How Indians Receive Enormous Margins from Corrupt Vendor Management Organizations

ByShaun Snapp

Executive Summary

  • The vendor management organization began as a way to control the costs of vendors by having oversight.
  • In the US, many VMOs are rigged by Indians to place enormous margins on the actual good or services provided.

Introduction

If one does a search in Google for “Vendor Management Organization” all of the article results that come back are positive, as is evidenced by the sample page results.

If one searches “Vendor Management Organizations” and “Margins,” again nothing sceptical comes up in the results.

Even if one searches for “Vendor Management Organizations” and “Fraud,” still no articles critiquing VMOs are returned.

The articles that you see above deal with “vendor fraud,” not “vendor management organization fraud.”

This is odd because we have been apprised from multiple sources of enormous margins in VMOs, principally owned by Indians.

How Excess Margins Work in Indian Controlled VMOs

They have removed labor expenses from the Income Statement to the Balance Sheet by using Vendor Management Organizations (VMOs). This is why companies are still so profitable. They’ve eliminated labor costs while seemingly increasing revenues and profitability by outsourcing and offshoring.

As a US IT worker, I’ve seen these circumstances where the middlemen are 4 and 5 layers deep, just taking money off of the top.

This gets to a topic we have noticed as well with Indian recruiters, where the recruiter places a resource at another recruiter that then sets the resources at a consulting company, that then charges the client. Every hour that resource works, they have this enormous overhead of three entities that are charging for every hour. We have also seen this with non-Indian recruiters.

Depressing US Wages

The quote continues.

As an, BoA goes through their VMO. The VMO is a fascist Indian company that sends requirements out to large Indian forms such as InfoSys, Tata, etc, say at $400 per hour. The VMO takes their cut off of the top for doing…nothing. The large Indian firms send the requirements to their family members who have incorporated in US with some bogus company. They give to another no-name company.

By then, the hourly rate to any US citizen is what their starting salary was 30 years ago.

This issue of it being considered acceptable for the person doing the work to receive a small portion of the hourly rate is something we found in the federal case against Infosys as we cover in the article How Infosys Violated B-1 Visa Law and Charged Clients a 98.6% Margin.

Getting Abused by Indians

Prudential in Woodbridge has a mall sized food court and you could be in Mumbai. Plus these Indians are buying up all of the commercial real estate. Any time you see ‘foreigners’ in Manhattan, they are usually the employed workers in Corporations.

If you see Americans, they are tourists!!!!!!

The Number of Companies Being Exploited by Indian VMOs

This commenter goes on to describe the extensiveness of the issue across many companies.

Vanguard. Same. Exelon. Same. Bank of America. Same. Verizon. Same. PNC. Same. IBC. Same. Horizon. Same.

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Conclusion

These Indian VMOs are often selected when Indians are hired into procurement positions in companies. Corruption is a way of life in India. According to the Transparency Index, India is ranked 78 out of 180 countries. The US is ranked 22nd. It is considered very normal in India to work in procurement for a company and then to get kickbacks. In India, wages are very low, and the people that work in procurement see it as simply a way to get back at their employer.

Secondly, the margins are so enormous on the Indian VMOs. One has to ask the question of how companies are not noticing that they are massively overpaying a series of corrupt middlemen.

References

https://www.transparency.org/cpi2018

https://www.transparency.org/country/IND