The Frightening Rise of the Indian Recruiters in IT

Executive Summary

  • IT recruiting in the US has become overrun with Indian recruiters and companies which primarily employ Indians in the US and Indians working in India who do not have the right to work in the US market.
  • Trust is declining to the degree that it is reducing the overall IT contract market.

Introduction to Indian Recruiters

The rise of Indian recruiters into the US and European IT markets have to lead to great dislocations for the domestic IT workers. They are changing everything from rates to terms and conditions in contracts to refashion the IT contract market entirely around Indian ethics and labor standards. In this article, you will learn about things I have seen first hand in the market for SAP contracting.

How Indian Recruiters Operate

I have been an SAP consultant/contractor for some years now, and there is a change that has been going on for a while but has been accelerating very quickly in just the past few years. This change is, I believe, going to have significant implications for the IT contracting market, and in ways that I think is not generally anticipated.

The takeover of IT recruiting by Indians has been extraordinarily fast. Indian recruiters lead any other recruiter type in both how much they irritate those looking for projects and their low quality of work.  

The Massive Rise in Indian Recruiters

There are three types of Indian recruiters that I will discuss. They are the following:

  1. Indians who are US citizens who now work in recruiting.
  2. Indians who are in the US, but who are not authorized to work in the US. My understanding is that the most significant numbers of people who operate this way are the wives of Indian who are married to men that are in the US under the H1B or related program.
  3. Indians who are based in India, but who work the US market.

The last two types are in a strange legal category. Neither of these two groups has the right to work in the recruiting market in the US, and many Indians are flouting the law on a very large scale, but on the other hand, I don’t believe that there is anyone who enforces these laws. Whether overseas Indians can somehow create a company in the US and if the wives of H1B holders generate a company under the husband’s name, I don’t need to get into at this exact mechanism, as its where I have any insights, however, one way or another it is being done.

What this is leading to is a massive increase in the number of recruiters that are working the field, and an increasing number don’t have the authorization to do the work they are doing in the US.

The New Life of an IT Contractor

The changes have been quite significant. The best way to understand them is to read through as a list.

The Proliferation of Recruiters Creates A Lot of Noise

In the past, there used to be far fewer recruiters for one specific job. In the past, I would often be contacted by a single recruiter, who was US-based, and either I was either placed or not. However, now I am inundated by requests, and flooded by Indian recruiters specifically, while the number of “American” recruiters is beginning to decline.

Copy of
The Confusing Noise Created by Indian Recruiters

Issue #
Noise Source
Noise Description
1
Increase in Contacts by Multiple Indian Recruiters
The increase in correspondence means that there are now many recruiters for a single consulting role.
2
Identifying the Recruiters
I now have a hard time keeping the recruiter contacts straight. I have an email inbox filled with names I can't pronounce, with company names that all seem to be some derivation of "BizTechSysInfoIT."
3
Incomplete Role Descriptions
The majority of Indian recruiters do not speak or write English properly. This means that in addition to all of the extra noise, the noise is extra noisy because of communication issues that are due to the lack of language skills on the part of the Indian recruiters. Most of the correspondence have very few details about the role.
4
Poor Understanding of the Role Requirements
The majority of Indian recruiters have far less of an understanding of the roles than do the domestic recruiters. 
5
Recruiter Client Assignment
This is highly confusing especially when so many of these recruiters now often hold out the client name until the last possible moment. This means when a new role hits if the two roles are in the same state, one has to ask for more specifics to not get submitted twice for the same role. 
6
Massive Uptick in Lying
Indian recruiters lie just as naturally as breathing. If one does not obtain interest from the client, or if the role is filled, in most cases the Indian recruiters will never get back to the consultant, so the consultant is kept off-balance as to what the progress is of the role. When asked what the status is, the Indian recruiters will state what happened, but then say "don't worry I will find you the perfect role," and then you may never hear from them again. 
7
The Dehumanizing Aspect
Indian recruiters do not do a very good job of hiding the fact that they view each consultant as more livestock than human. The lack of follow up or general respect for the consultants reduce any type of relationship building potential. It is a low trust situation, which the Indian recruiters seem to view as a numbers game.

