Jag Venugopal's Blog

March 10, 2010

Travails of an H1B Visa Holder

Filed under: India,Information Technology — Jag @ 3:39 pm
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Introduction

In this essay, I discuss the H1B lifecycle — how an aspirant first applies for an H1B job, then makes it into the USA. The lucky ones eventually get a “green card” that allows them to settle in the USA on a permanent basis. Through this lifecycle, I describe how unscrupulous consultants break the rules and pervert the intent of the H1B visa. I also provide some idea of the difficulty the temporary worker faces in their search for the holy grail — the “green card”.

I do not insinuate that every employer breaks the law. I work with many firms that represent H1B visa holders, and as far as I can tell they are pretty respectable and straightforward. Additionally, there are likely to be many fine, well-qualified individuals that are employed by IBM, Microsoft and various other large corporations that scrupulously adhere to the laws, and add value to their employer, and indeed their communities.  I have worked many individuals on H1B visas, and barring a few notable exceptions, I knew them to be honest people. In the interest of full disclosure: while I was never employed by a body shop, I did have an H1B visa in the ’90s.

With that said, I have worked with, and interviewed people who fit Ram’s persona below. None of this is fictional — it is all too real based on my own experience, and the experience of others, as documented on web sites such as http://www.goolti.com, and http://www.desicrunch.com.

In The Beginning — The Desire To Migrate

A prospective H1B employee in India (let’s call him Ram, the Indian equivalent of “Smith”) has a college education, either in Engineering or in the basic sciences together with a Master’s. During the late 90’s when the availability of skilled workers was at an all-time low, Ram would have been directly hired by US corporations who would send their interviewers to India. Today, few US corporations hire H1B visa holders, and fewer still hire them from India. This leaves Ram to try his luck with “body shops”.

The typical “body shop” is a paper corporation, run by an Indian who is either a permanent resident or naturalized citizen of the USA. The business of the body shop is to employ H1B visa holders who are then placed at various client sites, in exchange for an hourly fee. The body shop makes its money on the “spread” — the difference between what it earns for Ram’s services and what it has to pay Ram.

It is illegal for body shops to require candidates such as Ram to pay up-front for the costs of their H1B visa, and their return airfare to India in case things should go sour. They may however have a clause for liquidated damages in the employment contract, if Ram decides to switch employers once he has entered the USA. However that does not dissuade these shops from doing just that — charging in the neighborhood of $2000 — $3000 to apply for a visa for Ram. This money is usually paid in cash, or in any case without a legally traceable receipt. The body shop claims in its submission that it will be Ram’s employer.

There is a clause in the H1B paperwork (specifically the Labor Condition of Application or LCA) that H1B employees be paid the prevailing wages at their location of work. In any properly functioning market, the “spread” we discussed above is very small. To improve the odds in its favor, the body shop hires Ram into a drop-box office it has in obscure locations in Iowa and Maine, where prevailing wages for IT workers are likely to be very low. If Ram happens to get hired in NYC or Boston, where he can command a good hourly rate, the body shop makes a killing because it gets paid NYC rates, and has to pay Ram only Iowa or Maine rates.

Obtaining a Visa

H1B visas are limited in number. While in the early 2000’s, about 195,000 visas were allotted annually, as of 2010, the annual number is only 65,000. In regular, non-recession years the entire allotment of visas would run out within a few weeks of their allotment being made, typically in April for an October start.

Because the number of visas is much less than the number of applicants, the US immigration agency (United States Citizenship and Immigration Services, or USCIS) conducts a lottery among all valid applications to determine who gets the visa. Thus, it is in the interest of each body shop to apply for more visas than they need, in the hope that at least some of their applicants make it through the lottery.  If more applicants make it through the lottery than the body shop can place, they can always be subcontracted to other body shops (more on that later).

Assuming he is one of the fortunate 65,000, and that his “employer”, the body shop, hasn’t taken his $3000 and run, Ram proceeds to the next step. He uses the USCIS approval notice to get a visa sticker on his passport from the local US embassy or consulate. Ram is naturally apprehensive, given that three thousand dollars are riding on a successful visa interview. He therefore turns to a “visa consultant” to help him perfect his interview skills, and get his paperwork in order.

For a fee of $100-200, the visa consultant coaches Ram in the answers to provide to routine questions. If there are any lacunae in his paperwork, the visa consultant can point it out to Ram, and perhaps offer to fix it for a fee. Transcripts from universities, experience verification letters from past employers, indeed an entire employment history replete with office addresses and working phone numbers can be faked for a fee. The penalty for lying at the US embassy is high – up to a permanent disbarment from entering the USA. However the perceived benefits are so high that many still try their luck with a fraudulent application.

