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Permit for exploitation?

Employers say the H-1B program lets them recruit foreign workers for specialized jobs they can't otherwise fill. Critics argue that the program is vulnerable to abuse by giving employers unfair leverage and keeping wages low.

By KRIS HUNDLEY, Times Staff Writer

© St. Petersburg Times, published April 29, 2002


Employers say the H-1B program lets them recruit foreign workers for specialized jobs they can't otherwise fill. Critics argue that the program is vulnerable to abuse by giving employers unfair leverage and keeping wages low.

Gregory Troussov is quite clear about why he has hired only Eastern European engineers to work at his St. Petersburg software company.

"A Russian genius will cost $40,000 to $60,000," said Troussov, who has 15 employees -- all from former Soviet bloc countries -- at Trusoft International Inc. "A compatible American would want $200,000 to $300,000 and probably be an entrepreneur."

Few employers are as blunt as Troussov in acknowledging the financial incentives of the H-1B program, which has allowed U.S. companies to recruit hundreds of thousands of foreign workers with specialized skills. But after the economic slowdown and the terrorist attacks on Sept. 11, the program has come under increased scrutiny.

The Navy is considering banning foreign nationals, including H-1B workers, from working on sensitive but unclassified information technology work.

A congressman from Colorado has proposed slashing the number of visas by two-thirds to pre-1998 levels.

And President Bush wants to divert the $1,000 fee paid by visa applicants, now used for technology training for U.S. workers, to the INS. Its proposed use? Speeding up paperwork for foreign workers who want to become permanent residents.

The H-1B program was created through the Immigration Act of 1990. It allows companies to recruit not just foreign engineers but fashion models, physicians, chefs and others with specialized talents for up to six years. Today, there are thought to be more than 600,000 H-1B visa holders working in the United States.

In the boom times of the mid- to late 1990s, there was little opposition as technology companies and consulting companies lobbied to raise the limit on the number of foreign workers allowed into the United States. Employers such as Microsoft, Motorola, Cisco Systems and Oracle -- the program's biggest users -- claimed the American work force simply couldn't meet industry's demand for technical skills.

Last year, however, the visa requests kept coming even as high-tech companies eliminated nearly 600,000 jobs. For the fiscal year ended Sept. 30, the Immigration and Naturalization Service received a record 342,035 H-1B applications from employers. It approved 163,200, more than half of those for jobs in computers and engineering.

In the quarter ended Dec. 31, 54,000 applications were received and 28,000 visas were approved.

That makes little sense to those who have talked to engineers who are on unemployment or have thumbed through piles of resumes from out-of-work computer programmers.

"I can't believe they can't find skilled people right here," said Warren Rogers, a tech recruiter in Tampa. "There's a tremendous pool of talent here now, willing to work at reasonable prices. It's rare I get a job opening and am not able to find somebody who fits the criteria. I don't even have to look as far as Orlando."

Iskander Oumarov, the 27-year-old technical director at Trusoft, has worked in St. Petersburg on an H-1B visa for four years. He said he tried to recruit U.S. workers for two recent openings that involved working on the company's artificial intelligence software.

"It's difficult to find people with talent and enough passion about what they're doing," said Oumarov, who filled the vacancies with two fellow Russians. "I want people who don't worry about working normal hours but like to talk five or six hours straight about their work. And I'm not able to find them here."

A company such as Trusoft that depends on H-1B workers for more than 15 percent of its work force must document that it was unable to find qualified American workers, as do companies that have had previous Labor Department violations. (Such proof also is required for a foreign worker to obtain a green card permitting permanent residency.)

About a half-dozen of Trusoft's imported workers are scattered in paper-strewn offices in the upper floors of the Snell Arcade building on Central Avenue. The rest work at client sites.

Troussov, the company's founder, said his workplace looks like any other. "We don't have Russian dolls sitting around or anything," he said. And he said he would be happy to hire more Americans if they came up with exciting ideas.

