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September 18, 2007

A New Strategy For IT's End Clients

In the IT industry, as presently constituted, on  the one hand we have the “End” client (The final recipient of the IT services) and in the other hand, the Contractor and its Cartels of IT provider of services

We recommend that the “End” clients adopt a different strategy other than to become victims to the “Prestigious Ones” the name given by us to those organization that are trying to Monopolized the IT industry to maximize their profits.
 

This Strategy consist in using Peningo System approach of joining forces with the Consultant and the “End” Client and contracting among ourselves, by-passing the Prestigious ones and their excessive greed and Mark-ups which have lead to presenting only candidates that fit the Mark-up structure, disregarding the other talent that specifically are the ones that could satisfy the End Client’s needs which will never be presented because of their higher rates.  By eliminating the “Prestigious Ones” from the process, additional margin becomes available that could go to pay for the resource and at the same time provide savings to the End Client.
 

Additional reasons for adopting such Strategy by the End Client are:

Client controls systems projects that
support the client’s successful
business plan.


At Peningo, we expect the client to control all systems decisions, as we feel that those
decisions may impact the client’s “Business Plan”.  Systems contributions by Peningo Members should be limited to the development, enhancement and implementation of the systems that will deliver a client’s proven successful “Business Plan” intact.

There is a tendency on the part of the “Prestigious Ones” to try to control and influence the client’s “Business Plan” in order to be able to use their “package solutions”.  This efforts results in priority being given to systems solutions than to the client’s “Business Plan”.  

We have experience salvaging situations created by the “Prestigious Ones” in their
attempts to influence the client’s “Business Plan” in order to use the “standard solution” which results in totally inadequate business solution.  Again we re-state our view that systems decisions should be totally in the hands of client personnel and all systems must bow to the needs of the client’s “Business Plan”


The “Bench” Systems

The “Prestigious Ones” maintain consultants between assignments on the “Bench”
waiting for allocation to a project.   We at Peningo feel that the “Bench” system is totally wrong for the following reasons:

When a client states a requirement, there is an economic incentive, on the part of the ”
Prestigious Ones” to use “imperfect” matches to the client’s requirement in order to reduce the bench idle resources ,which are on their payroll, and are not billable to any client.  That is how the “Prestigious Ones” finds themselves offering “Oranges” when the client’s needs requires “Apples”

We have experienced replacing such mismatched resources presented by the “Prestigious Ones” and bringing the client back into harmony by delivering excellent matches to the client’s requirement.  In addition consultants are extremely unhappy to be placed on a “Bench” even when they continue to receive their pay.

We approach every client requirement without any limitations except to seek a very close match that has the pertinent skills at an expert level.    As we do not support the “Bench” systems we are able to bring upon the client’s needs the best solution available in the Market at that point in time.   Our consultants are compensated adequately so that should a situation developed of a gap between assignments the consultants may use their free time as they wish.  It is our experience that those that have dedicated their careers to consulting prefer this method best, as they do not like to be mismatched, resulting in personal failures at the assignment.


One single hourly rate

The “Prestigious Ones” when a resource home base is away from the client they offer the resource on an hourly billing rate plus expenses.  Such practices lead to extensive overhead costs in the part of the consultant, the client and the “Prestigious Ones”.

Peningo’s approach is to offer our consultant at a single hourly rate.  When the Peningo consultant home base is remote to the client we would have quoted the single hourly rate as all inclusive (no expenses to be added).  The client for all purposes may consider all Peningo resources as local.  It is up to the consultants to decide if they want to commute on a weekly basis or relocate in close proximity to the client’s site for the duration of the assignment,

It is our experience that the consultant and the client prefer this method and for Peningo, facilitate the inclusion of a nation wide pool of resources to respond to clients requests.

Markups

It is in the nature of the “Prestigious Ones” to function with extremely high overheads that leads to the need for large Markups.  As the consultants wants their earnings increased the “Prestigious Ones” finds themselves in the need to go “off shore” for resources that may fit their Markups requirements, with the consequent negative effect on quality of service.

By eliminating the “Prestigious Ones” Peningo will be able to share the savings with  the consultant and the client.  The client benefits by having a business formula that rewards the consultant, making it possible to retain the most accomplish resources available while receiving a substantial cost reduction.
 

If you wish to pursue this matter further please contact Peningo Systems Inc.

 

 About Peningo Systems:

Peningo Systems supports and provides Consultants with expertise in many areas including:

To see Peningo Systems areas of expertise, please go to the Peningo Technical Areas page.

 

 

August 02, 2007

Peningo Systems Selected to Provide WebSphere Commerce Development and Support Consulting Services

The Peningo Opinion Blog - Rye, New York - Peningo Systems has recently been selected to provide WebSphere Commerce Development and Support Consulting Services to a leading NASDAQ Bioscience Research firm.

Seeing the Light with Peningo Systems While pricing will always be a factor in the selection process by the “End Clients”, Peningo Systems was selected to provide WebSphere Commerce Development and Support services base on the combination of price and high level of quality and expertise in the Consultants that will be providing the services. The selection of Peningo System is an example of successful bypass of these Prestigious Names in IT Consulting and Professional Services, which Peningo often refer to as “The Prestigious One”.

