7 ms·

Investigation Reveals Silicon Valley’s Abuse of Immigrant Tech Workers

120 points by janeboo 10y ago

tristor 10y ago
I appreciate that Wired is writing about this topic. That said, I don't know anyone who works in tech that is not aware of the following facts: 1. Body shops overwhelmingly exist to abuse the H1B visa allocation system 2. Contractors cost more than FTEs, but it can be booked as CapEx instead of OpEx so looks better during reporting 3. Body shops generally supply subpar labor. People with cooked resumes that are incapable of performing at the same level as their non-body shop title peers. 4. Body shops overwhelmingly arbitrage the fact it's near impossible to legitimately acquire H1B visa allocations and the broken rules about job changes for immigrants on H1B visas. 5. All of this adds up to body shops treating immigrant workers horribly while at the same time largely defrauding their customers and the government offices responsible for visa allocations TL;DR: Body shops are evil, everyone knows this, management doesn't care because it looks good to shareholders.
- gonzo 10y ago
  Neither I-99 nor W-2 wages are "capex"
  - tristor 10y ago
    The business hiring a body shop typically does not directly pay any wages. They pay a per project fee or a contracted per headcount rate, both of which are treated as CapEx and amortized as a project cost. The economics are different for bringing in headcount unrelated to project work, but project based workloads are typically where body shops find their niche.
    - zwily 10y ago
      Work that you contract out and record as CapEx would be CapEx even if FTE's worked on it too. Still not sure what was meant by that point.
      - CydeWeys 10y ago
        The people with H1Bs are full-time employees of the body shops that the jobs are contracted out to. Otherwise they couldn't get those visas. But they are contractors from the point-of-view of the company that is paying the body shops, and that's the point he's making.
        zwily 10y ago
        I get that, but what does it have to do with CapEx vs OpEx?
        riskable 10y ago
        Outsourced labor is logged as CapEx in SEC filings and is a means of hiding labor expenses to improve EBITDA (which is used as a primary indicator of business health). If businesses had to report outsourced labor as OpEx instead of CapEx many would see drastic changes to their EBITDA and their stock would drop (for good reason: They're hiding important investment information). The SEC has supposedly been planning to fix this problem for years but has done nothing.
- solarengineer 10y ago
  This reminds me of the book "Sold out" by Michelle Mankin and John Miano [0]. Another commonly used trick is to send people on L1b or B1 visas. H1Bs are on lottery, these other two aren't. [0] https://www.amazon.com/Sold-Out-Billionaires-Bipartisan-Crapweasels-ebook/dp/B00VBW3SYQ https://www.amazon.com/Sold-Out-Billionaires-Bipartisan-Crap...
  - claviola 10y ago
    B1 is considered a visitor visa. You cannot legally work under it.
- gnipgnip 10y ago
  Indeed. It's rather hilarious when you hear these arbitrage traders speak about "innovation, research & creativity". http://scroll.in/article/741723/full-text-narayana-murthy-questions-the-contribution-of-iits-and-iisc-in-the-last-60-years http://scroll.in/article/741723/full-text-narayana-murthy-qu... http://timesofindia.indiatimes.com/india/Narayana-Murthy-runs-a-body-shop-tweets-Chetan-Bhagat/articleshow/10237098.cms http://timesofindia.indiatimes.com/india/Narayana-Murthy-run... India, if you understand how its education system is setup, is essentially a labour market for producing service workers for the Anglosphere. I'm not the slightest bit surprised that India is dirt poor, while Indians form the richest ethnic group in the US.
  - dominotw 10y ago
    >India, if you understand how its education system is setup, is essentially a labour market for producing service workers for the Anglosphere. There is no social security in India so many times aging parents solely depend on their kids for their livelihood. So its ingrained in culture to push your kids into studying what might be profitable than what is interesting to the kids.
    - murukesh_s 10y ago
      Anglosphere? You are wrong. Majority of non resident Indians work in middle east. (Or wherever there is a way to make better money). Regarding social security you are right but that is not the reason parents push kids into studying. They believe(foolishly) that giving better education to the kids is their life purpose. It's infused so by the culture and society.
    - gnipgnip 10y ago
