September 25, 2013 (Computerworld)
Some state governments are willing to hire offshore IT service providers to work on healthcare IT projects under controversial contracts that don't bar use of temporary foreign labor, or workers on H-1B visas.
Two multimillion-dollar government healthcare IT projects, one in Illinois and the other in the District of Columbia, illustrate what's going on.
In Illinois, Cognizant was awarded a $74.1 million contract in June to upgrade the state's Medicaid systems to meet the requirements of the Affordable Care Act (ACA), also known as Obamacare.
In January, the District of Columbia awarded Infosys a $49.5 million contract to develop a health benefit exchange and replace its Medicaid and eligibility systems.
H-1B visa holders may already be working on municipal computer systems in Washington. In Illinois, state officials say that no H-1B workers are working on its project -- for now.
Illinois said that Cognizant has assigned 13 workers, all U.S. citizens or permanent U.S. residents with Medicaid experience and expertise, to work on the project. Seven of the staff members are former state of Illinois employees with extensive knowledge of the state's Medicaid system, according to spokeswoman Kelly Jakubek, communication manager for the Illinois Department of Healthcare and Family Services.
Cognizant has submitted paperwork to hire 60 or more visa holders to work on the project -- a proposal that the state wasn't aware of, Jakubek said.
Computerworld sent Illinois officials emails with copies of the paperwork that Cognizant filed with the U.S. Department of Labor to hire 60 senior system analysts at a pay rate of $76,814. The documents, known as Labor Condition Applications (LCA), are part of the H-1B approval process and are used in salary determinations. As a general rule, though, the filing of an LCA doesn't mean that a visa worker in on the way.
The state controls the hiring process for the project, said Jakubek, though she could not say whether it will require the contractor to exclude temporary visa workers from the effort.
Asked about the paperwork filed with the Labor Department, Cognizant said it would take on visa workers if needed.
"Due to the shortage of qualified talent in many parts of the U.S., we routinely file LCAs when we anticipate a large contract to ramp up," Cognizant said in a statement. "Our first course of action is always to seek out qualified U.S. workers to fill these positions. We file LCAs as a fallback measure in the event that we are not able to find qualified U.S. workers."
Ron Hira, a public policy professor at the Rochester Institute of Technology and a researcher who studies tech immigration issues, said that Cognizant "is able to piggyback off of the false claims of a dire shortage of U.S. IT workers," adding that "Microsoft and others are providing cover to firms like Cognizant by making broad-based claims of IT shortages."
Cognizant, which is based in Teaneck, N.J., but has operations worldwide and conducts a major share of its work overseas, has been one of the largest users of H-1B visas, getting more than 9,000 approvals last year, according to government records.
Bangalore, India-based Infosys received 5,600 approvals last year.
The hiring of temporary visa workers "isn't due to a shortage of U.S. IT workers, but instead for the simple fact that those H-1B workers can be paid less than the market wage," said Hira.
Hira argued that governments should use their IT budgets to hire U.S. workers, and said government contracts "have also long been the sources of seed money to support workforce development and human capital development in technology areas."
"Innovation and education are the primary sources of economic growth in a knowledge economy, so policymakers should steer precious tax dollars to fostering innovation and education here, not overseas," said Hira.
The paperwork that Computerworld emailed to Illinois state officials wasn't a secret.
Actions in Illinois are being carefully watched by some citizen groups, such as the Edgar County Watchdogs and Open the Books, which had made public the LCAs and the state contract.
Adam Andrzejewski, who heads the Open the Books project, is expecting that visa workers will be used on the Illinois Medicaid systems project. He pointed to the state's high unemployment as one reason why using such workers is wrong.
The Illinois unemployment rate of 9.2% is the second highest in the U.S. Nevada tops the list at 9.5%.
Andrzejewski is critical of the cost of the contract, contending that the state's Democratic governor, Pat Quinn, is "not saving taxpayer money, but offshoring our jobs and tax dollars."
In the District of Columbia, the municipal government says it does not hire workers on temporary visas, but a contractor like Infosys can do so -- with restrictions. For any service contract valued at more than $300,000, the District says 51% of the new hires resulting from the contract must be District residents.
What constitutes a District resident? There is no length of residency requirement, and the employer verifies residency -- usually by checking a worker's District-issued identification card, according to a spokeswoman at the District's Office of Contracting and Procurement.
Infosys would not comment for this story.
In 2013, Infosys has filed more than 140 LCAs for District projects, according to LCA data gathered by MyVisaJobs.com.
Computerworld looked at a random sample and, except in a few instances, District government addresses were listed. The jobs included technology analysts to be paid $63,631 per year, project managers with pay of $107,738, and technology architects slated to earn $130,147.
Computerworld received a copy of the D.C. Infosys contract through a Freedom of Information Act request. The contract provides no added insight into the workforce, other than a list of local IT partners that was required under the District's local partner contracting policy.
Jimit Arora, a vice president at Everest Group, a consulting and research firm, says it's "still early days" in the effort of offshore companies to win government contracts. The trend toward offshoring in public-sector work has been driven by changes in the market.
Offshore companies "are realizing that the traditional cash cows of financial services, insurance, manufacturing and energy seem to be tapering," said Arora. Their interest in looking at new sectors, he added, "is a natural evolution of the firms wanting to grow as the traditional sources of growth start to slow down."
Paul Singer, principal at outsourcing consultancy Pace Harmon, said healthcare generally is becoming a very important market for outsourcers. For example, he said, 25% of Cognizant's revenues are from healthcare.
Singer said cost savings are a factor in the move to offshoring, but customers of the IT services companies are also "looking to providers to offer innovation, access to hard-to-find skills, and new technologies, which eliminates the need for some tasks completely, and therefore provides an even more meaningful cost impact."