Peningo will provide the WebSphere Commerce Development and Support services with a team of Senior Consultants with expertise in WebSphere Commerce development and system administration, based here in the U.S.A. . This level of Seniority and Expertise is rare to find when an “End Client” pays top dollar, utilizing the services from one of the Prestigious Names in IT Consulting and Professional Services.

The reasons these Senior level Experts are hard to retain when using one of the Prestigious Names in IT Consulting and Professional Services, is that their “Excessive Profit Margins” would NOT allow for these Senior Level Experts to be compensated properly. As a result, many of the Senior Consultants and experts in their respective technical fields chose to be employed elsewhere and are NOT available via one of the Prestigious Names in IT Consulting and Professional Services. To fulfill the Services to the “End Clients”, these “Prestigious Ones” look to retain resources who are:

  • Paid and command a lower salary. Many of these individuals are not Senior Level Consultants or Technical Experts.
  • On H1-B or L-1 Visa. Many times these Visa based Consultants are used because they are cheaper than Americans and Permanent Residents. As a result, the quality level of such candidates is suspect.
  • Resources located Offshore on the other side of the globe to provide the “WebSphere Consulting Services”.

For these reasons above, the quality of services from these “Prestigious Ones” has declined drastically. The founders of Peningo Systems has thrived for years in providing Consulting Services with the Senior Level Experts at rates that are below the rates of the “Prestigious Ones” with their sub-par to mediocre talent.

Aside from WebSphere Commerce, Peningo Systems supports and provides Consultants with expertise in many areas including:

To see Peningo Systems areas of expertise, please go to the Peningo Technical Areas page or go to the Peningo Websphere Consultants page.

 

 To see Peningo's other Blogs please go to

The Peningo Websphere Consultants Blog

The Peningo Opinion Blog

 

July 28, 2007

Myth About Consulting Jobs Versus Permanent Jobs in an H1-B - Outsourcing Influenced World


 In an effort to reduce costs of fielding consultants the Major IT Consulting organizations, which we refer as “The Prestigious Ones”, offer “Permanent Employment” with “Benefits” which comes with a low salary.

Anyone offering “Permanent Employment with Benefits” for consulting assignments is taking the consultant for a ride.  The reality is that consulting assignments have a beginning and an end.  For these reasons the ultimate Clients are willing to pay a substantial premium over the cost of their own employees.  When the assignment is over, the Consulting organizations will make every effort to have the employee transferred to another assignment, but such propositions are not based on certainty but in the hope that the exploitation may be able to continue.  When this fails, the Consultant finds themselves dismissed.

Every Consultant should expect premium compensation in their hourly rate instead of salary (salary employees work many overtime hours without compensation) and that hourly rate should include an amount taking into consideration the costs of self provided benefits, the fact that there are gaps in moving from one assignment to another and that there should be a premium for the difficult life (family wise) of a consultant that needs to travel away from home.   To settle for less means that someone is exploiting the Consultant as the organization will keep the premium for his/her sacrifices.
 

It is important for the Consultant to pay for their own “Benefits” as when they move to the next assignment it might not be with the same organization that provided the previous assignment.  By doing this the Consultant expand its Market and make it possible to achieve substantial earnings in keeping with the effort.
 

To make things worse the “Prestigious Ones” are attempting to replace the USA based Consultant by outsourcing offshore work which services the USA based clients. 

Blown Offshore to Mysore 
Obviously this is tax evasion as the offshore resources do not pay any Federal, State, Social Security or Medicare and the organization hiring do not have to match the Social Security and Medicare taxes  as if the work was performed by a USA based person.

We founded Peningo Systems to combat this problem of multiple layers of markups that ends up in between consultant and the end client. 

Peningo Systems solution to this problem is to bypass these “Offshore Outsourcers” and with the support of Peningo Systems Inc, contract directly between the Consultant and the End Client, thus, eliminating these ”Prestigious Ones” excessive Mark-ups and allowing for increased compensation for the Consultant while lowering the costs for the End Client.

With the Outsourcing IT Jobs OffShore and/or using employees who are H1-B Visa or L-1 Visa holders, many times the cost of “Services” to the “End Client” is slightly effected. Between huge markups by some of the Larger Outsourcers and/or the combination of multiple layers of subcontractors involved in providing the IT Services with their respective markups, the cost to the “End Client” is still high. All the Offshoring of IT jobs and hiring of H-1Bs & L-1 Visa holders offers is higher profit margins for the Outsourcers…….WHILE PROVIDING LOWER QUALITY OF SERVICE TO THE END CLIENT!!! It is very true the old saying that Power corrupts and that Absolute Power absolutely corrupts. It is time for the Consultant and the End Client to bypass these “Prestigious Ones” which every day are looking more like ruffians and knaves.



 
To All Americans: 

If you wish to voice your opinion, you are welcome in commenting to this post. If you wish to voice your opinion to a greater authority….Congress and/or your State Representatives, please go to the Peningo Advocacy Assistance Page.

