IBM: "The Cost Difference Is Too Great for the Business Not to Look for" H-1B Workers

By John Miano, August 6, 2012

Read more on IBM and H-1Bs

Workers from around the country send me examples of H-1B abuse that is taking place around them. I organize this data to decipher patterns. There is usually no legal action that can be taken due to the way the law is structured and the circumstances of the information provider. Generally, I just collect.

Separately, I have been preparing a case in which discrimination against Americans in favor of foreign workers is a factor. As part of the preparation I have been collecting advertisements from companies that say they only want foreign workers.

The companies that publicly advertise illegal recruitment tend to be small. Many of these small companies publish lists of companies they supply workers to. I compiled the advertisements and customer lists in a database and found a striking feature in the data. The median percentage for companies showing up as customers of companies making foreign-workers-only advertisements was 1 percent. However, at the high end there is a small cluster of customer companies that show up much more frequently. IBM leads the pack here, being claimed as a customer by 35 percent of the companies only seeking foreign workers. Let me rephrase that. Among advertisements seeking only foreign workers that had lists of companies it supplied these workers to, over one-third listed IBM (With Verizon and JPMorgan Chase close behind).

The frequency with which IBM appears suggested that I should return to my IBM collection and write about it. One item in the collection seemed particularly appropriate for showing how H-1B abuse takes place in big corporations behind the scenes.

An American IBM employee sent me an e-mail chain among the employee, IBM hiring managers, and IBM HR that shows how IBM flagrantly violates the law in regard H-1B usage and immigration status discrimination.

First a little background. IBM has a built-in source to import foreign labor. IBM's Indian subsidiary (IBM Global Services India) is one of the largest importers of foreign workers on H-1B visas.

When IBM is staffing projects in the United States it can hire locally or use imported labor on H-1B visas provided by IBM India.

Now let me set the stage for the e-mail chain. An American IBM employee in the United States had been working on a software development project for a customer that had recently ended. The employee needed to find another project to avoid being laid off, as it is easier to lay off people who are not working on projects.

The American IBM employee was on an internal IBM mailing list for employees who were available for a new project. The IBM employee received a timely mass e-mail through this list from IBM HR with a job description that started out:

We are urgently seeking Business Analyst resources with Test experience for two positions on the Alcatel-Lucent account (emphasis in original).

A lengthy job description and instructions on how to apply followed this introduction. (IBM uses the term "resource" throughout to refer to employees.) The job was located in the United States and the American IBM employee lived close to the project.

The American IBM employee responded to the job posting with a cover letter explaining how the employee's qualifications matched the posted job requirements, the additional information requested in the job posting, and a resume.

This is the IBM hiring manager's complete response to the American IBM employee's application (The IBM employee provided translations of acronyms that I have indicated in square brackets.):

Thank you for your interest in the eBusiness Analyst position on the Alcatel-Lucent account. We are in the process of gathering resumes for this position and will send you a follow-up response once we have had an opportunity to review your qualifications.

Please understand the clients first preference is IGSI [IBM Global Services India] landed resource, then local US candidates, then remote, so these candidates will be in the second group to be considered. (sic)

This manager was forcing Americans to get in line for jobs behind "landed resources" from IBM India. In case you are wondering — yes, this is illegal. See 8 USC § 1324B.

So how can IBM so flagrantly violate the law?

The reason IBM can get away with this disgraceful behavior is that discrimination enforcement requires a complaint. An employee considering a complaint has to weigh the probability of the government prosecuting the case and winning adequate compensation against the risk of retaliation and damage to his or her career. Many companies make severance packages contingent upon employees signing away rights to file such a complaint.

At this point, I am sure the IBM public relations folks reading this posting to formulate their response are thinking to themselves "Rogue hiring manager. IBM does not have a policy of discrimination." Read on.

The American IBM employee forwarded the e-mails to IBM HR and attached the following complaint:

You included these two positions - below - again into today's email to "Available". Per below, they are NOT looking at Americans. Pretty clear.

You would think that IBM HR, upon learning of unlawful discrimination, would disavow the actions of its hiring manager and take decisive corrective action.

Instead, IBM HR actually responded by explaining to the American employee why IBM violates the law:

There are often US Reg [U.S. Regular] seats that also have landed GR [Global Resource] seats open - sometimes the customer will take either as long as they are working onsite - - and the cost difference is too great for the business not to look for landed GRs or to use them if they are a skills match.

There you have it, straight from the IBM HR department. Foreign workers, global resources supplied by IBM India, are so cheap compared to Americans that it is worth violating the law.

IBM HR added this coda to its message to the American employee:

IBM India may not have visa-ready resources with the specific skills so many times US resources do fill the seats though

Doesn't hurt to get your resume in cosideration if that turns out to be the case. (sic)

IBM's HR statements demonstrate a number of points about the H-1B program:

  • Companies are willing to ignore available Americans even when they say they "urgently" need workers.

  • H-1B workers are cheaper than Americans — "and the cost difference is too great" for IBM not to look for foreign workers first. The H-1B statutes are designed to allow employers to legally pay H-1B workers less than Americans and IBM (and a lot of others) is taking full advantage.

  • The H-1B visa quotas are important — IBM would only hire Americans when "visa-ready resources" were not available. The quotas put in place a stopping point where employers can no longer ignore American applicants.

  • It is not just the Indian bodyshops who are H-1B abusers — Alcatel-Lucent is an H-1B abuser, telling IBM they prefer foreign workers. IBM is an abuser by giving preference to foreign workers.

  • Big companies try to hide their H-1B abuse through indirection — Alcatel-Lucent is getting its H-1B workers from IBM. IBM is getting them from IBM India. The chain goes even farther. I previously posted a blog describing recruiting agencies claiming to work for IBM India who were posting advertisements for jobs in America where only Indian H-1B holders would be considered.

Obviously, the government is not going to correct abuse at big-money companies like IBM. In the 22 years since creating the H-1B program Congress has done nothing to fix the well-known problems. The most likely corrective action will come through the legal system. This e-mail illustrates the kind of evidence that is waiting to be found in discovery at many large companies.