Outsourcing: How to Skirt the Law
The video looks as though it could have been shot at almost any sleepy corporate seminar in the country, with one camera panning between a man in a suit and tie standing at a podium and others seated nearby. But the dialogue is riveting: It's a group of lawyers openly discussing strategies for helping their clients pretend that they're trying to recruit American workers—as required by law—while they, in fact, hire cheaper foreign workers.
"[O]ur goal is clearly not to find a qualified and interested U.S. worker," says Lawrence Lebowitz, director of marketing for the Pittsburgh law firm Cohen & Grigsby, before an audience of employers at the firm's conference. The seminar provides details on how employers can meet the government's requirements for the Permanent Labor Certificate program (PERM), which lets employers sponsor foreign workers for permanent residency if they can demonstrate no U.S. worker can fill a job. The trick, according to Cohen & Grigsby attorneys, is to only go through the motions of hiring Americans without ever intending to.
The video, which has been posted on YouTube (GOOG), is now sparking a sharp backlash. On June 21, Senator Chuck Grassley (R-Iowa) and Representative Lamar Smith (R-Tex.) fired off a letter to Cohen & Grigsby demanding an explanation for its advice, as well as going so far as to ask for the names of its clients. "Your firm's video advises employers how to hire only foreign labor, while making it nearly impossible for a qualified American worker to get a job," they wrote. "We look forward to hearing from you on how such advice is ethical and does not undermine the programs by enticing fraud and misuse." (See the lawmakers' letter here.) A public relations firm representing Cohen & Grigsby did not return phone calls seeking comment.
Temp Work Program Under Fire
The same day, the legislators wrote a separate letter to Labor Secretary Elaine Chao. They asked for information about how the government is managing the program for temporary work visas, known as H-1Bs. The workers that are sponsored for permanent residency typically come into the country on such temporary visas. "[W]e are concerned that companies are abusing the H-1B visa program," the lawmakers write. "The video explicitly shows how attorneys are aiding companies in this effort." Grassley and Smith then voice concern about the Labor Dept.'s failure to monitor fraud in the visa system, and they request a breakdown of exactly how anti-fraud dollars are spent.
The video may complicate the prospects for immigration reform this year. While most of the debate has been over what to do about low-skilled workers, including the 12 million illegal immigrants already in the U.S., the policies for high-skilled workers are now becoming controversial, too. Microsoft (MSFT), Intel (INTC), Google (GOOG), Oracle (ORCL), Motorola (MOT), and a host of other leading technology companies have called for new policies to make it easier for skilled workers to come into the U.S., including by making available more H-1B visas.
But the temporary worker program has come under heavy fire this year. The program was originally set up to help U.S. companies hire foreign workers with specialized skills that the companies couldn't find among American workers. Now, however, the most active users of the program have become outsourcing companies, particularly those from India, including Infosys Technologies (INFY), Wipro (WIT), and Satyam Computer Services (SAY). That has led critics such as Grassley to question whether the U.S. program is being used to facilitate the outsourcing of American jobs (see BusinessWeek.com, 5/15/07, "Crackdown on Indian Outsourcing Firms").
Tech Labor Shortage Called a Myth
The Cohen & Grigsby video was originally posted online by the law firm itself as a way to promote the conference. Then Kim Berry, president of the Programmers Guild, an advocacy group for U.S. tech workers, took excerpts of the footage, edited them into a five-minute clip, and posted it on YouTube. The video has received tens of thousands of views so far.
Berry says the video is not exceptional, but rather exemplifies the way employers are systematically abusing the H-1B visa program for high-skilled workers to avoid hiring Americans who demand higher salaries. "The idea that there's a labor shortage in the tech sector is a myth," says Berry. "Hundreds of thousands of qualified Americans can't find work as visa workers continue to fill positions."
Employers don't have to prove that they can't hire Americans to employ an H-1B visa worker. But if they want to sponsor that worker for permanent residency, then they need to take a series of steps to prove no U.S. worker is qualified, including placing ads in newspapers, reviewing résumés, and interviewing potential candidates. That employers appear to be gaming that part of the immigration system, with its higher hurdles, is disconcerting to some experts. "What's disturbing about this from a public policy standpoint is that the PERM is supposed to be the gold standard," says Ron Hira, professor of public policy at Rochester Institute of Technology. "If you can circumvent those rules, it begs the question of what's going on elsewhere."
Brendan Boyd, a computer programmer in Austin, Tex., is one out-of-work American who is upset about the country's work policies. He was laid off from a freelance position at Raytheon (RTN) last fall and has since been unable to find work. "I've been on 15 or 20 interviews in the past few months, and I can tell they're phony," says Boyd. "They ask overly simple questions and don't even ask me about my tech qualifications. It's a sham."
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