      Trouble is, this entails studying entirely in a foreign language for 16 years. See: http://koenraadelst.blogspot.in/2015/11/propagating-english-to-help-india.html http://koenraadelst.blogspot.in/2015/11/propagating-english-... Many at this point jut in by saying "English is ours, you Heathen!", but really though it is not. India's English proficiency index was lower than China and Japan in 2011 [2] (before magically jumping up). I've been extremely disappointed with India. There is very little awareness of political systems, even while many get drawn into pompous nationalism. Everyone is obsessed with how the best of Indians leave for the US, and are greedily optimizing for how to get a share of that sweet sweet dough. This from language teachers,writers to engineers, scientists. When Sanskrit/Kannada teachers start spouting English for class signalling, you realize there is no hope for India (much as with Africa). It's not surprising that the power centers of Indology are in the US. Also see, [1] http://sankrant.org/2011/03/the-english-class-system-2/ http://sankrant.org/2011/03/the-english-class-system-2/ [2] https://www.amazon.com/Decolonising-Mind-Studies-African-Literature/dp/0435080164 https://www.amazon.com/Decolonising-Mind-Studies-African-Lit... [3] http://www.ef.co.th/sitecore/__/~/media/efcom/epi/pdf/EF-EPI-2011.pdf http://www.ef.co.th/sitecore/__/~/media/efcom/epi/pdf/EF-EPI...
- dominotw 10y ago
  Every attempt to fix legal immigration in the past has gone through the propose a fix -> club it with proposals dealing with illegal immigration -> stalemate -> back to step1
- chrisseaton 10y ago
  > I don't know anyone who works in tech that is not aware of the following facts I've never heard or witnessed any of these body shops or contractors. Do they just work at places like banks' IT departments so I may not run across them?
  - ChuckMcM 10y ago
    In my experience if you have a LinkedIn title of VP they will find you and try to sell you their services.
    - sundaeofshock 10y ago
      They hit you up as long as you are in any kind of resource management role: manager, director, VP, etc.
  - MrFoof 10y ago
    You've never heard of Robert Half or Randstad? They supply a large number of contractors (across multiple segments, not just IT) in most major US metros. As others have said, if you are VP level (or Director level), it's impossible to not know about them since they'll be trying to get your ear on a regular basis.
    - chrisseaton 10y ago
      Yes I even used to a contractor for a US company via Randstad! So maybe I'm one of these people myself without even knowing it and that's why I don't think of them as being sub-par labor incapable as performing at the same level as full-time employees.
sigsergv 10y ago
This is a 2014 article, what's changed since that? I think those bodyshops still operate and nothing changed.
- pmorici 10y ago
  A Congress and President were just elected who claim to support doing something about it. That and there were some high profile abuses that lead to lawsuits and congressional attention in the past year more so than in the past, like the Walt Disney layoff. http://www.nytimes.com/2016/01/26/us/lawsuit-claims-disney-colluded-to-replace-us-workers-with-immigrants.html http://www.nytimes.com/2016/01/26/us/lawsuit-claims-disney-c...
  - maxxxxx 10y ago
    I would be shocked if the new administration changed anything. In the end the Republicans will always side with business and they clearly want even more H-1Bs. But I am ready to be positively surprised....
    - guscost 10y ago
      Maybe, if we're lucky, these "elite business people" will start to figure out that cutting corners and optimizing for the bottom line on paper is a horrible strategy for knowledge work. Taylorism in offices needs to die already.
    - hga 10y ago
      Perhaps you didn't notice, but the GOPe(stablishment) that sides with businesses on this issue loathed and loathe Trump with a burning passion, and he got elected in spite of them in terms of active help (passively, their total awfulness in these sorts of areas created conditions that allowed a Trump to win). So I'd a) watch to see if he doesn't pack his administration with too many GOPe types and/or b) fires them quickly if they revert to type (he's decisive that way, even legendary, you might say), and c) ends up campaigning against a Do Nothing Congress (https://en.wikipedia.org/wiki/80th_United_States_Congress https://en.wikipedia.org/wiki/80th_United_States_Congress) in 2018 (and on) so that he'll eventually be able to get promises like his "Intel, not Infosys" one on H-1Bs fixed in the law. Actually, administratively he can nuke the Infosys type bodyshops from orbit, especially if he takes a page from JFK's playbook and starts putting their executives in Federal prison.
