Was 7:30’s TCS takedown fair?



blog In an extensive report aired last night, the ABC’s flagship current affairs program 7:30 went deep on Indian IT services giant Tata Consultancy Services for what the program all but flat out said were breaches of the Federal Government’s at-times-controversial 457 Visa program. The show aired shots of a database of hundreds of Indian names of TCS staff working at Qantas, and also highlighted that TCS has business with other local companies including Woolworths and AGL. You can watch the whole show online and read the whole transcript here. But this paragraph stuck out for me (it’s by host Hayden Cooper:

“This is the list of TCS workers at Qantas. Of the 211 names almost 200 are on 457 visas, filling roles like business analysts, project managers, even accountants. This woman doesn’t want to be identified because she’s looking for work in the IT sector, but the former business analyst was employed by TCS, and says she witnessed an open reliance on 457 visas at the expense of local graduates.”

There was no doubt that 7:30’s attitude towards this is issue was quite antagonistic — it was clear the show was coming into this program with the attitude that abuse of the 457 Visa program had the potential to stop Australians from getting work, as hundreds of Indians were bulk-shipped into Australia by companies like Tata to work on major Australian brands like Qantas.

However, to me the show’s approach felt immature and as though it really didn’t understand the dynamics of Australia’s IT industry. The reality is that for a very long time, Australia’s continually growing IT industry has been in a skills crunch, with very little local talent and staffing resources to go around. In this context, offshoring and the use of 457 Visas have become pretty much bog-standard practice, and I would argue that it would be near-impossible for many Australian organisations, such as our major banks, airlines, retail giants, telcos and more to get all of their business done without some degree of offshoring.

I haven’t seen a lot of examples where skilled Australian IT workers who have had their jobs taken by Indians haven’t been able to get replacement work. Usually they find it pretty quickly, especially if they’ve been in the industry for a while. There is constant demand for more skilled IT workers in Australia — it’s not like other industries where the use of foreign staff has the potential to place a cap on the amount of work available to Australians.

What I often see, when Indian IT workers are brought in locally, is that those IT workers take jobs that very few Australian IT staff want to do. Then the Australian staff are often redeployed into higher-value areas or higher-value companies for more rewarding work. There’s a lot of mind-numbing IT work in major banks and telcos, and not many Australians who want to do that work. We often have higher standards for workplace satisfaction than workers from less affluent countries do.

It has even been argued recently that the public sector’s unwillingness to use offshore labor is one reason why so many government IT projects are failing at the moment right around Australia.

Are there some cases where the 457 Visa program is being rorted, and where Australian IT workers are being short-changed? I’m sure there are plenty of examples of this. But I don’t think the rap that the IT industry is getting on this issue as a whole right now is justified. At the very least, 7:30 could have spoken to some IT industry experts last night (rather than just aggrieved workers) to get a more balanced and informed picture on how this dynamic is working.

The Federal Labor Government wants to raise 457 Visas right now as a key workers’ issue, seeing it as a political argument. But what I’m seeing in industry are arguments more along business and technology lines here — the use of foreign labor isn’t as simple a topic as many people seem to assume.

Image credit: Saleem Taqvi, royalty free


  1. Agree with your analysis here, Ren – it’s far easier to cast this as a black and white issue and stand back flinging mud to the encouraging whoops of the crowd (for both the media and government) rather than taking the balanced approach and dealing with this as the complex issue that it actually is. A detailed and unbiased assessment may find that, overall, there isn’t much cause for concern. I would suggest that stimulation of the sector (leading to growth in businesses and thus employment) would be a far more useful enterprise with a far greater impact on Australian jobs than any amount of 457 visa abuse.

    As you said, that doesn’t mean there isn’t some 457 visa exploitation going on – I’m sure there is. But is it the widespread, endemic problem that’s suggested? Or is it a relatively small, limited issue in the context of the industry (and Australian IT jobs) as a whole?

    • The problem is, the reporting itself is extremely limited and biassed, so it’s not even a useful source of information on the topic. Had 7:30 spent the time to get some real in depth industry analysis with scope that’s actually representational of the sector, then they would be adding to the debate in a meaningful way rather than simply presenting what appears to be a very limited one sided sensationalist wind up.

