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This is an archive article published on August 22, 2012

Systems check

Respite to Infosys in battle over alleged visa irregularities should force a larger stocktaking

Giving Infosys a much-needed breather,a federal court in Alabama has thrown out the harassment case filed by one of its US employees,Jack Palmer. He portrayed himself as a whistleblower who had outed the Indian IT giant’s abuse of visa regulations. He alleged that Infosys had bypassed US immigration laws and brought in on-site engineers from India on B-1 visas meant for short-term business visitors. He claimed that Infosys was deliberately avoiding the trouble and expense of getting H-1B visas for its workers. H-1B visas have been extraordinarily difficult to get,given the hostile US climate on outsourcing. The Indian IT industry’s visa rejection rate has risen to nearly 10 per cent lately.

This case is heavily freighted on both sides. Infosys is one of the most potent names in the heated domestic debate over US outsourcing. Across the board,US politicians have set their face against the idea of a nimbler,more productive global business — President Obama has looked at it exclusively in terms of American job loss,without acknowledging the higher costs in the US. He has,in fact,made it the basis of his biggest attack on Republican challenger Mitt Romney — casting himself as a champion of “insourcing”. HSBC and Standard Chartered have been hauled up in the US for outsourcing key banking functions and jobs to India. In such a fraught atmosphere,Infosys being held guilty would be a godsend for those who want to tar Indian services as subpar,much like the Mattel case becoming a lightning rod for all those who wanted to demonise Chinese manufacturing.

In India,Infosys has been the standard-bearer of its successful IT industry,and a symbol of its leadership as a software services exporter. It is also held up as a tutelary example for Indian business,for its corporate governance and institutional integrity,which means that its being brought down by such a scandal would be read as a much larger loss of face. Infosys had much at stake in this case — the company’s own forecast for growth was lowered in this fiscal. Investors had been wary about the outcome of the suit. The ruling was a relief not just for Infosys,but also for India’s $100 billion IT outsourcing business. Of course,the battle over visa irregularities isn’t over yet for Infosys. This episode should prompt the Indian services industry to introspect on its own practices,and understand the enormous stakes in its global credibility.

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