Business Week ran a cover page story in the magazine this week on High Tech Sweat shops.
This is a no brainer to most Software Techies; how the H1B program works, how Consulting outfits work and how they place H1B consultants in jobs that often involve at least 3 layers of sub-contracts. It won’t be an exaggeration to say there is no Placement firm in the US that has not dealt with these so called ‘sweat shop’s. Small (often under 50 employee) High Tech Consulting firms that predominantly hire ONLY H1B consultants.
There is a well known criticism that these firms are unduly replacing American workers instead of complimenting the American work force.
This year it is entirely different. Recession is one for sure. But also a variety of reasons. Some of these outfits are under investigation for a variety of fraud ranging from collecting fees for H1B sponsorship to ‘running the payroll’. Not sure how many of them and not sure the extent of fraud. But number of H1B petitions filed is any sign of their activity, then the activity has been completely subdued this year. The quota of H1B petitions for 2010 is still available and unfilled. Remember last year, the quota was over in a day or two and lottery has been put in place to handle the rush.
Overall, it appears many of these small Consulting outfits are not doing well. Many of these firms opted out of sponsoring H1B petitions this year due to recession. Finance companies that accepted TARP money have been imposed with additional restrictions in hiring H1B based consultants. Investigations on I-9 compliance reportedly at almost all organizations. People who left for their countries had hard time getting their visas stamped and have to stay put longer (NPR has a story a while back). Many H1B petitions and renewals are in trouble as these firms have hard time producing end-client letters navigating through the web of layers.
This grave situation is affecting good and bad firms alike. Hopefully, once the dust settles, good firms will survive and Consultants with real experience and skill sets to offer will have much better prospects.