The fact is, these items existed to a degree before the rise in Indian recruiters. There have, for example, always been recruiters who are new and did not know certain things, but the rise of Indian recruiters has massively reduced the quality of IT recruiting.

Indian Recruiters Offer Lower Rates for the Same Jobs Versus Other Recruiters

I have performed a direct comparison through some projects for over a year now, and the rates are lower when the recruiter is Indian is lower 100% of the time. I can say this with confidence because I compared the American recruiter versus the Indian recruiter for the same projects. I have kept a record and of these projects and I found when the recruiter is Indian the rates are on average 17% less. And the rate reduction goes beyond this as the Indian recruiters seem to have a depressing effect on contract rates generally, which are right now roughly 30% off of their average level.

Why is this?

The story is entirely consistent that the “client will only pay a certain” amount, but when I check through other sources the rate being paid to the consulting company is the same. Here the math gets a bit more tenuous, however, because the exact rate paid the consulting company is an estimate on my part. But the percentage the consultant receives from the project is roughly 37% of what the customer is paying the consulting company. This is I believe a historically high percentage of the total which is paid, and this means that the recruiters, and specifically the Indian recruiters, are absorbing more of the overall rate. This is particularly strange when one considers how low the costs are incurred by offshore Indians (where $10,000 goes a long way). Interestingly the Indian recruiters are incredibly consistent on the rates they offer.

Indian Recruiters Hide Their Location

Recruiters working in India attempt to hide their origin by having a US number that calls my phone. However, what gives them away is the combination of the fact that the English skills of the Indian based recruiters is significantly different than US-based Indians, and secondly, the voice quality is very low because they are using a VOIP service, as calling from a cell phone from India to the US would be quite expensive. The combination of the accent/English skills with the poor quality voice quality of VOIP makes it very difficult to communicate with them. Some of these conversations are ridiculous with the person stating their name, stating the SAP module and then asking me if I am interested. This is why I started asking them to send the requisition through email, which I tend to ignore.

Indians as Prenaturally Terrible at Recruiting in the US or European Market

The average quality of service of an Indian recruiter based in India is low. The vast majority of Indian based recruiters cannot develop relationships with the US IT consultants; there is no ability to understand the consultant beyond them being a bag of skills. Rather than try to robotically work down a list of questions, and then ensure that the rate that they obtain is the absolute lowest possible. This is an entirely foreign experience from many domestic recruiters where I feel as if I am having a real conversation. Although, this might be a good time to bring up the fact that some of my discussions with recruiters from the UK, who have greatly declined in the US market, also tended to have a very similar extractive feel to them.

Playing the Percentages with Indian Recruiters

I wanted to start this article by saying that it is difficult to find trustworthy recruiters in general. After years of dealing with recruiters, I would estimate that around one in six are actually worth dealing with. However, after dealing with recruiters for around nine years, I have determined that there is one group of easily identify-able group of recruiters that are far worse as recruiters, both ethically, in their negotiation, and in their communication than the average. This is Indian recruiters. This article is really for independent contractors who are from the US, Europe, Australia, New Zealand, i.e. the developed world. For those independent contractors that are Indian or from a third world county, you know the score already, and don’t need me to point out things that are obvious to you.

Understanding India, and The Longterm Disregard for Labor

In order to understand Indian recruiters, is important to understand India.

I have been to India and to Pakistan, and have read up on the history of the region. Essentially, India and Pakistan were bronze age societies prior to colonialization by the British. Colonialization was begun by the East India Trading Company (without authorization from the British Government), and was eventually taken over by the British Government. India has an enormous population (either soon to or already larger than China’s), and while the British brought some infrastructure, such as a rail system and postal system, most of the country remained undeveloped long after India won independence from the British. While India’s independence is a source of national pride for Indians, the country actually regressed. While the British were in India for their own advantages, the British were better administrators than the Indians that took over from them (since independence and up to the current day) and were less corrupt. India sits at 95 out of 180 countries on the Worldwide Corruption scale. (the US sits at 24, dropping roughly ten spots during the Bush Administration and not recovering our position a single space during the Obama Administration)