With some luck, Ram passes the visa interview, and is granted an H1B visa, valid for three years. At this point, Ram purchases his airplane tickets and packs his bags.  His employer has promised to pick him up at the airport, and to provide him temporary accommodation, euphemistically termed a “guest house”.

Arriving in the USA

When he arrives at JFK or Newark, Ram is not guaranteed automatic admission, based on his visa sticker. All that his visa has allowed him to do is to hop on a plane bound for the USA and show up before an immigration inspector. Here again, Ram’s papers are inspected, and if he’s lucky, he will be let in to serve out his three year visa term. If, on the other hand, the immigration inspector smells a rat, Ram will be put on a plane back to India, his approximately $4000 investment now being completely worthless.

The employer’s representative picks Ram up and takes him to a “guest house”. This is an apartment rented by the body shop that houses its employees who are in transit. The apartment is likely to be old and run down, close to downtown so Ram doesn’t have to commute, and packed with people, perhaps 2 to a room. A bare minimum of supplies is paid for by the employer and the employees are given a small stipend or nothing at all while they are on the bench. They are legally employed at this point, but are not billing their services out to a client. The rule for H1B visa holders is that they must get full pay during the time they are on the bench, but this is a rule followed more in the breach than in the observance. While Ram is looking for a job, he may end up working at a restaurant, grocery or a motel owned by a friend of the body shop’s principals, for a small under-the-table fee.

Job Search

The body shop runs various “training courses”. Many   such courses are of questionable quality and content, usually run by a bottom-dollar trainer, or an employee who also happens to be on the bench. The quality of the training notwithstanding, Ram is now in hock to the employer for the stated cost of the training. He must earn it back by committing to work for a certain number of months/years for the body shop.

Ram’s resume also undergoes revisions at this point. Typically, body shoppers start off a novice who has been trained with anywhere between 2-4 years of “experience”. The reasoning is that Ram will not get hired unless he shows some experience. Such experience can be easily manufactured, particularly if it is in India. Additionally, Ram is made to read books on the latest technologies, and his resume is reworked to show him to be an expert in those technologies which he just read about.

An employee on the bench costs money in food and rent, and does not bring in any profits. The body shop is anxious to place its employees. It does so in two ways. The first way is by leveraging any contacts the body shopper has with employers. Such contacts may be social, or through previously placed employees. Direct placement of employees is the preferred approach for the body shop, because there is no one else “skimming” Ram’s hourly billing.

Most likely, Ram’s employer will typically be a small shop with few, if any connections among the hiring managers of US corporations. Thus the body shop’s employees get contracted to another body shop, which has positions to be filled. Thus, Ram’s body shop now becomes a “buy side” shop, responsible for bringing in the employee and herding them through immigration. The new body shop is now the “sell side” shop, responsible for actually placing the individual. The “sell side” shop is often an American firm that has the right contacts at the right places.

This being Ram’s first job search in the US, his ability to respond to questions at interviews may not be finely honed yet. An experienced employee sits by Ram’s side while he is being interviewed. The employee either pretends to be Ram, or at the very least, listens to the question and provides cue cards for Ram with the right answers. This strategy will unravel if Ram is invited for an in-person interview, but typically, temporary positions don’t require one.

Remuneration

When Ram’s employer filed paperwork with the USCIS, they stated his salary in the application. Ram will not likely be paid the salary, especially if he is on the bench. When Ram is on the bench, the rules call for him to be paid, but economic realities of working for a small body shop make it likely that he will not be. Ram is in a bind, because the pay-stubs will be needed as proof that he is being paid. These pay-stubs will also be required for other immigration paperwork such as the H1B renewal and a possible “green card” application.

To solve this problem, Ram pays his employer a cash amount equivalent to his fortnightly paycheck. The employer runs this money through payroll, deducts the necessary taxes, and issues Ram a “paycheck”. Ram now has the requisite documentation to show that he is fully employed, though he is poorer by the amount of taxes to be paid.

At least in the initial stages, when Ram is on an H1B visa, his employer does not reveal his billing rate to Ram. Depending on how Ram is billed out, there might be two levels of body shop taking their cut before Ram sees a dime. As Ram becomes experienced, he will find other body shops that offer 70/30, 80/20 or 90/10 terms. The first number refers to the percentage of Ram’s billing rate that will be paid to him. The second number is the overhead and profit retained by the employer.

