Unemployment Chaos in Four States Tied to H-1B Program

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Neil Munro

The huge economic impact of the coronavirus crash is being worsened by the growing role of Indian H-1B visa workers in the nation’s software industry.

Americans in many states — including Florida — were left without unemployment payments for weeks when the software programs supplied to state governments by a company, which relies on Indian H-1Bs, could not handle the crush of new applicants.

The failures in Ohio, Maryland, D.C., and South Carolina were all connected to one Minnesota company, Sagitec Solutions, which uses an imported workforce of H-1B workers.

“Marylanders have spent hours — and days — trying to access new jobless claim portal,” said a May 2 Washington Post headline. The article reported:

It took Shelly Bell 32½ hours to update her unemployment status.

She logged on to Maryland’s new online jobless benefits claim portal at 7 p.m. last Sunday but didn’t reach the front of the virtual line until 3:30 a.m. Tuesday.

“It was beyond frustrating,” said Bell, a school bus driver in Baltimore who has been out of work since schools closed in late March.

Sagitec’s failure allowed Democrats to jab at the state’s GOP governor, Larry Hogan.

“The consequences of these delays are all too real for families across our state who are getting closer to financial disaster,” said a May 2 letter from Maryland Democrat Rep. Anthony Brown to Hogan. The letter continued:

I understand that the State partnered with an existing vendor – Sagitec – to implement the expanded unemployment programs provided for in federal legislation. When the system failed, you pointed your finger at the vendor’s shortcoming for not meeting the promises you made to the public. This is of little comfort to many Marylanders. While you may be shirking responsibility and accountability now, when the state had a troubling launch of the Health Benefits Exchange website in 2014, you declared “the people ultimately responsible for this … are the Governor and the Lt. Governor.”

Sagitec’s reliance on H-1B workers is exposed by MyVisa.com.

The government data displayed by MyVisaJobs site suggests the company has been allowed to import more than 150 well-paid H-1B workers, which exceeds one estimate that the company has a workforce of 146 employees.

Since March 1, the company has also asked to renew work visas for ten H-1B workers. Four of those requests came after President Donald Trump declared a national emergency on March 13.

Most of Sagitec’s H-1B workers come from India, according to the MyVisaJobs site. The site notes that Sagitec nominates some imported H-1B workers for green cards, and apparently, the nominated workers got degrees in Indian universities.

Sagitec has four co-founders, including Ranjith Kotcherlakota. He graduated from an Indian college in 1988 and moved to the U.S. as a visa worker with Tata and Mastech Digital, which are Indian-run staffing companies. The other founders — Bala Venkat, Deepak Ahuja — also worked for staffing companies before teaming up with American Rick Deshler to open the firm in 2004. The current CEO is another Indian, Piyush Jain.

There is no federal rule requiring companies to hire Americans before H-1Bs and no procedure to reliably verify the claimed university qualifications of the H-1B workers. So the Indian H-1B workers arrive with titles such as “software engineer,” “delivery manager,” “technical lead,” and “senior business analyst” — even though many young black, Latino, and white Americans graduate each year ready for such jobs.

The MyVisaJobs website does not reveal how many of the H-1Bs work at Sagitec every day. Many H-1B employers subcontract their imported H-1B workers to other staffing companies or to Fortune 500 companies. The major staffing companies include Infosys, Genpact, and Deloitte, which developed Florida’s inadequate software for helping people get unemployment benefits.

The problem for state officials is that H-1B workers face workplace pressures that are fundamentally different from the incentives that shape American professionals.

American professionals need to provide quality services to customers if they want to maintain their peer status and income. They are expected to openly argue the merits of technical proposals with their customers, their fellow professionals, and their own executives. If they disagree with their customer and employers, they are expected to quit and find another employer, perhaps at a higher salary.

In contrast, the H-1Bs have almost no workplace rights during their temporary stays in the United States.

Even when the H-1Bs are skilled, they are bound to the hiring managers who have the legal power to cast them out of the United States and send them home to India to live in relative poverty. They cannot easily change jobs, partly because they want their employer to nominate them for the green card that will let them stay in the United States. These circumstances ensure that visa workers — European, Indian, or Chinese — must go along with their hiring managers, especially if the hiring manager wants them to drag out contracts, minimize quality checks, and demand more billable hours from the customer.