July 18, 2007

Support the H-1B and L-1 Visa Fraud and Abuse Prevention Act of 2007

GRASSLEY AND DURBIN INTRODUCE FIRST BIPARTISAN H-1B, L-1 VISA REFORM BILL TO PROTECT AMERICAN WORKERS   

 

WASHINGTON, DC - U.S. Senators Chuck Grassley (R-IA) and Dick Durbin (D-IL) introduced "The H-1B and L-1 Visa Fraud and Abuse Prevention Act of 2007" to overhaul the H-1B and L-1 visa programs to give priority to American workers and crack down on unscrupulous employers who deprive qualified Americans of high-skill jobs.

Uncle Sam is on to you Outsourcers

The H-1B visa program allows American companies and universities to employ temporary foreign workers who have the equivalent of a U.S. bachelor’s degree in a job category that is considered    by the U.S. Citizenship & Immigration Services to be a "specialty occupation".  The L-1 visa program allows companies to transfer certain employees from their foreign facilities to their U.S. facilities for up to seven years.


“Our immigration policy should seek to complement our U.S. workforce, not replace it,” Durbin said. “Some employers have abused the H-1B and L-1 temporary work visa programs, using them to bypass qualified American job applicants.  This bill will set up safeguards for American workers, and provide much-needed oversight and enforcement of employers who fail to abide by the law.”

 

"This is about protecting the American worker,” said Senator Grassley.  “We're closing loopholes that employers have exploited by requiring them to be more transparent about their hiring and we're ensuring more oversight of these visa programs to reduce fraud and abuse.  A little sunshine will go a long way to help the American worker."

 

Provisions of the Durbin-Grassley bill would change existing law in the following ways:

Currently, the H-1B visa program is criticized for failing to protect American workers.

  • Under current law, only employers that employ H-1B visa holders as a large percentage of their U.S. workforce are required to pledge that they have attempted to find American workers before bringing in foreign workers.  The Durbin-Grassley bill would require all employers seeking to hire an H-1B visa holder to pledge that they have made a good-faith effort to hire American workers first and that the H-1B visa holder will not displace an American worker.
  • The Durbin-Grassley bill would require that before an employer may submit an H-1B application, the employer must first advertise the job opening for 30 days on a Department of Labor (DOL) website.  DOL would also be required to post summaries of all H-1B applications on its website.
  • The Durbin-Grassley bill would require that H-1B employers may not advertise a job as available only for H-1B visa holders or recruit only H-1B visa holders for a job.
  • The Durbin-Grassley bill would prohibit employers from hiring H-1B employees who are then outsourced to other companies. This is a method that some companies use to evade restrictions on hiring H-1Bs.


Currently, so-called “job shops” hire large numbers of foreign workers on H-1B visas for short time periods to train and then outsource these workers offshore.


  • The Durbin-Grassley bill would prohibit companies from hiring H-1B employees if they employ more than 50 people and more than 50% of their employees are H-1B visa holders.

 

Currently, the Department of Labor lacks sufficient oversight and investigative authority over the H-1B program.

  • The Durbin-Grassley bill would give DOL the ability to conduct random audits of any company that uses the H-1B program, and would require DOL to conduct annual audits of companies with more than 100 employees that have 15% or more of those workers on H-1B visas.
  • The Durbin-Grassley bill would give DOL authority to review employers’ H-1B applications for “clear indicators of fraud or misrepresentation of material fact.” Currently, DOL is only authorized to review applications for “completeness and obvious inaccuracies.”
  •  The Durbin-Grassley bill would give DOL 14 days to review H-1B applications, instead of the seven days currently permitted.
  • The Durbin-Grassley bill would give DOL more authority to conduct employer investigations and streamline the investigative process by, among other things, permitting DOL to initiate its own investigations and eliminating the requirement that the DOL Secretary personally authorize an investigation.
  •  The Durbin-Grassley bill would require the Department of Homeland Security (DHS) to share with DOL any information in H-1B visa applications indicating that an H-1B employer is not complying with program requirements.
  • The Durbin-Grassley bill would strengthen existing whistleblower protections for the H-1B program and establish whistleblower protections for the L-1 program.
  • The Durbin-Grassley bill would authorize the hiring of 200 additional DOL employees to administer, oversee, investigate and enforce the H-1B program.



Currently, the H-1B and L-1 visa programs are criticized for making it possible for companies to hire foreign workers at lower wages and with fewer rights than Americans, in turn creating incentives for companies to avoid hiring Americans.


  • The Durbin-Grassley bill would require H-1B and L-1 employers to pay employees the prevailing wage to ensure employers are not undercutting American workers by paying substandard wages to foreign workers.
  • The Durbin-Grassley bill would require the government to provide H-1B visa holders with information about their rights.
  • The Durbin-Grassley bill would require H-1B employers to provide an H-1B employee’s immigration documents to the employee upon request. 


Under current law, experts argue that employers can use the L-1 program to evade restrictions on the H-1B program because the L-1 program does not have an annual cap and does not include protections for American workers.  As a result, efforts to reform the H-1B program are unlikely to be successful if the L-1 program is not reformed at the same time.

