Dell Computer Company: An American Tale of Betrayal

In what sounds almost too unreal to be true, Dell Technologies (formerly known as simply Dell) is in the process of laying off 3,000 American workers, but wants to hire more than 5,000 workers from India and other countries who would come to the U.S. on H1-B visas to work for them. Of course, the foreign workers will be paid less than their American counterparts.

For those people in the tech industry, it’s a familiar story; companies such as Microsoft, Facebook and Intel have all been lobbying the Democratic Clinton presidential campaign and the Obama administration to change the rules about how many workers can be admitted to the country on H1-B visas.

For a large tech company like Microsoft or Amazon, the difference in salary costs can be enormous. This, in turn, can drive up profits and the stock price of such a firm, and it’s a no-brainer that these companies would support any candidate who’s willing to help them cut American workers out of their production expenses.

At Dell, which just closed the world’s largest tech industry acquisition ever with its $67 billion purchase of EMC Corporation, the company’s spokesman Dave Farmer attempted to explain the layoffs by saying, “As is common with deals of this size, there will be some overlaps we will need to manage and where some employee reduction will occur.”

CEO Michael Dell concurred, saying, “There are some overlapping functions and that sort of thing – that’s not the primary feature of this; but there is some of that.” By “overlaps,” Farmer and Dell were talking about workers, and in this case, the workers are in the administrative, marketing and supply chain departments of the company.

Dell’s admitted goal is to trim $1.7 billion in costs over the course of the next 18 months. But trimming costs is not the same thing as reducing headcount.

From 2014 to 2016, Dell submitted paperwork for 256 Green Cards and 2,039 H1-B visas. EMC had submitted paperwork for 453 Green Cards and 2,347 H1-B visas. The total for both companies is 5,095 applications. While it’s true that not all of the applications will be granted, 2016 isn’t over yet — there will likely be further paperwork submitted before the year is over.

The pressure to cut costs is on at Dell because the company’s corporate credit rating is at junk status. The firm’s debt is at an all-time high of more than $50 billion.

The company is facing stiff competition in the PC marketplace and in cloud and “Internet of Things” apps from Apple, Amazon, Microsoft and Google. Buying EMC was a way for Dell to get into new businesses, but it’s clear that a return to the profitability heights it enjoyed in the 1990s will be a tough climb, if not impossible.

Tech companies such as Dell and IBM have been pushing the envelope on the number of H1-B visas they can submit; in some cases, the demand for workers is genuine, and there may not be enough talented Americans to go around and fill all the positions that exist.

But in other cases, the visa applications are merely a matter of cost savings, prompting grumbling among Republicans in the Senate that companies are replacing American workers with cheaper foreign ones and abusing the H1-B program.

In 2014, a company called Eversource Energy in Hartford, Connecticut fired 200 workers in order to hire the same number of H1-B visa holders to take their place. Eversource contracted two offshore outsourcing companies to bring in the new workers and even had the gall of asking the American workers who were leaving to train their foreign replacements.

Under the threat of losing their severance pay, the company mandated the fired American workers not to give “statements to anyone, spoken or written, that would tend to disparage or discredit Eversource or any of its officers.”

At least one senator asked President Obama’s Justice Department under Attorney General Loretta Lynch to look into the Eversource matter in February, but it appears that request went into a black hole.

In the meantime, Eversource was listed as among the top six contributors to the Democratic members of Connecticut’s Congressional caucus and is known as a particularly active lobbyist of the Connecticut and Massachusetts state legislatures.

It should be noted that the offshore outsourcing companies that Eversource relied upon are not a small phenomenon. According to a recent story in the New York Times, a very small number of these companies — just 13 to be exact — are soaking up more than one-third of all foreign H1-B visa applicants.

They then can turn around and provide this labor to large corporations so the larger companies can honestly say they were not the ones recruiting foreign labor.

As for Dell, this wouldn’t be the first time the firm has engaged in these shenanigans. In 2013, the company shrank key departments by implementing what it called a “Voluntary Separation Program” (VSP).

Under its VSP, employees were “asked to quit” in exchange for one-time payoffs and a little bit of help in finding a new job. Quitting made the employees ineligible for unemployment.

The VSP was not considered an early retirement program because employees of all ages and tenures took part in it. One employee said that “no one from India is allowed to apply. Dell has moved much of its engineering to India.”

At the time, Dell released a statement which read:

Dell has announced an optional, global and voluntary separation program for eligible team members who choose to leave the company in exchange for the offer of a separation package to support their transition. Please note that we’ve taken steps to optimize our business, streamline operations and improve efficiency over the past few years. And we’ve been consistent in saying that a critical element of our strategy has been and always will be about improving our cost structure and freeing up capital to make the investments in growth areas that matter to our customers.

In light of this and other similar actions by tech companies, it’s high time for Congress to enact an “Americans-first” labor policy that makes the hiring of American workers the highest priority and protects existing American jobs, especially in the tech sector.

Republicans like GOP presidential nominee Donald Trump know that the Democrats won’t support such a policy, and that’s all the more reason why they need to be voted out in the upcoming general election.


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