Infosys to Face Record Fine in Visa Case

Federal officials are expected to hit Infosys with a record immigration fine of approximately $35 million over allegations that the Indian outsourcing company used B-1 visitor visas to bring foreign workers into the country and place them with large corporate clients, according to The Wall Street Journal. Infosys allegedly used the B-1 visitor visa as a means to circumvent the more expensive and difficult to obtain H-1Bs.

The Department of Homeland Security and State Department are expected to announce the fine on Wednesday, the Journal says. B-1 visas are designed to be used by foreign nationals coming into the U.S. for these business activities:

  • Consult with business associates
  • Attend a scientific, educational, professional, or business convention or conference
  • Settle an estate
  • Negotiate a contract

Because B-1 visas only cost $160 to process and can obtained in less than a week, Infosys may have received an unfair competitive advantage by using the cheaper visa, the Journal noted. H-1Bs can cost upwards of $5,000 to process.

And unlike H-1Bs that have a cap of 65,000 visas each year, the B-1 visa has no such restrictions. A number of Fortune 500 tech companies from Microsoft to Google to Facebook have complained that the 65,000 cap needs to be raised in order to help them find enough talent to fill job openings.

H-1B critics, however, say that there are plenty of qualified U.S. workers already in the States and the need to raise the limit beyond 65,000 a year is unnecessary.

See our Special Report on H-1Bs

InfoSys Legal Woes

Infosys, according to its filing with the Securities and Exchange Commission, was hit with a grand jury subpoena in 2011 by the U.S. District Court for the Eastern District of Texas. The subpoena required Infosys to deliver certain documents and records to the grand jury that related to its sponsorships and uses of B-1 business visas. The company complied with the subpoena.

The U.S. Attorney’s Office for the Eastern District of Texas, meanwhile, advised Infosys that some of its employees were targets of the grand jury investigation and that additional subpoenas may be issued. While the U.S. Attorney’s investigation was underway, the Department of Homeland Security reviewed the company’s employer eligibility verifications on Form I-9s for its employees working in the U.S. The DHS uncovered errors in a significant percentage of those forms and warned the company it might impose fines and penalties relating to those alleged errors.

As a result of discussions with the U.S. Attorney’s Office and other governmental departments, Infosys in its quarter ending Sept. 30 set aside a provision of $35 million, including legal costs, according to the filing.

The company, which generated $2 billion in revenues during the quarter, potentially faces a much larger hurdle if the government limits its access to the B-1 business visa program or other visas. Infosys is among the largest users of the H-1B program. In fiscal 2011, it ranked No. 2 among the Top 10 employers for H-1B positions that were certified, according to Homeland Security.

Infosys and IBM Spanked on Visas

Late last month, IBM reached a settlement with The Department of Justice over allegations it discriminated against U.S. software and apps developers. The DOJ alleged Big Blue favored job applicants who held H-1B visas or foreign student visas (F-1).

IBM posted online job openings for software and apps developers, allegedly stating a preference for F-1 or H-1B workers. F-1 visas are issued to foreign students and H-1B visas to foreign nationals with technical experience in a specialized filed.

In less than two months, the federal government has struck settlement deals with two high-profile tech companies over their visa use. But in the case of IBM, the federal government only fined $44,400 in civil penalties.


9 Responses to “Infosys to Face Record Fine in Visa Case”

  1. TCS is another big company that IS doing the same thing.
    Probably in a smarter way to avoid the higher costs involved with h1b visas.
    I believe most of their consultants are on the B! visa !!

  2. johngalt

    Interesting that Infosys got a $35M fine, while IBM got something *significantly* smaller as a fine, not even a slap on the wrist (barely enough to cover the CEO’s donut budget). I guess tha investment in congressional bribes paid off…

  3. All these companies(Infy, Wipro, Satyam, IBM, Accenture, TCS and many others) do the same thing. There is no proper check on these companies and the sad part is everybody knows about it in America and they wont do anything and they issue more visas.

  4. kulmohan

    As an employee of Indian IT consultancy, I have seen many innocent Indian IT employees working overtime and spending their health and long hours on the job, all through the year, even so on the day of Diwali festival (akin to Christmas in the western world). To say the least, US decision to levy a fine of 34 million dollars on Indian IT company Infosys has only deprived the ordinary Indian employees or the creators of this wealth from their rightful share.

  5. This is a clear act of discrimination against Indian IT Companies vs American IT Companies, the regulators plays by different set of rules for both Infy & IBM making it uneven field for companies. Infy should take it the Union Carbide way & lobby in India.

  6. If the government would investigate other outsourcing corporations, they would find similar visa violations. Another little known practice these companies do is taking their visa workers’ tax refunds. They would ask the employee to send their tax refund documents, and deduct their pay until the refund amount is reached. hmm, hmm…. CSC.