critical part of every portfolio,'' he says.

As long as the U.S. IT industry remains in the doldrums, New Delhi will
come up against U.S. protectionism. U.S. Rep. Jay Inslee (D-Wash.), who
supports India's free-trade argument, says the politically charged
issue won't be resolved anytime soon. "You'll hear an ongoing debate
for the next decade,'' he says. India's new tech powerhouses better
gird themselves for a long fight.

By Manjeet Kripalani and Bruce Einhorn in Bangalore, with Paul
Magnusson in Washington

JUNE 16, 2003

WORKPLACE

India: A Tempest Over Tech Outsourcing

American legislators are accusing India of stealing tech jobs

It has been a rough few months for India's IT-services companies. With
a slow global economy and increasing competition from multinationals on
their own turf, their profit margins have been sliding. So the last
thing they need is a trade spat with the U.S. But that's just what
they're getting. Alarmed by the loss of jobs to foreigners, American
lawmakers are trying to limit the outsourcing of tech services and
other white-collar work abroad. Says a top IT executive in Bangalore:
"When bad news starts coming, it comes in truckloads." The U.S.
accounts for 70% of India's software services exports.

The momentum against the export of white-collar U.S. jobs has been
building for months. Congress in early June began considering bills to
close an immigration-law loophole where foreigners can service U.S.
clients using guest worker visas. Representative Nancy L. Johnson
(R-Conn.) has asked that large insurance companies disclose how much of
their IT work is being done by foreign workers in the U.S. At the state
level, legislatures in Maryland, Washington, Connecticut, Missouri, and
New Jersey are considering laws banning outsourcing of government
tech-services contracts to low-wage developing countries. Even if they
don't pass, though, they might make a U.S. company think twice before
outsourcing more work to India and elsewhere.

The Indians are fighting back by taking the moral high ground on free
trade. N. Narayana Murthy, chairman of the premier Indian software
company Infosys Technologies (INFY ) Ltd., points out that India opened
its markets to U.S. consumer goods and services, so it's unfair for
Washington to erect protectionist barriers. "When you have these kinds
of noises, it creates the impression that you preach these things when
it suits you," he says.

India's software association, Nasscom, has launched a major lobbying
effort in Washington with help from U.S. public relations firm Hill &
Knowlton Inc., while New Delhi has appointed a representative in its
embassy there as part of India Inc.'s campaign against the
protectionist wave. They are talking up India's software prowess, with
the goal of convincing Americans that both countries gain when they
cooperate. Nasscom Vice-President Sunil Mehta argues that while India
sells $6.75 billion worth of software services to the U.S., the
industry contributes more than twice as much to the American economy by
way of hardware and software purchases, customer savings, and U.S.
taxes paid by Indian workers. "The Indian IT industry is making U.S.
companies globally competitive," Mehta says.

The industry also argues that it's actually creating jobs, not stealing
them. As they expand into the higher-end tech-consulting business,
India's top three IT companies, Wipro (WIT ) Tata Consultancy Services,
and Infosys, are hiring more U.S.-based marketing and consulting
executives. Nasscom claims Indian IT has been especially kind to New
Jersey, having created 1,600 jobs there in the past four years. Of
course, as the Indians admit, if they hire too many high-priced
American workers, they could erode their cost advantage.

Indian executives are betting that simple economics ultimately will
prevail. Indian software services deliver cost savings of more than 60%
to U.S. companies, says C. Srinivasan, who heads offshore operations in
India for Electronic Data Systems (EDS ) Corp., the consulting and
outsourcing company based in Plano, Tex., which plans to employ 2,500
in India by yearend. And despite the potential political heat in the
U.S., he expects the outsourcing trend to continue. "In the next three
to five years, the India solution will be a critical part of every
portfolio," he says.

But as long as the U.S. IT industry remains in the doldrums, New Delhi
will come up against U.S. protectionism. U.S. Rep. Jay Inslee
(D-Wash.), who supports India's free-trade argument, says the
politically charged issue won't be resolved anytime soon. "You'll hear
an ongoing debate for the next decade," he says. India's new tech
powerhouses better gird themselves for a long fight.

By Manjeet Kripalani and Bruce Einhorn in Bangalore, with Paul
Magnusson in Washington

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