INDIAN outsourcing giant Infosys said on Wednesday (October 30) it would pay $34m (£21.16m) to the US government to settle an investigation into alleged visa fraud by the company.
The group has been probed by the Department of Homeland Security and the State Department over accusations it put workers on short-term business visitor visas, which are much easier and cheaper to obtain than the correct work visas.
This would mean Infosys could undercut competitors in bids for programming, accounting and other work performed for clients, the Wall Street Journal reported on Tuesday (October 29).
Infosys said the settlement “removed the uncertainty of prolonged litigation” but it denied any claims of “systemic visa fraud, misuse of visas for competitive advantage, or immigration abuse”.
“Those claims are untrue and are assertions that remain unproven,” it said in a statement.
The firm said the settlement was “focused on historical I-9 paperwork errors from 2010-2011 that Infosys began correcting before the investigation began”.
It added that the use of B-1 business visitor visas was for “legitimate business purposes”.
Infosys said it had already put aside a reserve of $35m (£21.79m) for the matter including legal fees.
The company said the settlement “resolves all issues with the US Department of State, Immigrations and Customs Enforcement and the US Department of Homeland Security relating to I-9 paperwork errors and visa matters that were the subject of the investigation”.
The US probe began in 2011 after an employee filed a lawsuit in the United States alleging that the Nasdaq-listed Infosys was “improperly” using B1 visas.
Consultant Jack Palmer said he faced harassment after raising concerns over the violation of visa laws, but his case was dismissed.
“There were no criminal charges or court rulings against the company,” the Infosys statement said. “Furthermore, there are no limitations on the company’s eligibility for federal contracts or access to US visa programs as a result of the settlement.”
Infosys performs India-based computing and other technology services for Western clients, which have included Goldman Sachs Group, Wal-Mart Stores and Cisco Systems.
But it also has thousands of US-based employees working at on-site locations for clients as technicians and engineers.
The Bangalore-based firm was created three decades ago by NR Narayana Murthy and six others as they sat around a kitchen table.
Murthy, an icon of Indian business who pioneered the country’s flagship outsourcing industry, returned from retirement in June as executive chairman.
He came back at time when Infosys was struggling with weak earnings, loss of market share and waning employee morale, and he warned that the task of rebuilding a “desirable” Infosys could take at least 36 months.
The firm this month reported a lower-than-expected 1.6 per cent rise in quarterly net profit, but raised its full-year revenue outlook, marking a promising return for Murthy.
Many of India’s IT outsourcing firms reported sluggish growth last year, but the outlook for the industry has started to improve in the key US and European markets.