Getting By On The Job

Contracts through body shops are likely to last between 3-6 months. Some lucky H1B visa holders get contracts of longer than six months. Regardless, they go where their job takes them. Thus, Ram cannot lay down roots in any area of the USA. He will be required to travel to whichever city provides him a contract. It works well if Ram is either single, or married with a nonworking spouse. It gets extremely difficult if he has a school-age child. But the American dream is such that he soldiers on.

Ram was likely placed in a programming position for a technology that he barely knows. And sooner or later, when Ram runs into trouble with his lack of knowledge, he turns to Google for help in finding answers. Ram’s body shop might also provide the cell phone number of a more experienced employee, or even one of the principals to call in case he runs into an insurmountable problem. After all, the body shop has a vested interest in the continuation of Ram’s contract.

The Green Card Process

Ram puts up with a low salary, uncertainty, travel, and constant change for one big reason – the ability to eventually obtain a “green card”. The green card (which is actually yellow in color) will allow Ram to stay in the USA indefinitely, and seek employment with any company. At that point, Ram will be finally freed of the shackles of his body shop, and free to seek unrestricted employment. But getting there takes a long time, and for citizens of India and China, perhaps a decade or longer.

The green card process begins with Ram convincing the US Department of Labor that he is not taking a job from an American citizen or permanent resident. This is typically done by creating a job advertisement, and advertising as directed by the DOL. If no candidates are to be found, then Ram gets his “labor certification”. Often, to facilitate this process, the body shop’s immigration lawyers will create a job profile which is so unique that Ram is the only person who could possibly fill it.

While it is in Ram’s interest to get a green card as quickly as possible, the body shop’s interest is exactly the opposite. Ram cannot leave easily if he has an H1B visa. He can leave at a moment’s notice with a green card. Therefore, the longer it takes for Ram to get his green card, the better the chances that the body shop will continue to make money off him.

After the “labor certification”, Ram gets through additional paperwork, and eventually enters a long queue for a “visa number”. Employment-based immigration is restricted to a certain number each year, and no country may claim over 7% of the quota in any categories. This puts Ram at a significant disadvantage if he was born in India or China. Both these countries have a disproportionate number of applicants compared to the visas available. For example, for persons born in India and that possess bachelors’ degrees, in 2010, visas are being allotted to individuals that applied in 2001. Individuals with a graduate degree have it a little easier – their waiting list is a mere six years instead of nine. But neither of these means anything to Ram, because the backlog is so huge starting around 2004 that his application is likely to be pending for a couple decades. Ram’s only hope of getting a green card lies in entering the queue, and hoping for immigration reform legislation, which will increase the number of employment-based green cards.

While Ram is in his decades-long wait, he is beholden to his employer. He may not leave his “sponsoring employer” except in very specific circumstances, towards the end of his wait (in immigration jargon, this is called “AC-21 Portability”). Ram cannot accept increases in salary or promotions during this period. He is thus, likely to suffer a significant decrease in pay in inflation-adjusted terms. Additionally, Ram has to reach a certain milestone in his green card application called the “I-485 stage” before his H1B visa expires. If his visa expires before Ram can get to this stage, it is case closed – Ram must leave the country and start the process all over again. Ram and his lawyers will try many strategies to prolong his stay while the green card wait is continuing. One possible option Ram has is to immigrate to Canada, which has a much smaller wait – only three years or so.

Reaching The Ultimate Goal

Assuming that Ram has managed to hang on until the green card arrives, he becomes a “free agent’ in the job market, at liberty to choose his employer and place of residence. At this point, assuming that jobs are available and the economy is not in recession, Ram is finally able to earn market levels of pay. If he stays on the right side of the law for another five years, Ram can hope to become an American citizen.

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2 Comments »

  1. Excellent post !!

    An eye opener for me. I have been to US on J-1 thru company. Never thought the problem of body-shops was so mean and huge. Stumbled upon your blog while searching for h1b jobs. Seems however, I wil be regular visit to this place. 🙂

    Comment by vijay kale — May 28, 2010 @ 10:33 am | Reply

  2. […] have blogged about H1B visa scams in the past; click  here and here. My blog posts on it have been quite popular (at least relative to my other […]

    Pingback by Fake experience letters « Jag Venugopal's Blog — January 20, 2012 @ 12:23 pm | Reply


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