India is Now Outsourcing Jobs to the U.S.

See if you can wrap your head around this one: it’s a well-known fact that many American companies outsource their call centers to India (NYSE:IFN), where employees will work at a fraction of the salary required of an American employee. Many of those companies have outsourced the work through companies like Mumbai-based Aegis Communications, which employs workers on the company’s behalf. As business grows, Indian outsourcing giants are looking for growth opportunities in the United States. And with the United States limiting the number of visas for visiting Indian workers, Indian-based outsourcing companies are being forced to hire American workers. That is, U.S. Companies are outsourcing jobs to Indian companies that are, in turn, outsourcing the jobs back to the U.S. and American employees. You with me so far?

While Americans are happy to have the jobs, apparently they don’t make as good of employees as do their Indian counterparts. Many of Aegis’ New York City-based employees don’t have college degrees, some don’t even have a high school diploma. Some Indian managers say their American employees take less pride in what they’re doing, and are altogether lazier than their better educated and harder working Indian counterparts. And yet, given that India and the U.S. have two very different economies, the “inferior” Americans earn four times what Indian employees do for the same job.

According to Aegis’ website, 90% of its employees are American.  However, that’s not the case for the vast majority Indian-based outsourcing companies. While many are establishing U.S. offices, they are bringing Indian workers with them on H-1B and L-1 visas, which were established by the Immigration Act of 1990, allowing workers to remain in the U.S. for up to 6 years.  The original intent of the visas was to make it possible for American companies to bring in talent from elsewhere, not to simply replace Americans with foreign employees, and many are citing current practices as an abuse of the law.  Looking at H-1B applications, 20.7% contained fraud or technical violations. So in order to discourage these practices, lawmakers are urging companies to follow Aegis’ example and hire American employees. The $2,000 fee that the Obama administration added to H-1B applications seems to have helped, as applications are down 43% from last year.

But many companies continue to send Indian workers to the U.S., in large part because they can pay them less and work them longer hours. Workers are often paid “home-country wages” that amount to $8,000 USD per year, with housing allowances.  And according to Ronil Hira, a public policy professor at the Rochester Institute of Technology, 90% of most outsourcing employees in the U.S. are still Indian.

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