 

  • The Durbin-Grassley bill would limit issuance of L-1 visas for employees of a “new facility” to an initial period of 12 months, which can be extended after the employer demonstrates that the new facility is legitimate.
  • The Durbin-Grassley bill would prohibit so-called “blanket petitions” for L-1 visas, requiring employers to submit a separate application for each L-1 visa. 
  •  The Durbin-Grassley bill would prohibit the outplacement of L-1 visa holders.
  •  The Durbin-Grassley bill would establish a process for DOL to investigate, audit and penalize L-1 employers.

 

Peningo Systems supports the efforts of U.S. Senators Chuck Grassley (R-IA) and Dick Durbin (D-IL). We feel that they are on the right track in addressing the abuses in these programs that in turn destroy opportunity for Americans in the IT Industry.

Bill has a dreamWith the Outsourcing IT Jobs OffShore, and/or using employees who are H1-B Visa or L-1 Visa holders, many times the cost of “Services” to the “End Client” is slightly effected. Between huge markups by some of the Larger Outsourcers and/or the combination of multiple layers of subcontractors involved in providing the IT Services with their respective markups, the cost to the “End Client” is still high. All the Offshoring of IT jobs and hiring of H-1Bs & L-1 Visa holders offers is higher profit margins for the Outsourcers…….WHILE PROVIDING LOWER QUALITY OF SERVICE TO THE END CLIENT!!! It is very true the old saying that Power corrupts and that Absolute Power absolutely corrupts. It is time for the Consultant and the End Client to bypass these “Prestigious Ones” which every day are looking more like ruffians and knaves.

We founded Peningo Systems to combat this problem of multiple layers of markups that ends up in between consultant and the end client.

Peningo’s solution to this problem is to bypass these “Offshore Outsourcers” and with the support of Peningo Systems Inc, contract directly between the Consultant and the End Client, thus, eliminating these ”Prestigious Ones” excessive Mark-ups and allowing for increased compensation for the Consultant while lowering the costs for the End Client.

If you wish to voice your opinion, you are welcome in commenting to this post. If you wish to voice your opinion to a greater authority….Congress and/or your State Representatives, please go to the Peningo Advocacy Assistance Page

 

 

 

July 16, 2007

Media should focus on L-1 Visa Abuses by Large IT Outsourcing Firms

Unfortunately, in the mass media today, there are very few who see and are willing to report on the injustice, abuses and corruption that is behind the motivation of the movement to Outsource IT jobs Offshore. Lou Dobbs is one of the few that for years, has stood out of the crowd, defending the Middle Class of America.

 

Recently, an immigration law firm posted a video of their techniques to avoid hiring Americans, thus skirting the intent of the law, in order to bring in foreign workers on H1-B. The abuses of the H1-B Visa program has been going for years, and is just another dimension on this attack on the Middle Class of America. In the video below, Lou Dobbs takes on the H1-B issue:

 

While the H1-B abuses are real and truly harm opportunity for Americans, I would like for Lou Dobbs to open his eyes to another dimension that is more dangerous to the American Middle class, and that is the use and abuse of the L-1 Visa program. In my opinion the “Prefect Storm” that is currently attacking the IT Industry is the combination of the L-1 Visa and Outsourcing IT Jobs Offshore.

I have been in the business of providing IT Consultants for 20 years, so I have seen it all. One of the outrages is that a Foreign Corporation who is one of the largest Outsourcers of IT Jobs Offshore in year 2006 had approximately 4000 H-1B Visas and approximately 4000 L-1 Visas, for a total of 8000 new Visas in the USA for just year 2006. The majority of these Visas went to workers from India. While the H-1B Video shows clear abuse in terms of avoiding the “Intent” of the Law, the abuses in the L-1 Program, in my opinion, are more rampant than you’ll find in the H1-B program.

 

I am planning on requesting an Amendment to be added to the Immigration bill. I feel that my proposal should become America’s Proposal. I would like to have the Amendment referred to as the “H1-B and L-1 Visa Social Security and Medicare Recovery Amendment”.

 

In order to bring some equity back to the American tax paying workers, we at Peningo Systems would like to propose the following as the “H1-B and L-1 Visa Social Security and Medicare Recovery Amendment”:

- Any company that hires an H1-B or an L-1 Visa to work in the United States must pay a tax that is equal to 100% of the “Employer and Employee” portion of the Social Security and Medicare tax. This is important, since it takes away one of the “MAIN” incentives to fire an “AMERICAN WORKER” and replace them with an H1-B or L-1 Visa based worker. As it is, some of the H1-Bs, L-1s and their respective employers could be EXEMPT FROM PAYING SOCIAL SECURITY AND MEDICARE TAX! Also, many companies pay the employees on these Visas far less than an American, resulting in a lower tax overhead for the companies. Also by placing 100% of the FICA obligations on the company, even if the Visa holder is being paid less than the Americans, it gives some insurance that the hiring of such individuals is not strictly based on “Cost of Labor”. This Proposal is also very important, since it addresses an issue that is near and dear to every American, and that is, supporting Social Security.

