Infosys, India’s second-largest software exporter, reached a $34 million settlement with the U.S. resolving an investigation into the company’s use of visas for employees.

Infosys will pay $5 million to Homeland Security Investigations, $5 million to the U.S. State Department and $24 million to the U.S. Attorney’s Office for the Eastern District of Texas, according to a filing today in federal court in Texas.

John Bales, the U.S. attorney, had accused the company of “systemic visa fraud and immigration abuse.”

Bangalore-based Infosys received a federal grand jury subpoena seeking records related to its sponsorships for B-1 business visas and its use of them, according to an Oct. 11 regulatory filing. The company and “certain” employees were targets of the investigation, according to the filing. Infosys said it was cooperating with the probe.

Infosys said at the time that it had reserved $35 million for a settlement tied to the probe and that it was engaged in talks to resolve the matter.

“Infosys denies and disputes any claims of systemic visa fraud, misuse of visas for competitive advantage, or immigration abuse,” the company said today in a statement. “The settlement removes the uncertainty of prolonged litigation and allows us to continue to focus on delivering measurable results for our clients.”

Auditor Reports

Under the accord, Infosys agreed to retain an independent auditor to review its compliance in maintaining employee records. The auditor will file reports to the U.S. attorney.

Infosys was accused in a lawsuit brought by a consultant it employed of manipulating the B-1 visa program to send Indian employees to the U.S. to work on a permanent basis, according to court papers.

The consultant, Jack Palmer Jr., reported the allegations to federal authorities and claimed he was the victim of a retaliation campaign. U.S. District Judge Myron Thompson in Montgomery, Alabama, ruled in favor of Infosys and dismissed the case. The lawsuit didn’t involve whether the company violated U.S. immigration law, according to the decision.

The information-technology industry is spending about 25 percent to 30 percent more for on-site workers as H-1B visas, required for specialized workers, become more difficult to obtain, according to Ankur Rudra, a Mumbai-based analyst with Ambit Capital Pvt.

Subcontracting Employees

Companies, including Infosys, are losing about 1 percent of their annual revenue by subcontracting employees instead of sending cheaper labor from India to work face-to-face with their clients, he said.

The Justice Department previously probed International Business Machines Corp., which was investigated for violating anti-discrimination charges by stating visa-status preferences in job ads. IBM agreed to pay $44,400 and will remain subject to reporting requirements for two years, according to a Sept. 27 statement.

The case is U.S. v. Infosys Ltd., 13-cv-00634, U.S. District Court, Eastern District of Texas (Sherman Division).