Whistleblower calls out IT giant over U.S. jobs

(CBS News) We've all had this happen: you call an American company's 800 number for help, and end up talking to someone in a foreign country. It's called outsourcing. American firms do it because foreign labor can be cheaper.

But now, one company is being accused of bringing those lower-paid workers to the U.S. illegally and that may be costing Americans jobs.

The allegations are the subject of a federal probe and CBS News has been investigating this story for months. The allegations have been made against a giant Indian information technology firm called Infosys. The charges are coming from inside the company, from an employee who has never spoken publicly before.

Jay Palmer is a principal consultant at the company called Infosys. He is also the whistleblower whose charges sparked the federal investigation. Palmer says Infosys, the global high-tech giant, engaged in a systematic practice of visa fraud, a charge the company denies.

Palmer said the first thing to catch his attention was an employee that had been in the U.S. from India several times before.

"He came up to me and he was literally in tears," Palmer said. "He told me he was over here illegally and he didn't wanna be here. He was worried that he would get caught."

Palmer says he began digging into how and why Infosys seemed to be bringing in large numbers of workers from its corporate headquarters in Bangalore, India, into the U.S.

Palmer says at first, most came over on H-1B visas. These visas are for people with specialized talents or a level of technical ability that can't be found among American workers.

When asked if all the people had some special expertise that couldn't be found in the U.S., Palmer said, "Absolutely not. Not even close. Many of them is what we call freshers. People that would just come over, whoever they could get to come over. Whoever got accepted for a visa."

Many of the people brought in, in fact, didn't know what they were doing at all, Palmer said. "There was not a project or program that I was involved in that we did not remove somebody because they had no knowledge of what they were doing," he said.

So then what's the motive to bring them in? You could hire an American who is trained in that particular discipline and do better.

Palmer said, "It's purely profit."

Palmer says the Indian workers on his team were paid substantially less than an American would have made in the same job.

When the U.S. State Department began to limit the number of H-1B visas, Palmer says Infosys began using another type of visa, the B-1. The B-1 is meant for employees who are traveling to consult with associates, attend training or a convention. But Palmer says the employees were brought in not for meetings, but for full time jobs.

Palmer said the jobs were in "Everything from coding software to testing software to fixing software to installing."

So why would Infosys do this? And what advantage did it give them in the marketplace?

Palmer said, "They could outbid everybody or underbid everybody on every contract (because they were paying less.) For example...if I'm gonna pay you $15,000 a year why would I pay an American or a legal worker $65,000 a year? It makes no - it's just economics."

And Palmer says the B-1 workers never paid U.S. taxes because they received their salaries from India.

"They're basically a lot of times being paid on a cash card or a debit card where money was put in their account," Palmer said. "And the fact is, is they're just taking that money out and they're never paying U.S. taxes."

Infosys may not be a household name to many Americans, but in the technology business, the company is a powerhouse. It is one of the biggest consulting firms in the world with more than $6 billion in revenues last year alone, and 145,000 employees in 32 countries. But the bulk of its business comes from the U.S., re-engineering the computer systems of some of the biggest names in corporate America.

Federal officials say Infosys employees have 6,000 B-1 visas good for 10 years. Palmer says if just half of those employees were working on U.S. soil that would earn the company more than $150 million a year more than if they paid Americans the prevailing wage.

Infosys declined CBS News' repeated requests for an on-camera interview with a company executive or with chief executive officer and chairman S.D. Shibulal. But the company's chief financial officer, V. Balakrishnan, has denied the charges on Indian television, saying, "I think we are very clear that we have not violated any of the rules. We believe we have a strong case."

Infosys did give CBS News a statement saying, in part, "Any allegation or assertion that there is or was a corporate practice of evading the law in conjunction with the B-1 visa program is simply not accurate, and we will vigorously defend the company against any false allegation to that effect."

But one of Palmer's most serious allegations is that top company executives not only knew of the alleged fraud, but wanted to expand on it to increase profits. Palmer says during a 2010 meeting at Infosys' corporate headquarters in Bangalore the practice was discussed with a group of executives, including a senior vice president.

Palmer told CBS News, "There was some conversations about how to increase the share price, which is - in America is the stock price. So it's really about getting people over no matter what the cost or whatever. And you know, I think that's the first time I heard the term, you know, 'Americans are stupid.'"

When asked what that was in reference to, Palmer said, "The law, getting around the system."

When asked, "Because it was so easy?" Palmer replied, "Oh, it's totally easy."

Palmer said others at Infosys discussed the matter with him. And one of those people was Palmer's friend and Infosys project manager, Marti Harrington.

Harrington told CBS News, "I realize that there were a few times where they were really pushing me, they, Infosys, was really pushing me to get the client to agree to having more people onshore. They were still getting more money because they were paying these folks from India so little."

When Harrington learned that the B-1 visa specifically prohibited employment here, she checked the visa status of some of her own team members.

Harrington said, "And then I realize that we had people here, we being, you know, employees in Infosys - had people here that were in the States on B-1 visas that were working. You know, they weren't here to attend training or, you know, to attend a conference. They were here working on a project."

According to Palmer, telling documents come from an internal Infosys website. One document appears to be a "do's and don'ts" list that gives instructions on how to get B-1 visa requests by the U.S. State Department, telling managers not to mention things like work or employment on their applications or in interviews with U.S. Customs and Border Patrol agents.

When asked when he saw the information on the internal website what struck him, Palmer said, "Intent. Deliberate. Not even trying to follow the spirit of the law."

When asked if the internal document on the website was an instruction guide on how to beat the system, Palmer replied, "Yes, in my opinion, absolutely."

Palmer says after he blew the whistle to Infosys executives, they retaliated against him. He's now suing the company. Infosys denies Palmer's allegations and denies that the company ever retaliated against him.

In its statement to CBS News, Infosys said, "Mr. Palmer's allegations may make an interesting story, but the case before the court isn't about a story. It's about facts and the facts are clear and compelling."

When asked for his response to that statement, Palmer said, "It's the United States of America. If they want their day in court, let's - let's let them have their day in court. And we can lay the compelling facts out and let a judge and a jury decide."

CBS News senior correspondent John Miller asked Palmer, "When this is all over and it all comes out, where is Jay Palmer? Are you gonna be able to work in this business again? Do you look like a hero or are you the goat?"

Palmer said, "I don't know. You know, it's not about me. This story is about displaced American workers and about companies out for greed."

Palmer's civil suit against Infosys is scheduled to go to trial this summer in Alabama.

So are the other companies doing this?

Miller said, "I think other companies are doing this. Just this week another lawsuit was filed in New Jersey against a different company alleging the same practices of visa fraud and abuse."

To watch Miller's full report, watch the video in the player above.

  • John Miller

    John Miller is a senior correspondent for CBS News, with extensive experience in intelligence, law enforcement and journalism, including stints in the Office of the Director of National Intelligence and the FBI.

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