CoolGuySteve 10y ago
I was an H1-B but not for a contractor. I'm pretty sure the only reason I got off my TN was because I applied during the recession. There are 2 quick solutions: 1) Allow people to keep their H1-B after quitting their job. Looking for a job while you're on an H1-B sucks, you have to deceive your employer until the transfer goes through. And the transfer itself is a barrier to getting hired because you can't start immediately. 2) Prioritize applications within each occupation class by wage instead of lottery. That way these low wage body shops can't spam the system, they'd actually have to pay a good wage rather than the "prevailing wage" to get a visa approved.
- jon_richards 10y ago
  About 2, do you have any thoughts about how equity should play into the H1-B system? Often times people working for early stage startups are getting paid far less than even "prevailing wage" because their equity is valued at next to nothing.
  - prasadjoglekar 10y ago
    Leaving a loophole will only invite more abuse. If the equity is worth $0 (which it is for all illiquid startups big and small), then it shouldn't count for anything.
  - poof131 10y ago
    The 409A valuation should be used.[1] Definitely not the fundraising valuation for preferred shares. Employees should use the 409A too when trying to evaluate competing offers. While early 409A evaluations can be a bit of a swag they are much more reasonable then fundraising valuations. Example, left a seed stage startup where the founder liked to brag about the $10 million dollar valuation (had a convertible note with a $10 million cap so not really a valuation). The 409A was at $2 million, which was much more reasonable for the progress, potential, and risk. [1] https://www.quora.com/What-is-a-409A-valuation https://www.quora.com/What-is-a-409A-valuation
- jondubois 10y ago
  It's perfectly fine to shop around for other opportunities while you're working for a company - In fact you should always do it - There is nothing deceptive about that. You're selling your time, your employer doesn't own you.
natch 10y ago
Off topic: Even Wired is giving cert errors these days. What gives? I heard there was a major problem with a cert issuer recently, but it seems like it was a couple months back. Shouldn't this be cleared up by now? Anyone else getting this? Is Wired even aware of the problem?
- krakensden 10y ago
  Using the Chrome beta? They require more from CAs these days, which is sort of a hassle- CAs do not move quickly.
  - natch 10y ago
    Fully updated Safari on fully updated macOS.
geebee 10y ago
I hear a lot of solutions, but they're all downstream of a core problem. Any "immigration" visa that denies immigrants the right to choose where they live, what profession or trade they enter, and what employers (if any) they work for, has already failed. I understand it is tempting for silicon valley employers to lobby for control over workers lives, under the guise of a shortage of software engineers. But citizens are allowed to choose their path in life, and if becoming a developer in the vally isn't appealing to them, thats the market's answer. Don't try to fix this by creating a large scale tier of noncitizen worker with limited mobility right. Whatever system we have, it must not coerce immigrants into working as a developer as a condition of living in the us. As long as this deep flaw remains, all "fixes" will just be window dressing.
- closeparen 10y ago
  You're stating an extremist fringe position, sadly. There is no political will for a broadly available "because I want to be an American" visa program. To the extent that we give work authorization to foreigners en masse, it is to fulfill specific needs for labor that can't be met by domestic workers, or because they are exceptionally skilled. Workers are locked down to specific fields because otherwise they might start competing with Americans for jobs, and the electorate doesn't want that.
  - geebee 10y ago
    I'm not sure I agree. The United States takes well over a million immigrants a year into the country as free participants in the labor market, with the right to choose a career path not dictated to them by the terms of their visa or a corporation that "sponsors" their limited residency rights. It turns out that these immigrants don't go into software development in the numbers silicon valley leaders feel they should, either. That's why they tech employers have lobbied for an parallel "immigration" system run by corporations. Basic human freedom isn't convenient for them.