Indians like to spend a certain amount of time blaming Britain for India’s failings. However, 73 years after independence, India still has slavery and borderline slavery-like bonded labor. Furthermore, India did not have good labor standards before the British arrived. Blaming the British is a way for Indians to not acknowledge their lack of progress in treating workers better. Unfortunately, but unsurprisingly, when Indians immigrate to other countries, while they benefit from the higher standards of labor themselves when they are in the position of hiring, they default back highly exploitive labor practices. In IT today, Indians or at least Indian influence is the primary force driving down labor standards for domestic workers. 

India is marked by extreme income inequality and racial inequality. India has a much large population than it has resources (there have been some attempts at population control, but they have been fiercely fought by the country’s Muslim population). This means that India is one of the most competitive places to grow up in, and makes the people naturally aggressive negotiators. For instance, in Indian universities, the competition is so intense that there are stories of a large number of pages ripped out of textbooks in the Indian university library, which of course prevents the other students from obtaining the answer. Indian ethics center around the family and then become rapidly weaker outside of that unit. This is the common ethics in third world nations where there is great scarcity. This hopefully provides the proper mindset of Indian immigrants that then come to developed countries.

Negotiating with Indian Recruiters

Indian recruiters take their background in India and apply it to their approaches to recruiting. I am often contacted about contracts, however, on almost every occasion, the rates offered by Indian recruiters are lower than the rates I am offered by non-Indian recruiters. This is interesting because the final client is typically the same types of companies. I even received a lowball offer when the eventual client was a major consulting company (which I refuse to work for), and the major consulting companies charge at the top of the market in their billing rate. This Indian recruiters also waited until deep into the process to tell me that the prime contractor was Accenture.

I have concluded from this that Indian recruiters are simply attempting to take a higher percentage of the rate. This can be partially attributed to greed, but I think also relates to the fact that India has no history of respecting labor rights or labor’s value add to the process.

The Stark Value Differences Between Indians and the People Raised in the US or Europe

Many Indians are treated terribly by other Indians and unless you are part of the privileged classes it is simply accepted.

The US has a conception of the worker is an important component of production, India by in large does not. The US had at one time much stronger unions (now down to roughly 12%).

India never had this.

Those who would like to paper over this fact will point to Indian’s labor laws, with 50 national laws protecting labor, and more state laws. However, these laws are not well-respected by international labor bodies, and secondly, few laws in India are enforced.

The upshot of all of this is that the Indian culture is for the person with the “gold” to be primary, it is considered ethical to get whatever can be taken from labor. Any person negotiating with an Indian recruiter or rates or other contractual details needs to understand this background. Indians in India prefer not to work for Indian companies, but instead prefer to work for US or European multinationals where they can be treated more fairly.

Getting the Full Story from an Indian Recruiter

I never feel as if I am getting the full story with Indian recruiters. I received an email from an Indian recruiter recently about a project in San Diego. I told him my rate and he said

“we could talk about the rate,”

which translates into

“I can’t meet your rate but I will negotiate you down after you have invested time in discussing the role with me.”

Once I got on the phone with him, he tells me

“You realize this is a contract to hire position?”

I have no idea why I should have realized that fact, as it was never stated in our email communications.

Perhaps this recruiter believed that I had extrasensory perception. I went back to double-check our emails, and as I had originally thought there was no mention of “contract-to-hire” in the emails. I reject contract-to-hire positions as soon as I receive the email, so I would be surprised if it had gotten past me.

After reviewing the email, I told him I would not be interested in the role and that he had clearly left this information out of our email communication, waiting to spring the information on me during a call. I told him to either communicate honestly or to stop emailing me. He never responded to the email. What I have learned is that dishonest people can never be reasoned with. Pushing back on them, simply makes them move on to the next target.