Moreover, most H-1Bs get very basic training, say U.S. managers. Most of the H-1B’s technical and language skills are so weak that a recent American graduate from a state college can do four times as much as a typical recent Indian graduate, said an American project director. For example, most Indian graduates “don’t know how to troubleshoot” problems, he said.

The Indians also work under the hard-to-see hierarchy of the Indian caste system, not by the rules of American professionalism, said U.S. project directors. Under the caste system, high-caste Brahmins have more authority than a low-born, “backward” or “untouchable” low-caste person, even if the lower-caste person is more technically skilled.

But the caste system also operates on a regional basis. Telegu people from the Telangana province or the neighboring province of Andhra Pradesh may provide reciprocal trades with favored low-born Telegus, regardless of their U.S. contractors’ priorities. For example, a network of higher-ranking Telegu managers may choose to hire low-ranking Telegus in exchange for cash and gifts, multiple Indians and Americans tell Breitbart News. These trades are widely expected and are often conducted via third parties, often in India. “There are very few honest Indian managers — maybe one in a million,” one H-B Indian told Breitbart News.

“Americans are culturally oblivious to this idea that something so Third World would be in the United States,” said Jay Palmer, a former technology worker. He now helps India’s mistreated visa workers to sue U.S.-based corporations. “I’ve had so many Indians tell me it is an Indian Mafia — they use those words.” He continued:

I have hundreds of Indian workers coming to me to complain that they have to give part of their salary to Indian hiring managers out of gratitude [for getting their jobs], whether $5 to $10 an hour.

…

There are some Indian managers — I can prove this — making upwards up to $15,000 to $20,000 a month in kickbacks.

In early 2020, there were roughly one million Indians visa workers holding jobs in the United States.

The fortunate H-1Bs work directly for American hiring managers, including many in Fortune 500 companies, usually at American wages.

Most H-1Bs at the Fortune 500 H-1Bs are hired by other Indians to work as technicians. They work long hours, often up to 60 hours a week, compliantly adjusting, retuning, and maintaining software. Their Indian managers are long-term H-1Bs who are waiting for green cards or Indian immigrants with green cards or citizenship.

The Fortune 500 Indian managers prefer to hire Indian H-1Bs because Americans do not want to work repetitive tasks for long hours for many years, one former H-1B worker told Breitbart News. He continued:

As a manager, you want Indian guys because you are able to produce more. You have a [workforce of] compliant, amenable, never-complaining Indian guys with an H-1B. And you are basically getting the big bonuses as a vice-president because you’re able to produce more because you’re able to meet more deadlines. Of course, you don’t care about the quality of life for the employees — that’s a different game.

But life can be “hell” for the many other Indians H-1Bs who are imported by the lower-prestige, Indian-run staffing companies, said the former H-1B worker.

The staffing companies range from huge companies — Infosys, Wipro, and Tata, for example — to medium-sized companies and down to small-scale Indian-immigrant entrepreneurs. These staffing companies import many H-1Bs and work them hard as gig workers, often moving them from city to city for short-term gig contracts. “They do go through hell in many ways, yeah,” said the former H-1B worker. 

The nationwide army of roughly 700,000 Indian H-1Bs works under multiple hierarchies — the hiring managers, the caste rules, and regional hierarchies. Those hierarchies have the unconstrained power to destroy their U.S. careers — and their hopes for a valuable green card.

The same hierarchies apply to more than 100,000 Indian workers who are imported via the L-1, TN, CPT and OPT visa worker programs.

The result is that India’s visa workers will do whatever their Indian managers tell them to do, regardless of American-style professional obligations and regardless of what American customers want, according to H-1Bs and U.S. professionals who have spoken to Breitbart News.

One H-1B in Deleware told a local newspaper:

“The U.S. is the dreamland,” said a Wilmington-based H-1B worker who requested anonymity out of fear that speaking publicly could cost him his job.” “On H-1B, although you are near to the dream, there is always the fear factor,” the man said. “You can’t say tomorrow, ‘I will quit this job and move to another job.’ That is impossible.”