    • You need to realise that if there wasn’t truth in the matter being reported, there wouldn’t be a story, no mattter how “maturely” or “non-antagonistically” reported. After all it is TCS own employees reporting the abuse. Sure it would be “great stimulus” IF there was a genuine shortage of skills. You obviously didn’t see the stories a couple of years ago about Westpac IT workers being told to train their replacements.

      Trust me, the companies using TCS aren’t doing “in depth, reasoned analysis”. They just see a way of saving money and they don’t give a damn about any analysis of the existing labour pool.

  2. From what I understand, Labor are just looking to make it so that business have to reasonably attempt to hire local Staff before resorting to 457 visas. If it is true that there is a genuine skills shortage in Australia (which I don’t see myself, generally speaking) then these businesses will have no trouble showing that they can’t find local talent and need to resort to 457’s.

    I have two friends who are currently training their 457 visa replacements who are getting paid much less than the Australian workers. How can that business (don’t want to name names) argue that they can’t find skilled local workers when they are replacing existing Australian Staff?

    Anecdotal evidence, sure, but there is a lot of that anecdotal evidence around the industry.

    From what I see, business just doesn’t want to pay what IT workers are worth in Australia. 457’s are a way of helping to keep down IT wages.

    How can Qantas possibly argue that there is such a skills shortage that of 211 Staff looked at there are nearly 200 on 457’s? That seems preposterous to me.

    • If this is an endemic problem resulting in Australians who can’t find skilled IT work then I completely agree – it needs to be addressed and the use of 457’s generally reviewed and possibly limited. But reporting like this isn’t helping or even enlightening and it is beneath the ABC to engage in one sided sensationalism like this.

    • I have lived in this country most of my life, and worked in Australian IT for over 20 years and here’s my 2 cents.
      No organisation in my experience has had any measurable benefits from outsourcing. It is the single best and most reliable way of destroying value, culture and innovation within any organisation. I have 15 years worth of stories to back me up.
      No outsourced worker ever has, or will provide any positive change within any organisation.
      Australia has become a racist place because of outsourced Indian IT – here’s what I get from Indian companies: “Why would we hire you if we pay local rates – we would rather hire a white guy if we have to pay a premium”.
      Here’s what I get from “Australian” companies: “We can’t really hire you because people will look at your name and think you’re outsourced or cheap labour”.
      Stop outsourcing and hire locally – having someone who lives and breathes your corporate and cultural values, even if it’s a recent graduate, will more than pay for itself in a few years!

      • “No organisation in my experience has had any measurable benefits from outsourcing”

        Riiiight. Sorry mate — that’s a rather extreme view.

  3. Renai, there was nothing wrong with the 7:30 report.

    1. You write that displaced locals readily obtain new jobs, but that raises the question of why those locals were displaced in the first place. If they were doing the jobs, surely there was no need for the overseas workers?

    2. It’s just stupid to claim the Indians do jobs that locals don’t want. They do lots of good and high level development and project work in our most prestigious workplaces. .Why on earth wouldn’t locals want those jobs?

    3. “Locals” includes those people who’ve migrated here permanently, and who are also affected by the excessive use of fly-in, fly-out temporary workers on 457 visas.

    4. Government IT project disasters are actually often a direct result of the 457 visa program. The big outsourcers, like IBM, use lots of temporary workers flown in on 457 workers. They reduce their costs that way, and pocket bigger profits. But the result is a more command-driven environment free of professional checks and balances. That leads to crap. I’ve seen several cases.

    • That’s a different report though, isn’t it Tony? That’s evidence that wasn’t reported. And not that I’m suggesting that what you’ve said isn’t accurate, but what you’ve said is merely anecdotal with no basis in evidence – if you have evidence, please share it so you can meaningfully add to the subject.

      • Are your referring to my point 4? What’s your response to my points 1 to 3?

        My point 4 was a response to Renai’s claim that government IT disasters result from failing to offshore, with a false implication that also involves a failure to use 457 visa workers. I am making the point that government IT projects are actually heavy users of 457 visa workers.

        My reference to anecdotal information is not key to my points.

  4. >The reality is that for a very long time, Australia’s continually growing IT industry has been in a skills crunch, with very little local talent and staffing resources to go around.