Communicating with Indian Recruiters and for the IT Contract Market

Indian recruiters have poor communication skills. This is not simply “some recruiters,” it is instead every single one that I have dealt with. This should not be surprising, as some Indians speak several languages, and while India’s official language, or at least the language of commerce and education is English, Indians will always have a second Indian language (there are different estimates of how many languages are commonly spoken in India. Sometimes I am told 13, other times Indians laugh at this estimate and they there are hundreds), however the upshot is that Indians spend far less time speaking English than do people in “real” English speaking countries. This also extends to writing, and it is well-known that Indians do not communicate in English very well, and in fact, is one reason that the quality of documentation has fallen so much on IT projects.

My view is that India does not have a very strong written culture and that the focus is much more on verbal communication. As an example, when I worked at i2 Technologies (a company started by an Indian — Sanjiv Sidhu and Ken Sharma, two con men, Sanjiv Sidhu walked out with over $1 billion while i2 eventually cratered and was eventually purchased by JDA). i2 Technologies had a large percentage of Indian employees and the willfully poor communication on the part of Indians, no matter their rank or position was one of the company weaknesses that eventually brought i2 down. For instance, an Indian director received an email that was not to their advantage, they would simply not reply to the email. Even if the issue was quite important, the email would sit unanswered. If directly confronted, the response was always that they were “so busy.” A few US-born workers tried this stunt, usually pre-sales consultants or product managers who I caught lying to i2 salesmen and were not interested in having a conversation with anyone knowledgeable on the topic. However, the problem was far more prevalent with Indians.

How Could Indians Take Over a Function They Are Terrible at Performing?

Communication is one of the most important features of being a recruiter, which is why I openly question whether Indians can be effective recruiters outside of India. Why we have recruiters who are not first-language speakers in the country in which they are recruiting is a very interesting question. Certainly, Indians this may not apply to Indians that were raised in the US or England, but the vast majority of Indians working in recruiting, and working in these countries, in general, grew up in India. Therefore, the Indian culture, use of language, etc.. is what applies currently.

Does it Make Any Sense to Respond to Indian Recruiters?

I have stopped responding to Indian recruiters due to the reasons listed above.

  1. First, the trust is not there because I don’t feel comfortable negotiating with Indians.
  2. Secondly, I never feel as if I am getting a straight story.
  3. Thirdly I have never actually run into an Indian recruiter that was any good at the job. This may sound harsh, but if I were to try to work in recruiting in say Russia, and where Russian was my second language and where I did not understand the cultural norms and could not communicate properly with candidates (and where I was also trying to cheat them), I think others would be right in dismissing me as unqualified to do the job. I have wasted plenty of hours talking to Indian recruiters, and even explaining solutions to them.

Therefore, my viewpoint has been shaped by real experiences and remarkably consistent experiences. When I point out ethical and communication issues with Indian recruiters, this is not a small sample, and this does not apply to some of them…it applies to everyone that I have worked with. This is why I both recommend to other independent consultants to ignore emails from Indian recruiters, but also for Indians to get out of recruiting, and move into jobs where they have a better fit between the skills they offer and the demands of the job.

Can The H1-B Program and Indian Workers be Disentangled from the Issue of Indian Recruiters?

While discussing this topic with a domestic IT worker, I received this response.

I don’t have any problem with US companies hiring Indian programmers, architects, etc.
I HAVE A HUGE PROBLEM WITH THE INDIAN CONSULTING COMPANIES/RECRUITERS.
I have no idea – at all – about how to stop the tsunami of Indian recruiters. That is what I’d like to stop.

I don’t think it makes sense to break the topic into to separate categories. And you actually should oppose companies bringing over Indians because it means fewer jobs for domestic workers and more discrimination against you. Discrimination is a way of life in India.

If the H1-B program had been small, there would not be the Indian recruiter problem we see today. There was no problem with Indian recruiters before the arrival of H1-B.

The evidence for Indian discrimination by not only recruiters but Indian companies (Infosys, Wipro, TATA), is overwhelming. The evidence for discrimination against domestic employees by Indians in US companies is overwhelming. So if they continue to play by their rules — which are racist rules, while domestic workers pretend that Indians are just like any other workers, and are

  1. a.) being honest about their resumes,
  2. b.) are not targeting US domestic workers jobs,
  3. c.) not engaging in corrupt acts that match the same behavior of the corrupt system back in India (I have plenty of case studies of what are cash payoffs to get contracts by Indian companies), then the domestic workers lose.