"But right now all our (software) authors are from Russia and communication is a big issue," Troussov said. "It's just more efficient if we all speak Russian."

Few local workplaces are as dominated by high-skilled foreign workers as Trusoft. In the Tampa Bay area, CGI Group Inc. of Clearwater has one of the largest contingents of H-1B employees. But Dilip Patel, vice president of the computer consulting company, said less than 10 percent of its 3,000 workers in the United States are on the visas. He declines to say exactly how many H-1Bs work on CGI's Clearwater campus or for the parent company, which is headquartered in Montreal.

Since 1998, Patel's company has filed applications with the Labor Department for hundreds of computer-related positions paying $40,000 to $80,000 a year. Patel said the pace of foreign recruiting slowed during the economic downturn in 2001 but may begin to pick up.

"We're seeing a definite increase in responses from our customers," Patel said. "It's not a big boom, but there's a stronger sense of business in the pipeline."

And he insisted the company resorts to the program only because it cannot find the talent it needs at home.

"Why would I go through all that hassle if I could get a U.S. worker?" Patel asked. "With all the fees and processing time, it costs me more to bring a worker from overseas."

But Bruce Hojnacki of Largo doesn't buy it. In September, he lost a programming job after six years as a consultant with IBM. When he applied for a new position with IBM in Raleigh, N.C., he said he was told his resume was strong and he'd be a good fit, but they'd committed to bring in someone with an H-1B for the job.

"When the economy is good, it doesn't bother you," said Hojnacki, who worked as an IBM consultant assigned to Eckerd Corp. with dozens of H-1B workers. "But now is not the time to displace American IT (information technology) workers and bring down our wages."

To ensure H-1B workers won't be exploited and won't undercut the wages of U.S. employees, the program supposedly guarantees that visa holders will be paid the prevailing wage for their occupation.

But critics say those guarantees are routinely circumvented.

According to the state, prevailing wages in the Tampa Bay area in 2000 were $36,858 to $54,454 for computer programmers; $46,634 to $57,450 for systems analysts; and $33,030 to $55,203 for database administrators. Senior systems developers, also known as software engineers, make from $44,262 to $75,774.

Though one Tampa company filed a Labor Department application this year for a software engineer paying more than $72,000, another company said it would pay a systems analyst less than $17 per hour, or about $35,000 annually, well below the prevailing wage.

And Hojnacki said his experience at Eckerd convinced him H-1B workers were routinely underpaid.

"I know the subcontractors on visas, most from India, were making $25 to $30 an hour, while an American doing similar work would want $70 to $80 an hour," said Hojnacki, 39. "But it was extremely high according to their standard of living. They were sending money back to support their families."

Hojnacki said his co-workers on H-1Bs had been brought to the United States by an unidentified company that subcontracted with IBM and were not being sponsored by IBM or Eckerd. He thinks most of them had their sponsorship transferred to Eckerd last fall when the drugstore chain decided to bring its IT work in-house.

"I think most of the H-1Bs were rolled over and became Eckerd employees," said Hojnacki, who said he turned down the chance to join Eckerd because he wanted to remain with IBM. "And they probably did a little bit better there."

IBM said it couldn't comment on the wage disparity allegation without further information on the subcontractor.

Labor Department files show Eckerd applied for 112 H-1Bs visas last year for information technology workers, including systems analysts and senior systems developers. All salaries were pegged at $36,774, less than the prevailing wage as determined by the state.

In a statement, Eckerd declined to say how many H-1Bs were working in its IT department, but described their salary range as "fair, equitable, competitive within our marketplace and competitive within our industry."

A report by the General Accounting Office in September 2000 found serious flaws in the Labor Department's review of employers' wage applications for H-1Bs. Since the department neither verifies that the employer's figures are accurate nor ensures those wages are paid, the program is "vulnerable to abuse," it concluded.