Those hidden hierarchies also make it difficult for U.S. employers to get much value from the gig-worker H-1Bs, despite their lower salaries, say U.S. managers.

For example, the hidden hierarchies pressure Indian H-1B workers to hide problems that would make them or their Indian managers look bad, say Americans. “What I saw from the Indian contractors is they never wanted to admit a lack of understanding or knowledge,” said Ed from Pittsburgh, who served as a project leader in a team of U.S. and India vis workers. He continued:

They would always imply that they understood something, but they really didn’t. They didn’t want to look as if they were lacking in something for fear that they would be, you know, removed [back to India]. I never really had a confidence level that they understood what you were explaining to them.

This hidden pressure is softened when the gig-worker H-1Bs are treated by American project managers as if they are professionals, say American managers. For example, one American project director who worked with a team of roughly 200 Indians in the United States and in India said his Indian H-1Bs “never had a relationship with a manager that spoke openly to them … [Normally,] they still operate under a caste system.”

These pressures are largely invisible to most Americans, who rarely recognize the complex patterns of India’s rich cultural diversity and its many regional languages.

But U.S. project directors see these problems face-to-face, directors tell Breitbart News. “You speak quietly about it,” said Ed from Pittsburgh, adding:

There clearly was an [ethnic and regional] favoritism problem, but it just goes unstated. I can’t do anything about it. I just, yeah, see it … You’ve got to be careful about what you say there or, you know, you’ll be sidetracked.

American executives disregard these many problems and hire gig-worker H-1B workers because they seem cheap, said U.S. managers. “It was about money,” said Rachel from Richmond, who helped implement H-1B outsourcing at a major U.S. bank. “It was not about skill, it was not about anything else — it was about money.”

Good executives can ameliorate many problems, said Ed from Pittsburgh. But, he added, “they don’t seem to understand that this model that they have of bringing in these [H-1B] contractors and doing this work, is in some cases counterproductive to productivity.”

Sagitec executives did not respond to numerous emails and calls from Breitbart News, so Breitbart News cannot assess the company’s policies towards their imported Indian workforce.

But Maryland’s governor and his deputies blamed the company for the failure of Maryland’s unemployment site, dubbed BEACON.

“We were hopeful that our partnership with the vendor would provide rapid solutions. Instead, it has caused a series of challenges for applicants,” said an email from Secretary of Labor Tiffany Robinson. “The vendor’s platform could not sustain the volume of visitors to the site. This was not acceptable, and we are taking immediate actions to fix these problems.”

The department said on April 30 that Sagitec worked to fix some of the problems.

The claimed repairs came three weeks after the Baltimore Sun reported April 8:

Marylanders are reporting website slowdowns, busy signals and long waits on hold to submit applications for emergency cash to live on as the number of applications for unemployment in recent weeks approaches the state’s total for all of 2019.

And state officials said there is meanwhile no clear timeline for when residents will be able to receive an extra $600 in weekly unemployment benefits as part of the federal COVID-19 stimulus package approved by Congress and signed by President Donald Trump.

All of that comes on top of an unemployment claims process that can take three weeks even in normal times.

“It’ll be a month, probably, before I see money from the time I’ve been furloughed,” said Lisa Moyer, a dental assistant on the Delmarva peninsula who said she called the state unemployment more than 500 times Tuesday before getting through. “There’s got to be a better way.”

Americans in several other states also suffered when they could not quickly register for unemployment via Sagitec’s H-1B software. The company boasts of selling its unemployment insurance software to South Carolina, Washington, DC, and Ohio, which signed a contract with Sagitec in January 2019.

In South Carolina, “Glitches, delays plague S.C.’s overloaded unemployment system during COVID-19 pandemic,” the Greenville News reported April 8:

Ashley Strickland, a recently hired medical assistant with AnMed Health, sought unemployment benefits last month after her hours were cut.

…

Strickland said she filed her claim two weeks ago and she’s been checking back a couple of times each day. It remains listed as pending, she said.