120 points by janeboo 10y ago

I appreciate that Wired is writing about this topic. That said, I don't know anyone who works in tech that is not aware of the following facts: 1. Body shops overwhelmingly exist to abuse the H1B visa allocation system 2. Contractors cost more than FTEs, but it can be booked as CapEx instead of OpEx so looks better during reporting 3. Body shops generally supply subpar labor. People with cooked resumes that are incapable of performing at the same level as their non-body shop title peers. 4. Body shops overwhelmingly arbitrage the fact it's near impossible to legitimately acquire H1B visa allocations and the broken rules about job changes for immigrants on H1B visas. 5. All of this adds up to body shops treating immigrant workers horribly while at the same time largely defrauding their customers and the government offices responsible for visa allocations TL;DR: Body shops are evil, everyone knows this, management doesn't care because it looks good to shareholders.

gonzo 10y ago
Neither I-99 nor W-2 wages are "capex"
- tristor 10y ago
  The business hiring a body shop typically does not directly pay any wages. They pay a per project fee or a contracted per headcount rate, both of which are treated as CapEx and amortized as a project cost. The economics are different for bringing in headcount unrelated to project work, but project based workloads are typically where body shops find their niche.
  - zwily 10y ago
    Work that you contract out and record as CapEx would be CapEx even if FTE's worked on it too. Still not sure what was meant by that point.
    - CydeWeys 10y ago
      The people with H1Bs are full-time employees of the body shops that the jobs are contracted out to. Otherwise they couldn't get those visas. But they are contractors from the point-of-view of the company that is paying the body shops, and that's the point he's making.
      - zwily 10y ago
        I get that, but what does it have to do with CapEx vs OpEx?
        riskable 10y ago
        Outsourced labor is logged as CapEx in SEC filings and is a means of hiding labor expenses to improve EBITDA (which is used as a primary indicator of business health). If businesses had to report outsourced labor as OpEx instead of CapEx many would see drastic changes to their EBITDA and their stock would drop (for good reason: They're hiding important investment information). The SEC has supposedly been planning to fix this problem for years but has done nothing.
solarengineer 10y ago
This reminds me of the book "Sold out" by Michelle Mankin and John Miano [0]. Another commonly used trick is to send people on L1b or B1 visas. H1Bs are on lottery, these other two aren't. [0] https://www.amazon.com/Sold-Out-Billionaires-Bipartisan-Crapweasels-ebook/dp/B00VBW3SYQ https://www.amazon.com/Sold-Out-Billionaires-Bipartisan-Crap...
- claviola 10y ago
  B1 is considered a visitor visa. You cannot legally work under it.
gnipgnip 10y ago
Indeed. It's rather hilarious when you hear these arbitrage traders speak about "innovation, research & creativity". http://scroll.in/article/741723/full-text-narayana-murthy-questions-the-contribution-of-iits-and-iisc-in-the-last-60-years http://scroll.in/article/741723/full-text-narayana-murthy-qu... http://timesofindia.indiatimes.com/india/Narayana-Murthy-runs-a-body-shop-tweets-Chetan-Bhagat/articleshow/10237098.cms http://timesofindia.indiatimes.com/india/Narayana-Murthy-run... India, if you understand how its education system is setup, is essentially a labour market for producing service workers for the Anglosphere. I'm not the slightest bit surprised that India is dirt poor, while Indians form the richest ethnic group in the US.
- dominotw 10y ago
  >India, if you understand how its education system is setup, is essentially a labour market for producing service workers for the Anglosphere. There is no social security in India so many times aging parents solely depend on their kids for their livelihood. So its ingrained in culture to push your kids into studying what might be profitable than what is interesting to the kids.
  - murukesh_s 10y ago
    Anglosphere? You are wrong. Majority of non resident Indians work in middle east. (Or wherever there is a way to make better money). Regarding social security you are right but that is not the reason parents push kids into studying. They believe(foolishly) that giving better education to the kids is their life purpose. It's infused so by the culture and society.
  - gnipgnip 10y ago
    Trouble is, this entails studying entirely in a foreign language for 16 years. See: http://koenraadelst.blogspot.in/2015/11/propagating-english-to-help-india.html http://koenraadelst.blogspot.in/2015/11/propagating-english-... Many at this point jut in by saying "English is ours, you Heathen!", but really though it is not. India's English proficiency index was lower than China and Japan in 2011 [2] (before magically jumping up). I've been extremely disappointed with India. There is very little awareness of political systems, even while many get drawn into pompous nationalism. Everyone is obsessed with how the best of Indians leave for the US, and are greedily optimizing for how to get a share of that sweet sweet dough. This from language teachers,writers to engineers, scientists. When Sanskrit/Kannada teachers start spouting English for class signalling, you realize there is no hope for India (much as with Africa). It's not surprising that the power centers of Indology are in the US. Also see, [1] http://sankrant.org/2011/03/the-english-class-system-2/ http://sankrant.org/2011/03/the-english-class-system-2/ [2] https://www.amazon.com/Decolonising-Mind-Studies-African-Literature/dp/0435080164 https://www.amazon.com/Decolonising-Mind-Studies-African-Lit... [3] http://www.ef.co.th/sitecore/__/~/media/efcom/epi/pdf/EF-EPI-2011.pdf http://www.ef.co.th/sitecore/__/~/media/efcom/epi/pdf/EF-EPI...
dominotw 10y ago
Every attempt to fix legal immigration in the past has gone through the propose a fix -> club it with proposals dealing with illegal immigration -> stalemate -> back to step1
chrisseaton 10y ago
> I don't know anyone who works in tech that is not aware of the following facts I've never heard or witnessed any of these body shops or contractors. Do they just work at places like banks' IT departments so I may not run across them?
- ChuckMcM 10y ago
  In my experience if you have a LinkedIn title of VP they will find you and try to sell you their services.
  - sundaeofshock 10y ago
    They hit you up as long as you are in any kind of resource management role: manager, director, VP, etc.
- MrFoof 10y ago
  You've never heard of Robert Half or Randstad? They supply a large number of contractors (across multiple segments, not just IT) in most major US metros. As others have said, if you are VP level (or Director level), it's impossible to not know about them since they'll be trying to get your ear on a regular basis.
  - chrisseaton 10y ago
    Yes I even used to a contractor for a US company via Randstad! So maybe I'm one of these people myself without even knowing it and that's why I don't think of them as being sub-par labor incapable as performing at the same level as full-time employees.

