Corporate miscreance takes so many forms that readers may wonder why I am highlighting the allegations against Infosys, the second biggest IT outsourcing company in India. The answer is that this case provides a window into a much bigger problem, namely, the lack of anything resembling coherent US industrial policy.
Infosys faces a lawsuit by former employee Jack Palmer over charges that it abused US visa programs. Per the Economic Times of India (hat tip reader May S):
In a case that threatens to scald Infosys in the North American market, from where it gets over 60% of its revenues, and intensify the debate on outsourcing in the US, Jack Palmer said the company was circumventing H-1B visa rules by sending low-level and unskilled employees to the US on B1 visas instead.
H-1B visas, which are needed to send employees to work in the US, have become more expensive and harder to get than B1 visas that are only meant for meeting, conferences and business negotiations. Palmer, who has been working with the company since 2008, further said that Infosys managers in the US were intentionally committing fraud to avoid paying taxes locally and that the company mistreated him when he filed a complaint as part of the whistleblower policy..
In addition to Palmer’s suit, the company is under criminal investigation in Texas and Senator Charles Grassley has also taken interest.
The Infosys charges illustrate the growing conflict between the desires of multinational corporations to source cheaply (even if “cheap” has been mismeasured by not not being adjusted for risk) and what actions need to take place at a country level to make sure these very same multinationals have decent market for their goods.
The conundrum in the US is our lack of a coherent industrial policy, and our denial that we have one. We have industrial policy by default. Certain sectors, such as banking, defense contractors, agricultural producers, and Big Pharma, get large subsidies. But the US has an ongoing problem with employment and competitiveness (and the latter is made worse by rampant short-termism in large companies). Since at least the mid-1990s, there is lip service given to the idea that the US can become a knowledge society. Aside from the fact that it is questionable whether this vague idea will provide enough jobs, the outsourcing fad is assuring that it can’t happen. Entry level and yeoman work is being sent abroad. I read the tech site Slashdot occasionally, and for years there have been frequent comments about how it is extremely difficult for young computer professionals to find and create career paths. Similarly, in the law, the sort of research that was bread and butter work that helped train young attorneys is now sent overseas.
The Infosys case is disturbing because it suggests the displacement of young workers has gone even further. It is one thing to send certain types of well-defined work to staff overseas. But bringing people to the US to do face to face work says that even the places where local staff would seem to have an overwhelming advantage are under pressure.
If it is any consolation, Infosys had a major contract cancelled, apparently as a result of recent bad press. But that is a small reversal in a trend of US executives showing they have more loyalty to their pay packages than to their communities.
This post originally appeared at naked capitalism and is reproduced here with permission.