    Oh what a nonsense argument – so you do realise that people are telling potential uni students “don’t go into IT as they’ll just outsource your job”.

    This is not about “talent” by the way – this is a range of commodity and run-of-the-mill IT jobs – many of which are not highly skilled – e.g. manual testers. This isn’t about specialist niche skills at all – those are not the jobs that these firms are bidding for.
    It’s about bringing in a project manager and a handful of devs or a handful of testers on a contract that will work for less and can be thrown out with 2 weeks notice.

    Things you haven’t considered (I think)

    * we don’t know how many people are trying to get jobs which are no longer available because TCS, HCL, Satyam are now in the place with 20 x 457 workers. Many might leave the industry.
    * local consulting firms are undercut (and they are not just hiring 457 workers and who actually want to have something more than transient workers).. so their ability to compete is reduced dramatically.
    * 457s provide a disincentive to train up local workers or hire grads – youth unemployment is far FAR higher than the averages listed in the papers. Businesses are notorious for avoiding contributing back if they can avoid it – particularly with contractors and absolutely not with external consultants.
    * quality of training – I’ve found this is a particular issue with many of the 457 sourced workers (or off-shored centres) – claiming to be skilled in technology X only to find that really meant “Logged into the admin screen for platform X to check log files” or did a weekend course. This is versus a uni grad in Australia who has just spent 3-4 years broadly training up.
    * the erosion of local IT bases – finance in particular has been partitioning off and “service-ifying” their IT functions so they can off-shore. Starts with things like infrastructure and then works up to support.. Then to dev.. Then to project/business analyst type work – then on up through architecture and the rest. All the while cutting the legs off the promotion/skilling up/career paths to those other higher end jobs.

    >What I often see, when Indian IT workers are brought in locally, is that those IT workers take jobs that very few Australian IT staff want to do.

    Except that there WERE people doing those jobs that you just mentioned were displaced. Make up your mind. Quit the job snobbery as a defence of 457 rorting. Pretty hard to say that the people who were having to train their 457 replacement didn’t want to do – they were doing those jobs. Ridiculous to say that the developers now out of a job didn’t want to be earning a living.

    Or the jobs that grads would do but which are not able to get jobs.. I’m pretty sure those guys are keen for those jobs – yet what’s the first thing that evaporates with outsourcing or offshoring – the grad programmes as who cares about sponsoring and building up a grad when you can get a TCL, HCL, Satyam guy in who you don’t have to worry about pesky things like providing a good work environment.

    No one is generally saying that 457 visas have no place in Australian IT – but they are being used by certain firms pretty much exclusively to source jobs to push out local jobs from the market. That was never the intention of the 457 visa.

    I’ll leave you with a thought:
    It’s a rare person who has ever been contacted by one of these firms for a job for a project they’re signed up for. They don’t even bother because that’s not their model.

    • I read Planit are heading overseas for the second time this year to the UK and USA to hire testing staff. There definitely isn’t a shortage of skilled testing staff in Australia, in fact I know many skilled testing staff that are currently unemployed.

  5. The reality is that the IT industry may be growing in Australia, but in recent years it has been a “jobs free” growth as companies use a combination of offshoring and 457 to reduce cost. As someone who recently was made redundant, I can tell you it’s a hard market out there. Last time I was looking for work recruiters would call me, now I’m lucky to get a “thanks but no thanks” email. Of course industry “figures” would say there’s no problem, they are the ones profiting from offshoring. Let’s look at hard evidence instead, one paragraph stood out for me

    “Last financial year according to department figures, almost 11,000 457 visas were issued in the IT sector. That’s an increase of 68 per cent since 2008. Yet over the same period, the growth in all 457 visa users across all industries was just 35 per cent. Then there’s the issue of wages. In most industries they’ve been increasing for workers employed on 457 visas, but in IT they’ve fallen since 2008. A sign to the minister that foreign workers are being exploited to drive down company costs.”

    I’d add to that and say salaries have fallen for most workers in IT, as we are no longer in demand.

  6. I’ve experienced 1st hand a manager saying “We’ll get someone over from India” without bothering to look locally. I’m sure it happens often, many of the large companies in Australia “offshore” but bring the staff onshore without seeking to hire locally.

