Brazilian IT outsourcing company Stefanini IT Solutions has been managing an international crisis over the last few days after being accused of paying lower-than-average rates to Romanian contractors in Switzerland.
Five Romanian IT engineers employed by Stefanini were working at Geneva-based pharmaceuticals giant Firmenich for a period of 60 days and allegedly getting paid about CHF 840 ($884) per month compared to the minimum wage for the same function of CHF 3,500 ($3,683).
This has prompted accusations from local trade body Unia that the Brazilian IT services company was engaged in wage dumping - a term referring to paying salaries much lower than is normal in an industry, often to foreign professionals brought in specifically for the job. Firmenich said it was not aware of the salary practices of the outsourcer.
According to the Swiss press, Stefanini and the country's labor regulator came to an agreement on Friday (20) whereby the outsourcer will increase the Romanian professionals' pay while they are working in Geneva. The IT services firm refused to specify details of the agreement, such as the current salary of its staff or what the increase agreed with the government would be.
In a statement, Stefanini has defended itself saying that "there is nothing wrong" in the outsourcing contract with Firmenich when it comes to salaries and that it has acted "in good faith and in a totally legal manner."
"This salary comparison is unfair and doesn't match the reality," the outsourcer said. Stefanini is considered one of the most international Brazilian IT outsourcing firms, with operations in 30 countries, according to its website.
This practice of bringing contractors from a low-cost country to a high-cost country and continuing to pay them at their 'home' salary has been an issue in several other regions around the world.
Indian technology company Infosys was fined $35m for visa irregularities in the US in 2013 and a court case in the UK last year appeared to show that other technology companies see it as a strategic right to bring in low-paid workers for project work - despite labor legislation specifying that local workers cannot be replaced by cheaper foreign employees.
Stefanini may well have stuck to the letter of the law in Switzerland (which is not a European Union member), but these revelations are somewhat embarrassing for a company that should be selling expertise - not bodyshopping. Other companies in Switzerland who need IT services will need to think twice about the reputation and labor practices of their IT partner in future.