Reference no: EM132254140

Case Study : Temporary Visas/Permanent Job Loss

Finding employees with specialized technical skills can be difficult for American high-tech firms like Microsoft, Intel, Google, and Apple. Congress created the H-1B visa program to help address this problem. Under the program, American companies can hire foreigners with unique scientific and technology skills as temporary workers. The goal is to supplement the American workforce, enabling domestic companies to expand. Like a number of other federal initiatives, the H-1B visa program doesn’t always function as intended. Infosys, Tata Consulting Services, Accenture, Cognizant, and other large overseas outsourcing firms receive the greatest number of visas. Many foreign workers under contract to these consulting firms don’t appear to have specialized technical skills but, rather, do accounting and other office work. Few end up in the high-tech sector, working instead for Disney, Southern California Edison, Northeast Utilities, Toys “R” Us, Fossil, New York Life, Cengage Learning, and other companies. Often, their task is to shadow American employees to learn their jobs so the work can be outsourced, generally to India. When the temporary employees return home, the U.S. workers are laid off. At Toys “R” Us, for example, 70 employees were told that their positions would be transferred to Tata Consultancy Services and were threatened with immediate termination if they didn’t cooperate in the “knowledge transfer” program. Those who remained to the end received a severance package. Two hundred and fifty Disney employees were offered a “stay bonus” of 10% of their severance if they stayed 90 days, which did little to ease the pain of having to train their replacements. Said one former worker: “I just couldn’t believe they could fly people in to sit at our desks and take over our jobs exactly. It was so humiliating to train somebody else to take over your job. I still can’t grasp it.”1 United States firms defend their decision to hire H-1B temporary workers to replace domestic employees. They argue that doing so is a sound business strategy that results in significant cost savings. (H-1B hires work for 25%–49% less than their U.S. counterparts.) Executives claim that laid-off employees receive generous severance packages (an assertion disputed by some laid-off workers) and that any job losses are more than offset by job gains. Disney, for example, says it created 30,000 jobs over the past decade. Nevertheless, Congress appears ready to revisit the H-1B visa program. Outraged by tales of domestic employees forced to train their foreign replacements, a bipartisan group of Senators has called for revisions in the program. Companies would be required to try harder to hire Americans for open positions and to post job openings on the Labor Department website. The new rules would give more power to the government to investigate fraud and provide added protection for H-1B workers who are totally dependent on the outsourcing firms that employ them.

Discussion Probes

1. Would you agree to train your replacement if you knew your job was going to be outsourced? Why or why not?

2. Is it unjust to force employees to train their replacements? Does doing so take away the dignity of workers?

3. Is using the temporary visa program to outsource jobs unethical or good business? Why?

4. Should Congress end the H-1B temporary visa program?

5. What changes should Congress make in the H-1B program if it continues?