    One major IT project in Melbourne supposedly had 70% of their delivery effort “offshore” I don’t know the exact numbers but to me it looked like most of the offshore people were on site at the client on 457’s.

  7. I think wages are the only way to judge whether there is a “skills crunch”.

    If wages go up in the industry; there is a lack of available workers. If wages go down, there is a glut of skilled workers. If wages are steady then supply and demand are equal.

    If wages are steady; and 457 workers increase, then clearly all new demand is being fed into the 457 visa program. This is actually a problem, because it wont encourage more people to study in the IT sector. If you need more people in the IT sector; then you should raise wages. It is the only way to satisfy demand internally.

    I have no opinion on the current rate of 457 workers. I merely state that wages, not anecdotes, are the only way to accurately judge it.

      • So, what would be a better way of judging how the demand and supply of workers in a particular industry is going.

        Do you have a better metric? Or are you just being contrary for the sake of it.

      • I should add Nathan, that my statement wasn’t defending the use of 457’s, I don’t have any knowledge of the situation.

        I was just saying that anecdotes from those directly affected are not the most accurate method of determining the effect of 457’s. (Since those directly affected are of course always going to have the experience that they are losing their jobs to 457 visa holders).

        If anything, my point should clearly indicate if 457’s are having a negative effect. You say there are many factors that affect wages, but it doesn’t change the fact that if headline wages were higher, we would have more local enrollments, and supply of IT staff would increase to a level that demand requires (with a 3-4 year lag obviously).

        If wages are falling the only affect that will have is a reduction in local workers (in the form of reduced enrollments).
        If wages are stagnant, and the use of 457’s is increasing, I see that as a bad thing because 457’s are taking up the slack in supply, that would have otherwise caused a rise in wages, and a subsequent rise in enrollments.

        Obviously; 457’s should take the slack (that is their purpose), but should be very time-limited, (lets call it, 3 years) and there should be a cost associated with their use that would result in local workers being paid more (not the same amount).

  8. Renai – anecdotally I constantly receive emails from agents who know I am earning a far higher rate, offering less than half what I was paid 10 years ago.
    I know these are ambit claims for 457 visas and nothing else. I’m seriously looking to forward these on to immigration from now on, it’s dishonest and insulting to me as a specialist with long experience.
    The system is being rorted – ehtics is demonstrably a foreign concept to modern HR departments and always has been to placement agencies, it’s all ‘letter of the law’ legal compliance.

    And if you think banks, mining companies and telcos have workers interests in mind at all, you’ve successfully ignored the entire history of Australia’s labour struggles.

  9. Our company uses 457’s only sometimes. And usually only when an EXISTING employee from one of our overseas offices wants to, or we need them to, relocate to Australia. (Head office is in AU).

    It makes sense for us to hire someone already familiar with the company, and us with them, than to go hunting locally.

    That said, 90%+ are hired normally, (Seek etc).

    The article states the staff in question were accountants, business analysts and project managers. I really do not see that Australians would NOT want to do these jobs.

    Sounds like profit margins, not hiring Australians was key here from what I can see.

  10. I don’t really have a problem with them changing the 457 visa to have a test to see if they tried to find an Australian for the position first.

    The alternative, forcing companies to pay full Aussie wages to 457 workers, would also fix things, but I suspect “bigbiz” wouldn’t like that idea one bit…

    • > The alternative, forcing companies to pay full Aussie wages to 457 workers, would also fix things, but I suspect “bigbiz” wouldn’t like that idea one bit…

      What do you define as “full Aussie wages”? I would assume most of these positions are not covered by an award, and even then one would expect that this would be the minimum wage.

      Would we prefer people working here on 457 visas and at least contributing some of their expenses to the local economy or have the work outsourced completely overseas?

      I’d suggest the only advantage locals have is communication skills. It is touch to evaluate how much of a premium that is worth.

      • 457’s are meant for companies to fill skill gaps, not get cheap labour for tight arse employers…in fact thats exactly one of the examples used in that 7:30 segment, where they replaced an Aussie developer earning 70k a year with a 457 earning 20k.

  11. Well I only have anecdotal evidence I have a small number of friends you have lost jobs to 457 visa holders and have had to get other jobs at a lower salary / conditions. I also find they are very reluctant to speak up for fear of loosing job prospects. I have no such qualms since I have long since given up the notion of working for someone not so easy for my friends with mortgages and kids.