She is not alone. Countless workers who have been laid off during the COVID-19 pandemic are complaining on social media that South Carolina’s unemployment system is bedeviled by glitches and delays.

In Ohio, Cleveland.com reported April 13:

As of Friday, more than 696,000 people had applied for unemployment compensation in the state of Ohio in the three weeks since state officials ordered businesses to close to prevent the spread of the novel coronavirus.

…

For many people seeking unemployment checks, the process has been frustrating. Many have had to deal with misunderstandings with the unemployment office, long waits on the phone and, once they are finally approved, inconsistent or low payouts.

In Washington, DC, WUSA9 reported April 14, “Laid-off workers wait weeks to get unemployment benefits in D.C.,” adding:

The overload caused many problems with the city trying to get benefits to the workers. Many workers said between the obsolete website and call centers, they’ve spent weeks trying to get benefits, but have had no luck.

Aretha Yates worked at a restaurant downtown before the pandemic hit. When she got laid-off, she immediately applied for benefits. Her claims were processed, but she got no money. She started calling.

“Within a week, I called four times, stayed on hold about four hours each call, and then the phone hung up,” Yates said.

The company posted a blog defending its record in Maryland:

We know many Marylanders experienced slowness and technical issues during the first several days of using BEACON One-Stop. We also understand that user experience is extremely important. This is why we have worked without ceasing to continuously improve that experience for Marylanders over the last week. Sagitec and the Maryland Department of Labor have worked tirelessly to address reported issues, comments, and support emails.

Our work has proved fruitful. Wait times for claimants have reduced to zero and we expect it to remain that way. In addition, over 201,000 Marylanders have filed their weekly claim certifications this week. On Sunday alone, the new system processed over 141,000 weekly claim certifications, with claimants filing an average of 5,800 weekly certifications every hour. This is more than double the 65,000 weekly claim certifications that were processed last Sunday, April 26.

But Sagitec’s problems are just one more example of the quality problems that beset companies whose executives build their business around the H-1B visa workers.

For example, the underperforming and overbudget Obamacare website was a political disaster for President Barack Obama, and it came after the main contractor — CGI — hired H-1Bs. Klick.com reported:

There is some evidence that this project was, at least in part, off-shored and that H-1B (temporary foreign worker) visas were used extensively. This seems to have led to decisions such as the code supporting the obscure Indian Gujarati language and comments being written in a style consistent with offshore programmers.

The Obamacare websites for other states also got entangled in H-1B problems.

Also, MillerCoors sued HCL Tech for $100 million in 2017. Tata Consulting was hit with a $940 million fine after it was sued by Wisconsin-based Epic Systems. British Airways outsourced its operations to India before the airline’s network crashed.

Most importantly, Boeing’s top management reportedly emphasized cost savings above engineering and also outsourced critical software to an Indian company (which then reportedly hired Indian graduates straight out of college) before the not-fully-explained Boeing 737 Max disasters.

Moreover, numerous lawsuits have been filed against Indian H-1B companies in the United States for national discrimination, visa fraud, sexual discrimination, and securities fraud.

The Indian press keeps a close track of H-1B fraud indictments in the United States and also covers domestic corruption in India.

H-1B workers also drain funding from the local economy. For example, each H-1B spends just 25 percent of their wages in local rents, consumption, and taxes, according to 2017 interview of one Indian recruit based in California. Moreover, each H-1B hire can work with five additional people back in India, said the lawyer, Navneet Chugh, founder of the Chugh law firm. U.S. “companies are looking to change it to 10:90 …. [to] reduce the reliance on US-based onsite employees and work will slowly shift offshore,” he said.

Software failures are so common they are regarded as routine by companies — but not by voters who may blame politicians for the software failures.

“While we have been able to handle this volume better than many other states in the country, it is simply not good enough,” Gov. Hogan told a press conference on April 29. He continued:

The IT contractor who developed this site and the Department of Labor have fallen short of the high standard that we have set, and the people of Maryland deserve better and the buck stops with me.  So I am going to make sure that they do and that we do whatever it takes to get this straight so that every single Marylander gets every single penny of financial assistance that they deserve.

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