Outsourcing giant Infosys faces record immigration fine

The U.S. is about to impose a fine of roughly $35 million on Infosys for immigration infractions, according to several reports. Infosys reportedly gave workers easy-to-obtain visitor — not work — visas before assigning them to big corporate clients across the country. The news was first reported by the Wall Street Journal (registration required) early Tuesday morning.

The issue is that H-1B visas — which allow foreign nationals to work for long stretches in the U.S. — are in short supply. Infosys apparently brought workers over under much easier to obtain B-1 visas, which cover shorter visits. That allowed Infosys to undercut competitors’ pricing. Infosys reportedly reached a settlement with the U.S. Attorney for the Eastern District of Texas. Infosys told the Journal it is cooperating with the probe.

Update: Earlier this month, Infosys acknowledged the probe in its second quarter financial reports. On October 11,  it said it was:

“in discussions with the U.S. Attorney’s office and other government departments regarding a civil resolution of the government’s investigation into the Company’s compliance with Form I-9 requirements and past use of B-1 visas. Based on the status of those discussions, Infosys has set aside a reserve of $35 million including legal costs. Because the discussions are ongoing, Infosys cannot provide additional details at this time.”

Immigration reform has long been a hot button issue among U.S. tech companies.  Many tech executives say limits on H1-B visas restrict their ability to hire top talent from outside the country. They tend to couch this in high-flying words about easier access to top technical talent is good for the country. The suspicion, however, is that they really want a  steady supply of affordable but highly trained labor.

Bangalore-based Infosys has about 30,000 employees in the U.S., according to this CBS news report. 

Update: Reached for comment, an Infosys spokespersons emailed this response:

“In response to reports attributed to Justice Department officials, Infosys is in the process of completing a civil resolution with the government regarding its investigation of visa issues and I-9 documentation errors. The resolution has not been finalized.”

Update: Infosys just sent a revised comment denying

“any claims of systemic visa fraud, misuse of visas for competitive advantage, or immigration abuse. Those claims are untrue and only unproven assertions. The Company’s use of B-1 visas was for legitimate business purposes and not in any way intended to circumvent the requirements of the H-1B program. No criminal charges have been filed against the Company and no court rulings have been issued.”

I will add comments from the U.S. agencies when they are forthcoming.

I’ve reached out to both Infosys and DHL and the State Department for comment and will update this report as needed.

Note: This story was updated at 6:57 a.m. PDT with Infosys comment and again at 7:54 a.m. with a revised comment.