Murali Krishna Devarakonda, a software engineer in Raleigh who received his green card in August after 11 years as an H-1B, said there are many ways employers can cheat foreign employees on wages. Most common, he said, are consulting companies that recruit foreign workers with the promise of a steady salary when in fact the pay is tied to project work that may not materialize.

"These 'body shops' don't pay them at all or pay them less than promised," said Devarakonda, who is on the board of Immigration Support Network, which assists H-1B visa holders. "We hear complaints like this all the time and we pass them on to the INS, but they're totally ill-equipped to handle them."

Even good employers have leverage over H-1B workers when it comes to pay, Devarakonda said, because of the nature of the relationship.

"The H-1B (worker) is not going to ask for a raise because his entire legal future is in the hands of that employer," he said. "Because you're sponsored by the employer, you're at his mercy. And though the program has checks and balances, they are a farce."

Devarakonda said H-1Bs are thrown into a panic when they're fired or laid off. "They're not really illegal, but they're considered out of status," he said, noting that the message board on his group's Web site (www.isn.org) often gets anguished messages from H-1Bs who suddenly find themselves unemployed and fear they will be deported. "There's a lot of gray area, and the average decent law-abiding engineer just has no clue about these things."

Patel at CGI said his company, formerly known locally as IMRglobal, has laid off H-1B workers, but he refused to disclose the number.

"If you notify the INS right away, they'll generally exercise discretion" in the worker's favor, Patel said, adding that the company must offer an H-1B worker a ticket home. He declined to say how many of CGI's foreign workers took the company up on the offer. "If the work goes, the person may have to be laid off, though it's a last-resort thing."

He added that the immigration process is a bit more complicated in a post-Sept. 11 world. The H-1B procedure takes more time now, Patel said. "And I can't imagine what it would be like if I were trying to bring someone in from Saudi Arabia," he said.

Patel said Florida's bureau of motor vehicles also has started revoking the driver's licenses of H-1B workers the minute their visas expire, despite a regulation that lets them stay in the country working while extension or green card requests are pending. "I've had people spend all day trying to get their driver's license extended," Patel said. "And the people who did all the damage Sept. 11 had driver's licenses."

Gregory Troussov, who has built his software business with an all-foreign work force, is puzzled that the H-1B program is considered controversial.

"Compared to all other forms of immigration, this is the most beneficial to the long-term future of the country," Troussov said. He said Sony Europe has signed a contract to use Trusoft's artificial intelligence software and that most of his company's revenue comes from customers in England and Japan.

"We're bringing money into the American economy and our employees are paying taxes here," he said. "Most of these people want to stay in the U.S. and they're smart, educated and already have jobs."

John Miano, head of the Programmers Guild, a Summit, N.J., trade group that has long opposed the H-1B program, doesn't expect the flow of foreign workers to be affected at all by economic or security concerns.

"It's quite grim right now and Americans are losing their jobs because of this program," Miano said. "But this is an issue driven by money, and the H-1Bs are a giant source of cheap labor."

-- Times researchers Caryn Baird and Cathy Wos contributed to this story. Kris Hundley can be reached at hundley@sptimes.com or (727)892-2996.

Some H-1B employers in the Tampa Bay area

Company, location, business, number of H-1Bs, work force

CGI Group Inc., Clearwater, computer consulting, maximum of 450, 3,000 (total U.S.)

Tech Data Corp., Clearwater, computer reseller, not available, 2,200 (local)

CAE USA Inc., Tampa, flight simulators, 14, 500 (local)

Soft Computer Consultants, Palm Harbor, software, 30, 450 (local)

Trusoft International, St. Petersburg, software, 15, 15 (local)

Who is the H-1B worker?

-- Almost half are born in India.

-- Average age is 28.

-- 72 percent are males.

-- 60 percent are recruited for jobs in information technology.

-- Median salary is $45,000.

-- California attracts the largest number of H-1Bs (11 percent).

-- Florida has about 6 percent of H-1Bs.

-- Source: Immigration and Naturalization Service, September 2000

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