What the Future Holds with Indian Recruiters

The rise of Indian recruiters means that it is much more of a hassle, with more miscommunication issues, lower pay then the contracting market I entered years ago. It means the US and Europe have subordinated the interests of their domestic IT workers to the desires and interests of recent Indian immigrants and to Indians who are back in India. On the demand side, the companies are inundated with requests from many different recruiters. I was recently discussing this with someone, and one can imagine the need for a recruiter for recruiters or recruiting wrangler so that the many recruiters that are going after the same roles can serve as another intermediary roll to the final customer, and they can then take another piece of the rate. This would end up with three intermediaries (the consulting company, the recruiter and the recruiter “wrangler”), and we will have reached a new level of ridiculousness.

Trust is declining the SAP contracting marketplace, and I see several outcomes from this change, which has been genuinely breathtaking regarding how quickly it has occurred:

  1. Many contractors will exit the market, opting for full-time employment. This is due to a combination of the hassle of dealing with recruiters who are now so numerous and are challenging to communicate with, combined with the fact that the rates offered by Indian recruiters now make full-time employment attractive again.
  2. Clients will be more incentivized to hire full-time employees as the contract market will become filled with less experienced consultants.

Therefore, my prediction is that the contract market will change, and change in a way that is bad for all of the pre-existing parties.

Indian Subcontract Agreement

I was recently was close to taking a project with a consulting company as a subcontractor. I received a subcontractor agreement via email, which is the standard practice. The email that introduces these types of documents is typically quite innocuous and says something like “please complete these steps.” The general feeling that is presented by the recruiter or consulting firm that offers these agreements is that everything is standard. However, my experience has been that there can be hidden trip wires in the subcontractor agreement and in this recent agreement I was sent, I found the most outrageous clauses I had ever seen. This I felt could not go without an article. Here were some of the clauses that caught my eye, and which I asked to be changed.

TERM AND TERMINATION
a)   This Agreement shall continue indefinitely until cancelled by either of the parties hereto upon thirty(30) days written notice to the other.

SUBCONTRACTOR agrees to provide THE PRIME CONTRACTOR 30 days written and verbal notice of intent to abandon any and all projects outlined in this agreement if that date is before the “end date” indicated in Supplement B – Statement of Work included within this document.  If SUBCONTRACTOR fails to provide 30 days written and verbal notice (with the exception of issues related specific to H1Visa requirements outside of the SUBCONTRACTORS control) , SUBCONTRACTOR acknowledges that payment for all applicable unpaid time and expenses may be forfeited by SUBCONTRACTOR as deemed reasonable by THE PRIME CONTRACTOR.

In addition, THE PRIME CONTRACTOR shall have the right to immediately cancel this Agreement upon written notice to SUBCONTRACTOR, in the event THE PRIME CONTRACTOR, in its sole discretion, determines SUBCONTRACTOR’S performance to be unsatisfactory or in the event of any breach of the obligations of this Agreement by SUBCONTRACTOR, or in the event SUBCONTRACTOR fails to submit proper invoices in a timely manner.

Upon receipt of such termination notice, SUBCONTRACTOR will stop all activities associated with the terminated Statement of Notification as of the cancellation date on the notice. THE PRIME CONTRACTOR will pay SUBCONTRACTOR for acceptable Services performed up to the effective date of such cancellation when THE PRIME CONTRACTOR receives all Deliverables and Materials related to such Services.

