200 Jobs Are New To Tata, Not to LR.
Actually, the workers were already here.
Gov. Asa Hutchinson was quoted saying TSC's $2 billion deal with insurance and investment conglomerate Transamerica was creating "more jobs for our existing workforce." But TSC merely absorbed the 200 Transamerica employees already at 1400 Centerview Drive, space that TCS took over. A Transamerica sign overlooks the parking lot.
TCS, previously known in Arkansas for its 150-employee operation in Bentonville, is a 400,000-worker global giant in IT and business consulting. January's multi-year deal with Transamerica, essentially an IT outsourcing pact, is the biggest contract ever for the publicly traded corporation, based in Mumbai.
But it comes as TCS faces a federal suit in California accusing it of favoring South Asian job prospects over Americans. The case is one of seven classaction suits alleging abuse of America's H-1B guest worker visa program, a litigation wave causing chaos in the multibillion-dollar IT staffing industry.
TCS's May announcement was murky on where the Little Rock employees were coming from, and wholly unsure about Little Rock geography.
A news release described TSC's site as "in downtown Little Rock," but the old Transamerica site--TSC's new home--is off Kanis Road in west Little Rock, eight miles from downtown.
William Thomas, TSC's North America manager of communications, confirmed to Arkansas Business that all 200 Little Rock employees were transferred from Transamerica's employ.
Thomas said the workers have a mission to "digitally transform" Transamerica's life and annuities business, enhancing digital operations and simplifying the service of "10 million policies into a single integrated modern platform."
TSC also expects to improve customer service and hire more Arkansans, he said.
"TSC is one of the top two job creators in the U.S. IT services sector, and fully expects to hire more people in the future in Arkansas and across the U.S.," Thomas said in an email. "TCS has more than 33,000 employees in the U.S. and more than 400,000 globally." The company has publicly committed to "protecting more than 2,200 Transamerica jobs" in the U.S.
Part of the Tata Sons group, a south Asian behemoth, TSC had more than $19 billion in revenue in the year that ended March 31, as well as more than $4 billion in net income. It is listed on the BSE (the former Bombay Stock Exchange) and the National Stock Exchange in India.
Thomas said TSC has invested nearly $3 billion in its U.S. operations over three years, and has about a third of Fortune 500 brands as customers. He also notes the company's reputation as a sustainability leader, and its civic engagement through nationwide STEM education programs and partnerships and gifts to institutions like Carnegie Mellon University, Cornell Tech and the Massachusetts Institute of Technology. It is India's largest software exporter.
Wave of Class Actions
On the negative side, TCS has fought persistent allegations that it discriminates against Americans seeking positions within the U.S. That's the thrust of an April 2015 suit playing out in federal court in northern California, where plaintiff Steven Heldt, a "Caucasian American," says he encountered "substantial anti-American sentiment" before being dismissed after 20 months of work at several TCS offices in the U.S.
The suit survived a plea for dismissal in December when a federal judge in Oakland, Yvonne Gonzalez Rogers, granted it class-action status. Since then, plaintiffs have joined the action and six other class-action cases have moved forward around the country, asserting that IT staffing companies are favoring South Asian applicants over fully qualified Americans.
The California case, with a Nov. 5 trial date, is the furthest along. It claims that TCS treats "persons who are South Asian or of Indian national origin more favorably" than those with different geographic origins.
An amended complaint alleges that Tata, which derives more than half of its revenue from North America, has a U.S. workforce in stark contrast with U.S. population patterns. "South Asians made up 1-2 percent of the United States population" during the 2010 census, the filing says, but "approximately 80 percent of Tata's United States-based workforce is South Asian (primarily from India)."
The plaintiffs note that South Asians dominate TCS's senior management, and accuse TCS of abusing the H-1B visa system, meant to bring in specialized foreign workers only when skilled American workers are insufficient to fill jobs.
"In fiscal years 2013, 2014 and 2015, for example, Tata filed 5,954, 9,262, and 14,000 H-1B petitions, respectively," court documents say. TCS had nearly 15,000 H-1B visa petitions approved last year, second only to Cognizant Technology, which gained nearly 29,000 approvals. Cognizant is a defendant in one of the other class actions.
In a statement to Bloomberg Law, which wrote last week about the wave of class actions, TCS described itself as an equal-opportunity employer that bases all hiring decisions on "legitimate non-discriminatory business reasons."
TCS's Thomas told Arkansas Business that the company does not comment on ongoing litigation, but its lawyers have denied the plaintiffs' claims in court papers and described the allegations as baseless.
This year, TSC gained legal traction by arguing that claims against it should be barred in cases where plaintiffs signed releases or agreed in writing to settle disputes through arbitration. Subsequently, the company filed a list of 370 former employees whose separation agreements appear to fall in that category. A week ago, Gonzalez Rogers refused to invalidate the plaintiffs' release agreements with the company.
Nevertheless, the judge rejected what she called a "hail-Mary effort" by TCS to limit workers' redress to monetary damages only. That ruling leaves the company vulnerable, should it lose the case, to court orders regulating its employment practices, a possibility that sent shock waves through IT staffing companies.
Those operations have boomed as more U.S. companies, including Transamerica, have outsourced their IT needs. But these companies, which have extensive H-1B experience, have had their reputations battered by the class actions, and their businesses could be ruined by a finding of discrimination, Washington attorney Allen Orr told Arkansas Business.
"The desired goal is already reached, harming the good name of these staffing companies and services," said Orr, second vice president of the American Immigration Lawyers Assocation. His firm is not involved in the litigation. "There are places where immigration needs to grow, and some changes do need to be addressed. But this is not one of them."
Orr sees rising anti-immigrant sentiment in America as one catalyst for the class actions, and he says plenty of safeguards already prevent H-1B guest workers from taking jobs that would otherwise go to Americans. H-lBs are temporary, he notes, and capped annually.
Companies that arranged their own H-1B visas before turning to the IT staffing operations could simply go back to their old ways, Orr said. "This wouldn't cut the number of H-1B visas," but it would disrupt the staffing companies, he said.
Still, Orr sees an eventual discrimination finding as unlikely, "because plaintiffs have to establish intent, that the defendants intended to discriminate, which is a high bar."
For several years, requests for H-1B have oustripped supply, resulting in a lottery to determine who gets authorization. "So there's an H-1B lottery, and a higher fee for these workers because the U.S. Labor Department sets a higher wage, and then if your company has more H-1B workers than American workers, you pay an additional fine per application and get additional scrutiny from the Labor Department.
"To be clear, there are plenty of safeguards to protect American workers."
The Justice Department's Immigrant and Employee Rights division is fighting discrimination against Americans in the workforce, but its authority is limited to national-origin claims made against small companies. The Equal Employment Opportunity Commission has jurisdiction over bigger corporations.
All seven of the companies named as defendants in the class-action cases have roots either in India or Sri Lanka, the tear-shaped island nation off India's southeast coast. Besides TCS and Cognizant, they are Infosys Ltd., Wipro Ltd., Virtusa, Tech Mahindra Ltd. and HCL Technologies Ltd.
By Kyle Massey
[PHOTO BY KERRY PRICHARD]
Caption: This sign remains at 1400 Centerview Drive in Little Rock, where Tata Consultancy Services has absorbed 200 former Transamerica employees, part of a $2 billion IT services deal. TSC is one of seven IT staffing companies accused in lawsuits of discriminating against American job seekers.
Please Note: Illustration(s) are not available due to copyright restrictions.