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H-1B loophole may help California utility offshore IT jobs

Patrick Thibodeau | April 21, 2014
Southern California Edison is outsourcing part of its IT operations, and the jobs may be going overseas.

The offshore companies, iGate and Infosys, both pay wages of more than $60,000 a year and therefore aren't obligated to meet the H-1B dependent rules.

Ron Hira, a public policy professor at the Rochester Institute of Technology, said H-1B-dependent firms are required to make three attestations: They must make a good faith recruitment of American workers prior to filing an LCA; they can't replace their American workers with H-1B workers; and they can't replace American workers employed with a client's company.

But Hira calls the $60,000 threshold and master's degree exemptions "a huge loophole."

The H-1B dependency rules were put into law about 15 years ago, and were "part of the quid pro quo of the major increase in the H-1B quota," Hira said.

Companies that fell below the 15% threshold for H-1B workers could avoid good faith recruiting and could also legally displace their American workers with H-1Bs, Hira said. "The rationale was that the only employers that abused the H-1B program were 'dependent' upon them," he said.

Hira said there has been no effort by the government to enforce the dependency rules. "This is remarkable given the hundreds of thousands of visas that have been granted to H-1B dependent firms since the regulations took effect," he said.

IT services firm iGate employs about 30,000 people. At the end of last year, it had more than 4,000 professionals in the U.S., nearly 50% on H-1B visas. Infosys employs more than 160,000 globally. It doesn't provide a specific U.S. headcount.

In a statement, Edison said its outsourcing efforts and assessment are at different stages in select business units across the company, "and various alternatives are being explored to achieve operational and service excellence. SCE's Information Technology (IT) unit is one example."

The utility said it "has yet to finalize employee reduction numbers or percentages at this time. However, SCE is exploring several ways to support impacted employees including career development workshops that feature interviewing and resume writing, job fairs with SCE vendors, and other transition opportunities with SCE."

In 2011, two IT managers at SCE were fatally shot by an employee who took his own life.

Following the shooting, there was an audit of internal operations by an outside risk management firm, Incident Management Team, which looked at conditions in the IT organization.

One observation in the report was that "employees perceive managers to be more concerned about how they 'look' from above, and less concerned about how they are viewed by their subordinates. This fosters an unhealthy culture and climate by sending a message to employees that it is more important to focus on how things look from the top than how they actually are down below."


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