iGate Isn’t Only ‘Villain’ Hiring Foreign High-Tech Workers

iGate isn't only 'villain' hiring foreign high-tech workers

By Mark Houser
Monday, June 9, 2008

A local high-tech company has put a Pittsburgh face on a national debate about hiring foreign workers.

Computer consulting firm iGate Corp. of Findlay paid the Justice Department $45,000 in April to settle charges it discriminated against U.S. workers by posting online job ads seeking foreigners with special visas.

The fine for favoring holders of H-1B visas, which go primarily to computer and engineering specialists, is the highest yet, said Justice Department spokeswoman Jamie Hais.

Critics say cases such as iGate's are not the only problem with the visas, which are widely used by high-tech firms.

“Everybody is a villain here, not just iGate. … It's also IBM, Intel, Microsoft, Oracle, and so on,” said Norman Matloff, a University of California, Davis, computer science professor and prominent H-1B critic.

The government allocates 85,000 new H-1B visas each year. High-tech firms covet the visas, which supply them with skilled foreign talent.

Foreign workers covet them, too. The visas, which last from three to six years, often serve as a path to U.S. citizenship.

Critics contend admission of thousands of skilled workers each year diminishes opportunities for U.S. workers and depresses salaries.

About 75,000 computer specialists are unemployed nationwide, according to the federal Bureau of Labor Statistics.

Matthew Mashyna of Erie, an independent programmer with a master's degree in software engineering from Carnegie Mellon University, said the constant influx of skilled foreign workers can make finding work more difficult, even if it is good for business.

“As a programmer looking for a job, I hate it. It means fewer opportunities because there's more of the commodity (skilled workers), and if you do find a job you're going to be paid less. As somebody who runs a company who develops software, I think it's a good thing because it gives you more people to choose from,” he said.

A 2003 study by the U.S. General Accounting Office revealed some employers said they hired H-1B workers partly because they would accept lower salaries than similarly qualified U.S. workers.

Federal law requires employers to pay prevailing wages to visa holders. But Matloff and other critics say companies skirt the rule by lowballing industry salaries when they apply for the visas, or by hiring overqualified workers for low level jobs and wages.

Even the best H-1B workers receive salaries barely above the industry average, Matloff reported last month in a paper for the Center for Immigration Studies. The Washington policy group favors restricting immigration laws.

Simply hiring unemployed U.S. workers instead of foreign H-1Bs isn't always practical, said Dan Caliguire, business development manager for The Command Group of Pine. The company supplies computer workers to industry.

Caliguire said the field is highly specialized. A system administrator skilled in one environment might not manage the transition to another, he said.

“Trust me, I have clients that will want to hire Americans, will do everything they can to hire Americans … but if that person's not available with that skill set and they have to reach out to an H-1B, that's what they're going to do,” Caliguire said.

Rich Dowey, who spent 17 years in Pittsburgh managing computer networks for local corporations, said H-1B workers are common in New York, where he now works as a network engineer for a pharmaceutical company.

Information technology is so specialized that “companies couldn't exist without H-1B workers coming in and contributing to IT projects,” he wrote. “Deadlines are too short for people to be retrained, so companies hire consultancies who staff themselves with hordes of H-1Bs that they farm out on those projects.”

Indian consulting firms are the biggest users of H-1B visas. The top three — Infosys Technologies, Wipro, and Satyam Computer Services — accounted for more than 8,500 visas in fiscal 2007, according to the U.S. Citizenship and Immigration Services.

Last year, iGate was approved for 55 H-1B visas. Its applications listed salaries for software engineer positions in Pittsburgh and elsewhere starting at $60,000.

The company has depended on foreign labor since its 1986 founding by Sunil Wadhwani, a graduate of CMU's business school, and Ashok Trivedi.

Most of iGate's more than 7,300 employees work abroad, with major operations in India serving corporate clients such as General Electric.

The company has announced plans to sell off its Pittsburgh-based professional services business, called iGate Mastech. Wadhwani stepped down in April from his longtime post as CEO, and Trivedi resigned as president. Both continue on the board of directors.

A third of iGate's approximately 1,000 U.S.-based employees hold H-1B visas, according to the company's annual report. An iGate Web site claims the company has secured more than 20,000 of the visas for its workers since 1990, as well as 2,000 “green cards,” which grant permanent residency to foreigners.

The company can't rely solely on finding new hires at CMU or the University of Pittsburgh, said iGate spokesman Christopher Evans.

“You've got to understand that we don't just serve the Pittsburgh market,” Evans said. “Whereas there may be a glut of talent coming out of the Pittsburgh area, not all of those are looking for positions, say, in Minneapolis.”

The Justice Department investigation focused on iGate Mastech, specifically 30 online ads it posted in 2006. One example, for a Java developer position in Illinois, said “only H-1s apply.” Federal law prohibits discrimination in hiring because of citizenship status.

In the settlement, iGate Mastech agreed to post all open IT positions online “so that U.S. workers have an equal opportunity to compete for its job vacancies.” The company now posts a non-discrimination hiring statement on its Web page.

Terms of the settlement state iGate Mastech does not admit to violating the federal hiring law.

Unlike a permanent work visa, which requires the job in question to be posted in local newspaper want ads and elsewhere before a foreign worker is authorized, the H-1B program doesn't require employers to look for U.S. workers first.

That difference has prompted congressional scrutiny.

“(Companies) are using the H-1B program essentially as an outsourcing visa program,” said Max Gleischman, a spokesman for U.S. Sen. Richard Durbin, D-Illinois.

Durbin and Sen. Charles Grassley, R-Neb., have cosponsored a bill requiring employers asking for H-1Bs to first list open jobs on a government Web site for at least 30 days. The bill would expand federal investigative authority to prevent fraud and abuse.

The proposed legislation has been dormant since the sponsors tried to include it in last summer's failed immigration reform bill. Gleischman said he does not expect Congress to look at it again before the August recess.

At the same time, business titans such as Microsoft's Bill Gates are pushing Congress to lift the annual cap on H-1B visas.

While that effort hasn't succeeded, the government in April extended the period recent college graduates can work in the country while on student visas, from 12 to 29 months. Gates and others had called for the extension, saying the limited supply of H-1Bs made it difficult to recruit talented foreign students for jobs after graduation.

H-1B opponents have filed a federal lawsuit, saying the Department of Homeland Security had no legal basis to change the student visa rules.

One party in the suit, the Programmers Guild, is the whistleblower that brought iGate's ads to the Justice Department.

John Miano, a former programmer, said his frustration after several colleagues were laid off led him to establish the New Jersey-based membership organization and lobbying group in 1998.

Miano said of the $45,000 iGate fine, “For us that's great, but that came out of petty cash for them.”

He said his group has filed nearly 100 Justice Department complaints like the one about iGate.

“I thought after we started doing this the companies would catch on and the ads would disappear. But they keep popping up,” he said.

Mark Houser can be reached at mhouser@tribweb.com or 412-320-7995.