 

- To combat the abuse of low pay to the H1-B and L-1 Visa holder, which results in the under cutting of the American based worker, which is a violation of the letter of the law, the Federal government must come up with a “Up To Date” Salary survey that would accurately reflect what an American actually would get in the free market place. Then the H1-B or L-1 Visa holder MUST be paid in the UPPER 10% of the Salary range…that’s right…. the H1-B or L-1 MUST be paid in the UPPER 10% of the Salary range. This would insure that H1-B and L-1s are treated, in terms of cost, the same as an American and that the H1-B and L-1 Visa holder is truly a talent that is needed! Also, to combat the “Tax Evasion” aspect of these programs, by paying the Visa Holder in the upper range of the Salary Survey, the “Tax” base that the Employee is being paid at would be in par with what Americans pay. Let’s remember the “Spirit” of these Visa programs is to bring talent that cannot be found in the USA marketplace. If this is truly the case, then in the free market, these individuals should command a higher salary than Americans, since they are “SO SPECIAL”. Unfortunately, they only special quality most of these Visa holders have over Americans is that they “ARE CHEAPER” than Americans.

 

If we implement these 2 proposals, then the H-1B and L-1 would compete with an American based worker on the merits of his/her abilities and not solely based on the fact that the H1-B’s or L-1’s resume looks good and the H1-B or L-1 is 10s of thousands of dollars cheaper than the American. This is a fair way to bring equity back into the US as well as protect our Tax Base from these Tax Evading scheme of hiring foreign workers and avoid paying for Social Security and Medicare tax.

 

With the Outsourcing IT Jobs OffShore and/or using employees who are H1-B Visa or L-1 Visa holders, many times the cost of “Services” to the “End Client” is slightly effected. Between huge markups by some of the Larger Outsourcers and/or the combination of multiple layers of subcontractors involved in providing the IT Services with their respective markups, the cost to the “End Client” is still high. All the Offshoring of IT jobs and hiring of H-1Bs & L-1 Visa holders offers is higher profit margins for the Outsourcers…….WHILE PROVIDING LOWER QUALITY OF SERVICE TO THE END CLIENT!!! It is very true the old saying that Power corrupts and that Absolute Power absolutely corrupts. It is time for the Consultant and the End Client to bypass these “Prestigious Ones” which every day are looking more like ruffians and knaves.

 

We founded Peningo Systems to combat this problem of multiple layers of markups that ends up in between consultant and the end client. Peningo’s solution to this problem is to bypass these “Offshore Outsourcers” and with the support of Peningo Systems Inc, contract directly between the Consultant and the End Client, thus, eliminating these ”Prestigious Ones” excessive Mark-ups and allowing for increased compensation for the Consultant while lowering the costs for the End Client. Lou Dobbs is a hero, since he is one of the few who is willing to stand up a fight for the American worker. I think to complete the coverage of this circle of this attack on America, Lou Dobbs needs to focus on the IT Industry’s “Perfect Storm”, the combination of the L-1 Visa Program with Outsourcing IT Jobs Offshore and its effect on taking opportunity away from America and cheating every American. If you wish to voice your opinion, you are welcome in commenting to this post. If you wish to voice your opinion to a greater authority….Congress and/or your State Representatives, please go to the Peningo Advocacy Assistance Page

Continue reading "Media should focus on L-1 Visa Abuses by Large IT Outsourcing Firms" »

July 14, 2007

Shocking H1-B Video may result in H1-B Reform Bill with no Quota Increase

I have been in the business of providing IT Consultants for 20 years, so needless to say, I have seen it all. The recent H1-B Video of the Immigration Law firm’s procedures to basically defraud America was shocking….but no surprise to me. For those of us who have been in the Business for years, we all knew this has been going on for years. It has been my opinion that the H1-B process is currently riddled with corruption and fraud.


Thanks to that now famous “H1-B Video”, the masses will understand what we mean by corrupt and unfair to Americans. That video is going to do more “GOOD” to the cause of bringing fairness and equity back to the Americans, than thousands of posts on these Blogs!! This video could not have come at a better time, when our nation is debating on how to handle the H-1B and L-1 Visa based worker. In my opinion, this Video exposes the true intent of the IT Industry Leaders who have been lobbying hard to increase the H-1B quota from 60K to 180K – 250K. If you have not seen it yet, check out the video below:



Some in the Senate support increasing the H1-B Visa Quotas. In my Opinion, with the amount of abuse and corruption in this program, increasing the quota would be a totally irresponsible act against the American People.


I am planning on requesting an Amendment to be added to the Immigration bill. I feel that my proposal should become America’s Proposal. I would like to have the Amendment referred to as the “H1-B and L-1 Visa Social Security and Medicare Recovery Amendment”.

 

In order to bring some equity back to the American tax paying workers, we at Peningo Systems would like to propose the following as the “H1-B and L-1 Visa Social Security and Medicare Recovery Amendment”:

- Any company that hires an H1-B or an L-1 Visa to work in the United States must pay a tax that is equal to 100% of the “Employer and Employee” portion of the Social Security and Medicare tax. This is important, since it takes away one of the “MAIN” incentives to fire an “AMERICAN WORKER” and replace them with an H1-B or L-1 Visa based worker. As it is, some of the H1-Bs, L-1s and their respective employers could be EXEMPT FROM PAYING SOCIAL SECURITY AND MEDICARE TAX! Also, many companies pay the employees on these Visas far less than an American, resulting in a lower tax overhead for the companies. Also by placing 100% of the FICA obligations on the company, even if the Visa holder is being paid less than the Americans, it gives some insurance that the hiring of such individuals is not strictly based on “Cost of Labor”. This Proposal is also very important, since it addresses an issue that is near and dear to every American, and that is, supporting Social Security.