sigsergv 10y ago

This is a 2014 article, what's changed since that? I think those bodyshops still operate and nothing changed.

pmorici 10y ago
A Congress and President were just elected who claim to support doing something about it. That and there were some high profile abuses that lead to lawsuits and congressional attention in the past year more so than in the past, like the Walt Disney layoff. http://www.nytimes.com/2016/01/26/us/lawsuit-claims-disney-colluded-to-replace-us-workers-with-immigrants.html http://www.nytimes.com/2016/01/26/us/lawsuit-claims-disney-c...
- maxxxxx 10y ago
  I would be shocked if the new administration changed anything. In the end the Republicans will always side with business and they clearly want even more H-1Bs. But I am ready to be positively surprised....
  - guscost 10y ago
    Maybe, if we're lucky, these "elite business people" will start to figure out that cutting corners and optimizing for the bottom line on paper is a horrible strategy for knowledge work. Taylorism in offices needs to die already.
  - hga 10y ago
    Perhaps you didn't notice, but the GOPe(stablishment) that sides with businesses on this issue loathed and loathe Trump with a burning passion, and he got elected in spite of them in terms of active help (passively, their total awfulness in these sorts of areas created conditions that allowed a Trump to win). So I'd a) watch to see if he doesn't pack his administration with too many GOPe types and/or b) fires them quickly if they revert to type (he's decisive that way, even legendary, you might say), and c) ends up campaigning against a Do Nothing Congress (https://en.wikipedia.org/wiki/80th_United_States_Congress https://en.wikipedia.org/wiki/80th_United_States_Congress) in 2018 (and on) so that he'll eventually be able to get promises like his "Intel, not Infosys" one on H-1Bs fixed in the law. Actually, administratively he can nuke the Infosys type bodyshops from orbit, especially if he takes a page from JFK's playbook and starts putting their executives in Federal prison.