    I also get rung / emailed 3-4 times a year been offered cheaper development when I say I prefer to staff locally the first thing that springs out of the mouth of the agent / sales person is no problem we can get you contract staff in your office within the month.

    Another point I rarely find when I question the agent’s that they have the staff with the breath of skill needed they seem to have experience on 1 aspect of development / sysadmin which is always a red flag to me

    Note I currently use several local sub contractors for all my needs there is far more to development cost than just wages


  12. The guys they bring onshore are not paid the same wages as local workers. I might be wrong but doesn’t it say somewhere that you have to pay 457 holders similar wages to industry norms?

  13. Could some of those reported project failures be the result of communication failures?
    It’s been my experience that getting a message across is much less difficult when both parties speak in a common native language & accent.
    Years back due to a shortage of qualified supervisors in my industry we were importing them from England. Trouble was due to their accent & use of terminology unfamiliar to our local workers we experienced a constant comedy of errors; a situation I suggest is even more likely in a mix of local & 457 Asian staff . Possibly why some employers prefer to choose from the one source?

  14. I’ve worked in a company where they bought people over from India and the Philippines and paid them twice the rate for they’re home salary.

    This was still less than minimum wage!

  15. I find this blog post much more skewed that the actual report ABC aired. As an industry insider I can say this.By generalising too much the writer is giving chance for companies like TCS to do away flunking rules hiring people from abroad whom you will find locally.

    IT industry jobs can be categorized into high skilled and not high skilled. Most of the jobs (99% of them) Indian IT companies do are of the second type.Manual Testing,Business Analysis,Application Development and Maintenance, Business Intelligence,etc.These are jobs you definetely find in australia,but these companies insist on bringing from India. Even if you do not find one,its quite easy to train someone in these and there are plenty of training options.

    The first type, skills that are used in companies that innovate, these are mostly product, web and mobile development companies, which do cutting edge work and continously innovate.They are mostly agile, constantly upgrade the tech they use and these companies I believe definetely face skills shortage.And it is right for the government to allow them to use the 457 program to bring in talent from abroad for the greater good of australia.

    So, generalising both will allow companies like TCS, to bring anyone from abroad to replace australian workers.
    The DIAC should take a better view of the 457 program and decide which ones should be allowed on 457

  16. I’m currently working with TCS at one of the big banks and their whole business model is based around shipping in cheap workers with ease. I think it’s at best naive to think they’re only doing this to bridge a skills gap – they’re doing it because it means they can win bids with a lower cost.

  17. You seem to have a blind sport where this particular topic is concerned, Renai.

    Have you read the comments when you’ve posted about this previously? Tale after tale of real, live IT people who’ve had this done to them. Yet you still don’t see it as any kind of a problem.

    Okay, here we go. I didn’t lose my job when my then company outsourced hundreds of IT roles to TCS et al. I didn’t watch my colleagues be forced to spend months training up “highly skilled” 457 visa shadows, knowing that when the training was done, they’d be laid off and the 457s would either take their place directly, or take their job description back to India to have it done from there. Oh, and there was never any implication that they’d be fired, rather than laid off, for not following orders if they didn’t play ball on training their replacements. (So no redundancy for them, see?) Nope, sure never saw that.

    I guess the whole thing must have been a bad dream…

  18. The problem I think with programs like the 457 in Australia and the H1-B in the US is that quality IT people see them being filled with those with barely any skills let alone the “highly skilled” qualifier. I’m on a E-3 VISA working in the US (think H1-B for Australians) and have the interesting perspective of being a foreign worker and working with other foreign workers. We have one TCS H1-B employee who has spent more than a month trying to figure out how to install OpenStack and having issues following the OpenStack manual. The fellow is neither highly skilled or even capable of it appears following the manual (I had to sit with him on Friday and read through the manual to progress him further). There are plenty of folk on the VISA who are legitimately highly skilled but there are plenty who are highly skilled by definition of having a piece of paper that says they are highly skilled but without the talent to support it.

    Now that isn’t to say that there isn’t a problem finding “highly skilled” equivalents locally either (AU or US) however I’d argue that we’re not getting highly skilled folk from overseas consistently either.