- To combat the abuse of low pay to the H1-B and L-1 Visa holder, which results in the under cutting of the American based worker, which is a violation of the letter of the law, the Federal government must come up with a “Up To Date” Salary survey that would accurately reflect what an American actually would get in the free market place. Then the H1-B or L-1 Visa holder MUST be paid in the UPPER 10% of the Salary range…that’s right…. the H1-B or L-1 MUST be paid in the UPPER 10% of the Salary range. This would insure that H1-B and L-1s are treated, in terms of cost, the same as an American and that the H1-B and L-1 Visa holder is truly a talent that is needed! Also, to combat the “Tax Evasion” aspect of these programs, by paying the Visa Holder in the upper range of the Salary Survey, the “Tax” base that the Employee is being paid at would be in par with what Americans pay. Let’s remember the “Spirit” of these Visa programs is to bring talent that cannot be found in the USA marketplace. If this is truly the case, then in the free market, these individuals should command a higher salary than Americans, since they are “SO SPECIAL”. Unfortunately, they only special quality most of these Visa holders have over Americans is that they “ARE CHEAPER” than Americans.

If we implement these 2 proposals, then the H-1B and L-1 would compete with an American based worker on the merits of his/her abilities and not solely based on the fact that the H1-B’s or L-1’s resume looks good and the H1-B or L-1 is 10s of thousands of dollars cheaper than the American.

This is a fair way to bring equity back into the US as well as protect our Tax Base from these Tax Evading scheme of hiring foreign workers and avoid paying for Social Security and Medicare tax.

With the Outsourcing IT Jobs OffShore and/or using employees who are H1-B Visa or L-1 Visa holders, many times the cost of “Services” to the “End Client” is slightly effected. Between huge markups by some of the Larger Outsourcers and/or the combination of multiple layers of subcontractors involved in providing the IT Services with their respective markups, the cost to the “End Client” is still high. All the Offshoring of IT jobs and hiring of H-1Bs & L-1 Visa holders offers is higher profit margins for the Outsourcers…….WHILE PROVIDING LOWER QUALITY OF SERVICE TO THE END CLIENT!!! It is very true the old saying that Power corrupts and that Absolute Power absolutely corrupts. It is time for the Consultant and the End Client to bypass these “Prestigious Ones” which every day are looking more like ruffians and knaves.

We founded Peningo Systems to combat this problem of multiple layers of markups that ends up in between consultant and the end client.

Peningo’s solution to this problem is to bypass these “Offshore Outsourcers” and with the support of Peningo Systems Inc, contract directly between the Consultant and the End Client, thus, eliminating these ”Prestigious Ones” excessive Mark-ups and allowing for increased compensation for the Consultant while lowering the costs for the End Client.

If you wish to voice your opinion, you are welcome in commenting to this post. If you wish to voice your opinion to a greater authority….Congress and/or your State Representatives, please go to the Peningo Advocacy Assistance Page

Thank you

 

July 02, 2007

L1 Visa Abuses - A Silent Killer To The IT Industry In The USA

With all the immigration attention being turned to the current attempt by the Outsourcing Corporations to increase the H1-B Quota from 60K to 250K H-1B workers “PER YEAR” to enter and work in the United States, very little to nothing has been said regarding the workers entering the USA working on the L-1 Visa, which currently has NO QUOTA CAP.

As Outsourcing Offshore evolves many companies who have been entrenched in Outsourcing have learned that you need to have more control to have a remote chance to provide the quality of service that is needed to support operations in the USA. In response to this, these companies are now creating divisions overseas in the places like India. These companies are the name plates that we have associated with “Corporate America”, and by no coincidence are the same firms that often announce the laying off of thousands of American workers. The L-1 Visa allows companies with divisions offshore to transfer an employee internally from their division in the Offshore nation to the United States. Many of the qualities of the L-1 Visa are similar to the H1-B, with the exception that the L-1 can only work for the parent company.

Like the H1-B, the L-1 Visa employees may not have to pay for Social Security or Medicare or are paid at a lower salary based effecting the tax base. More importantly, the Employer of the L-1 visa holder may not have to pay for the “Employer” portion of Social Security and Medicare or are paying at a lower tax rate due t the low salary base. This is one of the “MANY” tax advantages and incentives that corporation have to “LAYOFF AMERICANS” and replace them with the L-1 (or H1-B) Visa workers.

Though it is clearly illegal in the letter of the law, many of the workers on either L-1 or H1-B are paid substantially less than their American counterparts….that they have replaced. It’s our opinion that as a result of replacing an American with an internal employee on an L-1 Visa, the company can save thousands, if not 10s of thousands per year, per employee when you factor in the cut in base salary and the savings from the lower tax base of the cut salary or possibly NOT PAYING FOR ALL OF THE SOCIAL SECURITY AND MEDICARE TAX OBLIGATIONS !!!! As you can see, this puts any American at a huge disadvantage!