Analysis

This clause requires that the SUBCONTRACTOR provide 30 days written notice to the PRIME. This duration is unusual, as two weeks is actually the generally expected notification for permanent employees. If the SUBCONTRACTOR does not do this, they agree to forfeit both their expenses and their billings. However, this contract has 30 day terms on payment. Therefore, what is certainly possible is that if an emergency or other reason were to prevent the SUBCONTRACTOR from performing their duties, the PRIME could keep up to 30 days of billings and expenses. However, the fact that the PRIME holds the invoiced amount for 30 days, there is actually the potential for the PRIME to keep a maximum of 60 days of billings and expenses. Obviously, this is completely outrageous. However, it gets worse. While the SUBCONTRACTOR agrees to provide 30 days notice, the PRIME has the right to cancel the contract on the spot. They have no notice requirement whatsoever. An additional clause described further on in this article states that if the PRIME is unhappy with the work, they can also keep billings and expenses invoiced by the SUBCONTRACTOR.

“PERFORMANCE OF SERVICES

SUBCONTRACTOR represents and warrants that the Services shall be performed in a good, professional workmanlike manner.  If the client rejects the Services required hereunder, because the Services provided by SUBCONTRACTOR or its workers were of poor quality so as not to be within industry standards, SUBCONTRACTOR shall promptly correct the work for acceptance by the client.  SUBCONTRACTOR shall not charge (THE PRIME CONTRACTOR) nor shall (THE PRIME CONTRACTOR) be required to pay for those Services.”

Analysis

Here the SUBCONTRACTOR is required, not the PRIME, to correct the work free of charge. There is no limit listed here regarding when the client will be satisfied. This is an open-ended liability of the SUBCONTRACTOR. So the PRIME takes the profile off of the difference between the rate charged and what it pays the SUBCONTRACTOR, but assumes no risk, because the risk has been delegated to the SUBCONTRACTORS, even though most of the easy money is being taken by the PRIME.

“Code-of-conduct

SUBCONTRACTOR will acknowledge and adhere to THE PRIME CONTRACTOR’s Code of Conduct per both verbal discussions as well as that which is defined within Supplement C. SUBCONTRACTOR’s services and associated manner in which services are to be delivered are not limited solely to Supplement C. SUBCONTRACTOR is to continually represent (THE PRIME CONTRACTOR)’s best-interest including representing THE PRIME CONTRACTOR and THE PRIME CONTRACTOR’s interest throughout the duration of the contract as well as after the contract/engagement has concluded. Failure to represent (THE PRIME CONTRACTOR) in the most professional manner and/or jeopardize or compromise THE PRIME CONTRACTOR’s best interests will result in violation of this entire contract and could result in forfeiting monies invoiced.”

Analysis

This is entirely arbitrary, and completely at the discretion of the PRIME. What range of activities or behaviors could qualify as “not representing the PRIME’s best-interest”? Well, who knows really. This is highly subjective. If the SUBCONTRACTOR is not sufficiently flattering in a discussion, this could be considered not in the PRIME’s best interests and could result in forfeiting monies invoiced. Again, the PRIME shows a repeated obsession with holding billed time and expenses as hostage in the event of a disputes with the SUBCONTRACTOR. This has enormous potential for abuse. There is no intermediary here.

Imagine the power the PRIME would have over the SUBCONTRACTOR with this clause. It in effects utterly controls and censors the SUBCONTRACTOR. If the SUBCONTRACTOR were to make a recommendation that did not maximize the PRIME’s income, they could have their invoiced monies forfeited. This clause is very clear. Honesty on the part of the SUBCONTRACTOR is not tolerated. Furthermore, while the end client may be given the impression that the SUBCONTRACTOR works for them and their interests (they are after all the source of income), the agreement states in no uncertain terms that the real client is, in fact, the PRIME, who is simply an intermediary between the end client and the SUBCONTRACTOR. The PRIME is in effect lying to the client. These consultants arrive on the project as if they are free to provide their expertise in an unrestricted manner, but in reality, the PRIME controls them like marionettes.

