A U.S. employee of Infosys Technologies, one of India’s largest IT outsourcing providers, has filed a lawsuit against the company, claiming that Infosys has been circumventing U.S. visa laws to send Indian individuals to work in the U.S. for its clients.

According to the complaint, Infosys employs over 15,000 foreign nationals in the U.S. and is therefore heavily dependent on H-1B visas which allow skilled individuals to work in the U.S. on a full-time basis. The plaintiff, Jack “Jay” Palmer, claims that after the U.S. restricted the availability of H-1B visas, Infosys began to send unskilled workers to work full-time in the U.S. using B-1 visas. Individuals entering the U.S. on a B-1 visa are prohibited from working full-time in the U.S. Palmer also claims that Infosys failed to withhold federal or state income taxes from its employees working in the U.S.

As we noted earlier, the U.S. recently doubled the fees for obtaining H-1B visas, making it more expensive for outsourcing providers outside the U.S. to obtain visas to send workers to the U.S.

Lessons Learned / Practice Tips

Regardless of the merits of this case, this lawsuit highlights the importance of companies including the following provisions when negotiating or renewing an outsourcing agreement:

  • Requiring the service provider to comply with applicable laws;
  • Requiring the service provider to comply with the customer’s code of conduct;
  • Having and exercising sufficient audit rights to incentivize proper service provider behavior and to confirm that service provider personnel are being charged properly; and
  • Limiting turnover on the customer account.

A copy of the complaint in Palmer v. Infosys Technologies Limited Inc. is available here.