We must remember the corporations really don’t give a “hoot” regarding the American based worker; they only give a hoot about making a buck …. as they should. It is the lawmakers of our land and the enforcers of those laws who have not step up to the plate. As a result, industries are being destroyed, as well as the lives of those who have worked in those destroyed industries. The true Traitors may not be the Companies who are currently stabbing us in the back……the true Traitors to us Americans are the Legislators and enforcers who do “Nothing” to combat this Corporate Scheme to “EVADE” Taxation while paying L-1 and H1-B Visa holders substantially less than their American Counterparts, which is in clear violation of the law.

In order to bring some equity back to the American tax paying workers, we at Peningo Systems would like to propose the following:

- A CAP must be placed on the number of L-1 Visa based workers than can enter and work in the United States per year.

- Any company that transfers an L-1 Visa into the United States must pay a tax that is equal to 100% of the “Employer and Employee” portion of the Social Security and Medicare tax. This is important, since it takes away one of the “MAIN” incentives to fire an “AMERICAN WORKER” and replace them with an internal transfer from an Offshore nation who’s on an L-1 Visa.

- To combat the abuse of low pay to H1-B and L-1 Visa holder, which is a violation of the letter of the law, the Federal government must come up with a “Up To Date” Salary survey that would accurately reflect what an American actually would get in the free market place.

I plan to personally deliver these proposals to my Federal Representatives.

If you agree with me, please feel with sharing these proposals with your Federal Legislators.

If you wish to voice your opinion, you are welcome in commenting to this post. If you wish to voice your opinion to a greater authority….Congress and/or your State Representatives, please go to the Peningo Advocacy Assistance page.

June 12, 2007

An Additional Tax Evasion Scheme By The Offshore Outsourcers

Cheating AmericaThe Offshore Outsourcers are motivated by the desire to support USA operations with offshore personnel which are "NOT" subject to Federal, State, Social Security, Medicare taxes. In order to be able to avoid paying the matching Social Security, Medicare and unemployment insurance many corporations have opened offshore subsidiaries or engaged proxies to do so for servicing USA based business, that if done within the USA, will be subject to all taxes.

Not satisfied with the ill gotten savings obtained by illegal activities, now these “Prestigious Ones” are compounding the crime by a scheme to avoid paying Federal Income Tax.
 

The first step in the scheme is to create profits overseas (that is why the emphasis to  transfer offshore as many jobs as possible).
 

The second step of the scheme is to bring back to the USA those profits without paying any Federal Income Taxes.  The IRS rules allows the firms to defer paying Federal Income Tax on overseas profits till such a time as those profits are brought back to the USA.  In order to evade this regulation the “Prestigious Ones” use the overseas profits to buy back the Corporation's Stock with the overseas currencies and then the overseas suppliers pay for services with the Corporation Stock acquired from the overseas profits, in violation of the intent of the law and its regulations.
 

This places consultants which are USA persons at a tremendous disadvantage as any USA based operation has to pay all taxes.

The “End Clients” using the services of “The Prestigious Ones” have become victims of this scheme by being associated to such illegal activities.

 

It is very true the old saying that Power corrupts and that Absolute Power absolutely corrupts.  It is time for the Consultant and the End Client to by pass these "Prestigious Ones" which every day are looking more like ruffians and knaves.

Peningo’s solution to this problem is to bypass these “Offshore Outsourcers” and with the support of Peningo Systems Inc, contract directly between the Consultant and the End Client, thus, eliminating these ”Prestigious Ones” excessive Mark-ups and allowing for increased compensation for the Consultant while lowering the costs for the End Client.

 To All Americans: 

If you wish to voice your opinion, you are welcome in commenting to this post. If you wish to voice your opinion to a greater authority….Congress and/or your State Representatives, please go to the Peningo Advocacy Assistance Page.

 

May 10, 2007

Alternative Strategy For Offshore Outsourcers

This is an open letter to the Corporations who are engaged in the Outsourcing of our IT Jobs Offshore.

 

To All Firms Involved in Offshoring IT Jobs:


Your present efforts of reducing your operating costs by engaging in Offshore Outsourcing to support USA based operations is headed for failure.

The economic advantage of such a strategy is based on the fact that the offshore resource is not subject to USA Federal, State, Social Security and Medicare taxes and that you will not have to pay matching Social Security, Medicare taxes nor pay the unemployment insurance taxes.
 

You must be aware by now that such a strategy is doom to failure as it is based on a Tax Evasion effort and as the effort to offshore grows, the tax burden left in the USA based employees will have to increase to compensate for the “USA Tax Exemption” that the offshore resources and you illegally  enjoy.  That will generate a backlash in the USA to have the laws respected and enforced and you will be in the wrong side of this battle.   The use of cheap labor in large quantities is not a winning strategy and it is condemned to failure.
 