Lost Agency

Project managers that are managing SAP projects need to evaluate the subcontract agreements that the companies they hire ask subcontractors to sign. If they are similar to this contract, the implementing company is paying for the consultants, but legally, the consultants are completely beholden to the PRIME. You can imagine that you will not receive honest opinions if the subcontract consultants can lose a month or more of billings and expenses in addition to having their contracts canceled. This is another reason that hiring a consulting company results in a decrease in value over hiring independent contractors directly or through recruiters (recruiters less frequently have these clauses, but consultants are least encumbered when they are simply hired directly with no intermediaries). Consultants working for companies generally have no legal standing to voice their own views, and the consultants themselves are the ones with the answers, not their handlers, the partners, etc…

“COMPLIANCE WITH THE LAW

SUBCONTRACTOR agrees that it will comply with all applicable laws, statutes, rules, regulations or orders of any country, state or political subdivision thereof, and upon request of THE PRIME CONTRACTOR, will furnish satisfactory evidence or compliance therewith.”

Analysis

This clause is ironic because the agreement that the PRIME demands the SUBCONTRACTOR to sign is in fact not only does not comply with US civil law but is, in fact, hostile to US civil law. I explained this to the PRIME in this email response.

“I have come to a final conclusion on this topic and I am passing on this project. The reason is the subcontractor contract was so punitive towards the subcontractor that it undermined my trust in the relationship. I have shared this contract with a number of family friends who are familiar with contracts, and there is a unanimous opinion that the contract attempts to supersede US law in several areas. With this contract THE PRIME CONTRACTOR is claiming special privileges that would never be granted in a US court. The US civil code is designed to protect both sides of transactions, and it works reasonably well. US laws are determined through a somewhat democratic process, which is why its dangerous to allow companies like THE PRIME CONTRACTOR to sneak in punitive and self-centered clauses that disadvantage the other contracting party. Ms X has been very accommodating in adjusting punitive clauses, but in truth I should not have to negotiate simply to obtain reciprocity. Ms X, you say the contract is standard. However, after a number of years of signing subcontractor agreements I have never seen a contract like this. So I would say it is not standard. The individual responsible for crafting or commissioning the contract has a concerning disregard for US law and for the rights of workers vis-a-vis intermediaries like THE PRIME CONTRACTOR.

No subcontractor should be required to forfeit any monies invoiced. If the main contractor has a problem with the subcontractor, they need to inform the subcontractor, and if necessary terminate the relationship. THE PRIME CONTRACTOR already has the ability to cancel the contract on the spot. There is absolutely no reason for the  THE PRIME CONTRACTOR to keep monies that have been invoiced. Disputed services and payment go to civil court, they do not simply stay with the prime contractor. That is the dispute resolution system under US law.

Through THE PRIME CONTRACTOR’s multiple clauses the subcontract agreement puts all the power in the hands of THE PRIME CONTRACTOR, which sets up scenarios that can be interpreted in a way in that in every case are entirely at the discretion of THE PRIME CONTRACTOR. I am offended by this contract and find the contract unreasonable. Even if this clause is removed, I don’t trust the person who would put such a contract together. That is a problem.

Ms X, both of us have put a lot of time into going over the contract. I must be up to 6 to 7 hours of time investment all together. But sometimes its better to cut one’s losses even after a significant investment. THE PRIME CONTRACTOR wants a very docile subcontractor who follows THE PRIME CONTRACTOR’s rules and signs a one-sided contract where THE PRIME CONTRACTOR has all the power. That is not me. We will both be better served if I pass, and you find someone who is not so offended by the THE PRIME CONTRACTOR subcontract agreement.”

Conclusion

The contract I was asked to sign is unethical, underhanded and contradictory to US law with respect to dispute resolution. It is also bad for both the subcontractor as well as the end client. If I were managing a project and hiring a consulting firm, I would inspect their subcontractor agreement to ensure that it provides freedom of expression to the subcontractors and that no punitive clauses exist. In fact, the existence of such a subcontract agreement in a prime contractor would lead me to instantly question the ethics of the directors of the company that would create such an agreement.

The Mental Profile of the Agreement Crafter

It says something very dark about supposedly well-balanced and successful people that they would create such a contract. In fact, there is something psychologically wrong with individuals in companies that craft such documents, or ask that these clauses be inserted within them.

Financial Disclosure

Financial Bias Disclosure

Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.

References

https://en.wikipedia.org/wiki/Corruption_Perceptions_Indexhttps://en.wikipedia.org/wiki/Indian_labour_law

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