CoolGuySteve 10y ago

I was an H1-B but not for a contractor. I'm pretty sure the only reason I got off my TN was because I applied during the recession. There are 2 quick solutions: 1) Allow people to keep their H1-B after quitting their job. Looking for a job while you're on an H1-B sucks, you have to deceive your employer until the transfer goes through. And the transfer itself is a barrier to getting hired because you can't start immediately. 2) Prioritize applications within each occupation class by wage instead of lottery. That way these low wage body shops can't spam the system, they'd actually have to pay a good wage rather than the "prevailing wage" to get a visa approved.

jon_richards 10y ago
About 2, do you have any thoughts about how equity should play into the H1-B system? Often times people working for early stage startups are getting paid far less than even "prevailing wage" because their equity is valued at next to nothing.
- prasadjoglekar 10y ago
  Leaving a loophole will only invite more abuse. If the equity is worth $0 (which it is for all illiquid startups big and small), then it shouldn't count for anything.
- poof131 10y ago
  The 409A valuation should be used.[1] Definitely not the fundraising valuation for preferred shares. Employees should use the 409A too when trying to evaluate competing offers. While early 409A evaluations can be a bit of a swag they are much more reasonable then fundraising valuations. Example, left a seed stage startup where the founder liked to brag about the $10 million dollar valuation (had a convertible note with a $10 million cap so not really a valuation). The 409A was at $2 million, which was much more reasonable for the progress, potential, and risk. [1] https://www.quora.com/What-is-a-409A-valuation https://www.quora.com/What-is-a-409A-valuation
jondubois 10y ago
It's perfectly fine to shop around for other opportunities while you're working for a company - In fact you should always do it - There is nothing deceptive about that. You're selling your time, your employer doesn't own you.

natch 10y ago

Off topic: Even Wired is giving cert errors these days. What gives? I heard there was a major problem with a cert issuer recently, but it seems like it was a couple months back. Shouldn't this be cleared up by now? Anyone else getting this? Is Wired even aware of the problem?

krakensden 10y ago
Using the Chrome beta? They require more from CAs these days, which is sort of a hassle- CAs do not move quickly.
- natch 10y ago
  Fully updated Safari on fully updated macOS.

geebee 10y ago

I hear a lot of solutions, but they're all downstream of a core problem. Any "immigration" visa that denies immigrants the right to choose where they live, what profession or trade they enter, and what employers (if any) they work for, has already failed. I understand it is tempting for silicon valley employers to lobby for control over workers lives, under the guise of a shortage of software engineers. But citizens are allowed to choose their path in life, and if becoming a developer in the vally isn't appealing to them, thats the market's answer. Don't try to fix this by creating a large scale tier of noncitizen worker with limited mobility right. Whatever system we have, it must not coerce immigrants into working as a developer as a condition of living in the us. As long as this deep flaw remains, all "fixes" will just be window dressing.

closeparen 10y ago
You're stating an extremist fringe position, sadly. There is no political will for a broadly available "because I want to be an American" visa program. To the extent that we give work authorization to foreigners en masse, it is to fulfill specific needs for labor that can't be met by domestic workers, or because they are exceptionally skilled. Workers are locked down to specific fields because otherwise they might start competing with Americans for jobs, and the electorate doesn't want that.
- geebee 10y ago
  I'm not sure I agree. The United States takes well over a million immigrants a year into the country as free participants in the labor market, with the right to choose a career path not dictated to them by the terms of their visa or a corporation that "sponsors" their limited residency rights. It turns out that these immigrants don't go into software development in the numbers silicon valley leaders feel they should, either. That's why they tech employers have lobbied for an parallel "immigration" system run by corporations. Basic human freedom isn't convenient for them.