A more enlighten strategy will be to use the old and proven method of improving costs and productivity by systematization and automation.  It is true that such efforts will lead to increased productivity by the fact that fewer employees will be able to do more work.  This process takes time to implement and that delay in the process allows for the labor force to relocate to new endeavors where their services will be in demand without a major disruption and the increased productivity by allocating the employees to where they are needed will raise the standard of living of all concerned and guarantee your organization’s continued acceptance in the USA market.
 

As to the Offshore efforts, it will prove very beneficial to the USA and your organization if you develop the Third World creating new markets but not by having your efforts financed by the USA taxpayers.
 

It is understandable that most of our CEOs are the product of the bureaucracy and that the time of the owner-entrepreneur is past and therefore with that we have lost the vision that those entrepreneurs possessed.  It will serve us well to re-learn those skills or face the decline and fall of those that insist on using the general public as indenture servants.

Peningo’s solution to this problem is to bypass these “Offshore Outsourcers” and with the support of Peningo Systems Inc, contract directly between the Consultant and the End Client, thus, eliminating these ”Prestigious Ones” excessive Mark-ups and allowing for increased compensation for the Consultant while lowering the costs for the End Client.

 

To All Americans: 

If you wish to voice your opinion, you are welcome in commenting to this post. If you wish to voice your opinion to a greater authority….Congress and/or your State Representatives, please go to the Peningo Advocacy Assistance Page.

 

May 01, 2007

Strategy For An American IT Consultant In An Offshore World

 

Ant vs. TurkeyWith all these “prestigious” names in Information Technology doing all they can to monopolize our IT Consulting Industry…….while driving down the Consultants hourly rates…….and……shipping  as many jobs as they can offshore…it’s enough to drive one crazy!!!

Driving the effort to Offshore jobs is the fact that an American corporation can offshore jobs to individuals that are not subject to Federal, State, Social Security taxes and the employer does not have to pay matching Social Security and Medicare taxes, as well as, avoid paying Unemployment insurance.  These offshore resources are then used to support operations in the USA, that if supported locally, will be burden by the associated costs of taxation.  This tax evasion could not be perpetuated without the participation of all of our Government regardless of political stripes.  It is not important to the IT Consultant why is this happening, but the need to face the reality that it is happening.

Those that claim that this is free enterprise let us assume for argument sake that in order to level the field of competition…. from now on all Americans are exempt from taxation.  Obviously this is not a satisfactory proposal, but that is what the Outsourcers believe except that this “American tax exemption” is only for offshore resources.

Peningo’s solution to this problem is to bypass these “Prestigious Ones” and with the support of Peningo Systems Inc, contract directly between the Consultant and the End Client, thus, eliminating these ”Prestigious Ones” excessive Mark-ups and allowing for increased compensation for the Consultant while lowering the costs for the End Client.

Peningo seeks to join with the individual Consultants and the End Client together to reverse this trend by cutting out these “Prestigious Ones”,   Let us fight back by Outsourcing the Outsourcers!!

“One Ant can not take down a Turkey but thousands of Ants can”

Peningo advocacy is concentrated in the IT Industry and within that for that segment of the market that provides advance software support and development.  For the larger market of Americans who are besiege by a similar problem we invite them to join our Grass Roots movement to change the minds of our Government and the CEOs of American corporations who are engaging in blind Offshore “selves flagellation”

If you wish to voice your opinion, you are welcome in commenting to this post. If you wish to voice your opinion to a greater authority….Congress and/or your State Representatives, please go to the Peningo Advocacy Assistance Page.

Many of our Representatives are not leaders, they only follow trends and it is up to us to create a new trend. 

April 30, 2007

Offshoring Software and Confidentiality Rights Is A Bad Idea For The IT Industry

In the past the IT Industry and specially Peningo Systems Inc. have been very careful to secure the Client’s rights in works developed for the Client by the Consultants working in the development of  computer based systems as well as securing confidentiality agreements over such works. 

The larger IT corporations in America (which we refer them as  the “Prestigious Ones” ) in their efforts to engage in “Tax Evasion” by outsourcing offshore the development work  of software (The offshore developers are not subject to USA taxes and the US corporation avoid paying matching Social Security, Medicare and Unemployment Insurance),  fail to secure the Software Rights and Confidentiality, agreements that would be protected if celebrated under USA laws.
 

The offshore developers are not bound by USA laws, therefore, there might be some surprises to those using American Firms that have engaged offshore resources and the foreign developer may want one day to claim royalties over the software that you the “end client” have paid in full.   As customary in our USA based industry such works are contracted as belonging to the “end client”. Under the offshore circumstances it will no longer be so.
 

In addition, and for the same reasons stated for the Software Rights, confidentiality of the “end client” information, including that of its Customers may be compromised, as the foreign elements offshore will be free to sale such information to other organizations in the USA or world wide.
 

Peningo’s solution to this problem is to bypass these “Prestigious Ones”, and with the support of Peningo Systems Inc., contract directly between the consultant (a USA person) and the “end client”, thus, eliminating these “Prestigious Ones” who are failing to secure the “end client’s” Software Rights and Confidentiality and will leave the “end client” and their customers exposed to the abuses of foreign nationals who are beyond the reach of USA law.