Infosys is one of India’s largest IT companies.
What do IT companies do?
IT companies do many things. One of the most stable things they do, is to create computer based systems for other companies.
Suppose you want to open a retail store. At first, you keep track of all the things you are stocking in a simple register.
Soon, however, the register becomes difficult to maintain.
Then, someone suggests that you should put all this information in a computer.
Nandan, your IT whiz friend, tells you about this company that will come and make a software (computer program) that will let you keep all your stocks, record all your sales, and even manage your finances!
For this, someone from the IT company comes to your store and sees how you record your purchases, what is the information you need to maintain, etc. Then they do the same thing for your sales, stocks, etc.
Then, they go back and make a computer system or an app that allows you to do all these individual transactions. Let’s say you bought 10 packets of chips to sell at the store. You enter the purchase in the system, and automatically, your stock of chips goes up by 10 and your money goes down!
OK, What did Infosys do wrong?
Most of these client companies are in the United States of America.
There are two types of visas available. B1 visa is for business visitors. It allows someone to attend a conference or a business meeting but does not allow them to work in the United States.
The second kind of visa is the H1B. This visa allows professionals to work in the US. However, the number of such visas is limited. Further, all professionals who work on H1B have to get some minimum wage and some benefits from their employer.
What Infosys did was, it sent professionals to work in the US, but sent them on B1 visa instead of H1B visa. This means that they stayed and worked in the US, but did not get US salaries or benefits, and also violated the H1B limit of US visas.
They misrepresented the purpose of visit to the US, they provided false information on the Invitation Letters. They also directed employees to lie to the US consular offices.
The violations recorded by this court statement were done between 2008 and 2011.
Impact on Infosys, USA, and the employees
Infosys
By not paying H1B wages, Infosys was able to bid on IT projects at lower prices. This means that they were winning these contracts in an unfair way.
The minimum wage for an H1B visa holder is 60,000 dollars or 50 lakh rupees. But most of these professionals in India make between 8 – 15 lakhs per year. This means that Infosys was saving up to 80% on its costs. Imagine the price advantage it gave the company in bidding for projects!
Infosys also cheated the US government by bypassing the limit on H1B visa holders. This limit is imposed to create more jobs for Americans.
Infosys also got these professionals to work at a much lower rate. They kept these employees away from their families for months on end. This meant that the professionals were cheated out of their fair wages, which should have been paid to them as H1B visa holders.
USA
First, there is a massive difference in US Visa fees between B1 and H1B.
Secondly, not paying the right amount to professionals doing coding and other technical work in the US is a violation of US laws.
Third, Infosys deliberately lied to the US government about the nature of work, the destination, and the duration of stay.
Employees
Obviously, the first impact is that the professionals were paid a fraction of what they should have got.
Secondly, they remained away from their families for long periods. To compensate for this, Infosys, like many other firms, provided a per diem (per day) allowance in addition to salaries for every day that they were in the US.
What is the settlement?
As this settlement document indicates, Infosys will:
A. Pay 34 million dollars in a settlement. This includes a 24 million fine. This translates to about 283 crores in Indian currency.
This is the highest ever immigration related fine imposed by the US on any company.
B. Ensure that it tightens its internal processes to ensure that this does not happen again.