IT Outsourcing Giants Probed By Feds On Suspicion Of Visa Violations

Two Indian outsourcing giants are being investigated by the U.S. government on suspicion of violating labor rules by replacing American workers with foreigners on temporary visas.

The U.S. Department of Labor is investigating whether Mumbai-based Tata Consultancy Services, No. 4 on the 2015 CRN Solution Provider 500, and Bangalore-based Infosys complied with the H-1B skilled-worker-visa system under their contracts with utility company Southern California Edison.

Sens. Richard Durbin, D-Ill. and Jeff Sessions, R-Ala., announced the investigation after being notified about it by the Labor Department, according to reports from The New York Times and The Wall Street Journal. Tata's stock is down 2.8 percent since the news came out Friday, while Infosys' stock is down 1 percent.

[Related: Infosys Pays $34 Million To U.S. Government In Visa Case]

Southern California Edison recently shrunk its IT department from 1,400 to about 860 employees through layoffs and voluntary severance agreements, according to the utility company. Many of the displaced workers claim they were forced to train their replacements, who were brought in on H1-B visas by Tata and Infosys.

Most companies aren't barred from replacing Americans with H1-B workers, though they are required to pay H1-B workers either a legally defined prevailing wage or the same wage as others doing similar work at the company, The Wall Street Journal reported.

Tata spokesman Ben Trounson said the company is fully cooperating with the Labor Department's request for information.

"TCS maintains rigorous internal controls to ensure it is fully compliant with all regulatory requirements related to U.S. immigration laws, including those related to H-1B visa," Trounson said in an email.

Similarly, Infosys said it is committed to complying with U.S. immigration laws.

’The U.S. Department of Labor regularly selects a percentage of visa and labor condition applications for extra scrutiny in this industry, and we work closely with the DOL to assist them in this activity in the ordinary course of our business,’ the company said in an email.

A Southern California Edison (SCE) spokeswoman said many of the workers assigned to them by Tata Consultancy Services (TCS) and Infosys are U.S. citizens or permanent U.S. residents living in California or Ohio.

"SCE's contacts with IT vendors Infosys and TCS require those companies to comply with all applicable laws and, specifically, those requiring valid and appropriate work authorizations for their employees performing services in the United States under contracts with SCE," Southern California Edison said in an email.

Infosys, though, denied any guilt and said it agreed to the settlement only to remove uncertainty associated with prolonged litigation with the U.S. government.

Infosys filed nearly 24,000 applications for H-1B visas in 2014 and is on pace to submit more than 46,000 applications this year, according to FindTheCompany.com. Some 4,200 -- or 18 percent -- of the applications were submitted for jobs in California, the highest among all states.

Infosys' median salary for H-1B workers in 2014 was $72,254, or $8,610 above the prevailing wage, with computer systems analysts, computer lab technicians and computer programmers making up the top occupations, FindTheCompany.com found.

Tata Consultancy Services submitted more than 14,000 applications for H-1B visas in 2014 and is on pace to file nearly 19,000 applications this year, according to FindTheCompany.com. More than 1,400 -- or 10 percent -- of the applications were submitted for jobs in California, the highest among all states.

Tata's median salary for H-1B workers in 2014 was $66,600, or $6,360 above the prevailing wage, with computer programmers, computer lab technicians and Web designers serving as the top professions, FindTheCompany.com found.

PUBLISHED JUNE 15, 2015