    • If you are getting around about to saying there are big issues in areas such as effective management and HR departments with half a freaking clue, I tend to agree with you.

      However, jiggering with VISA laws won’t fix any of that.

      • They have to tinker with the VISA laws, you can’t reverse engineer greed out of executives…

      • I would suggest that there is no effective measurement of TCO that hurts these analysis. Finance sees a cost in human capital and sees someone else who can do the “job” cheaper. In some cases this works however my view is that these people aren’t equivalent in terms of actual effectiveness. It is the same delusion that IT workers are all replaceable cogs in a machine like training a new burger flipper at McDonald’s (perhaps best evidenced by Australian staff training their new Indian equivalents). In taking that mentality, you are far more.likely to end up creating a low paid burger flipper that doesn’t necessarily have the skills to grow beyond burger flipping (processing defined tickets). This takes someone who might have some level of innovation and replace them with someone who may not necessarily posses that sort of thinking. This reduces overall organisational capabilities and in the end increases costs. Anecdotally I’m seeing a trend towards increased automation and then insourcing because the amount of people is reduced and prior outsourcing choices has produced people whose job is able to be automated.

        So yes, effective management, HR and Finance long term evaluation of overall effectiveness of outsourcing and contracting programs.

  19. This is from: “Labour market testing Schedule 2, Amendment of the Migration Act 1958 Part 1”

    (2) The approved sponsor is exempt from the requirement to satisfy the labour market testing condition in section 140GBA if:
    (a) either or both of the following are required for the nominated position, in relation to the nominated occupation:
    (i) a relevant bachelor degree or higher qualification;
    (ii) 5 years or more of relevant experience; and
    (b) the nominated occupation is specified for the purposes of this subsection under subsection (4).

    (3) The approved sponsor is exempt from the requirement to satisfy the labour market testing condition in section 140GBA if:
    (a) either or both of the following are required for the nominated position, in relation to the nominated occupation:
    (i) a relevant associate degree, advanced diploma or diploma covered by the AQF;
    (ii) 3 years or more of relevant experience; and
    (b) the nominated occupation is specified for the purposes of this subsection under subsection (4).

    What you might notice is that most IT jobs are therefore exempt from the new ALP legislation, so what the 7:30 report is doing is just whipping up some public sentiment using the IT industry as leverage, even though the government is really focussed on low skill jobs in other industries. Bait & Switch 101.

    • Perhaps you should re-read section “140AA Division 3A—purposes” of the “Migration Amendment (Temporary Sponsored Visas) Bill 2013″…

  20. This is basically catastrophic for Australian IT workers. When i started 40 years ago, companies localy represented such as, IBM, MOBIL, the banks etc would take people who passed their aptitude test and train them, I was one of them. Now they don’;t even keep experienced locals on. They massively, as reported replace them with overseas workers. This is not a myth. I have a good network of working friends who see this in every industry they work in, when they can get work that is. There are PLENTY of locals, trained or capable of being trained and who would be committed to a working life in their home country, but out employers are treating them like the problem, and this is crating one of dis affected disenchanted locals, who quite rightly hate the administration that allow this. The list of IT work titles exempt from the new rules is wide enough to get any sort of IT work through and so is meaning less. This appears to be a way of shipping profits to the corporate world and indicates zero concern for the welfare of the county or its working class who are after all, the majority. This is a disaster for local youth.

  21. It’s a common story around Sydney in the IT industry where staff are brought here working on wages that would be less than minimum wage here (as they’re still employed by the overseas company) and do jobs that would have been done by someone with a permanent residency of some sort.

    Perhaps when the dollar falls further the balance will change, perhaps the skills shortage is because nobody can get the variety of jobs at the low end that we used to have that springboarded people into the higher level jobs, perhaps we should be lobbying our superannuation funds to invest in businesses that provide proper apprenticeships.

    None of these issues can be addressed in IT while it’s possible to do what the mining unions have been up in arms about in the mines – ship in temporary workers on low wages through ‘consultancies’.

    I’m pro-migration btw, but the 457 program should require an employer to keep the employee here for 4 years and have them employed through a local subsidiary (not contracted in from an overseas parent) to make it work properly, otherwise it’s a 456, and scrutiny on that is higher (apparently).

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