Look who is hiring and investing in USA: Indian outsourcers
December 21, 2009
Buried among the headlines of job losses and jobs being outsourced overseas over the past few years, you might be surprised to hear who has been hiring or planning to hire or invest money in the USA – Indian outsourcers. In fact:
- The Wall Street Journal has recently reported that Infosys is planning to nearly double its USA based workforce in anticipation for the coming increase in outsourcing deals as technology spending once again resume. As of the end of the first quarter of 2009, Infosys had 1,200 employees in the USA and as of the end of the third quarter, they had 105,453 employees worldwide.
- Back in 2008, Information Week noted that Tata Consultancy Services had opened a development center located inside a 200,000 sq foot former paper plant outside Cincinnati (Ohio) and they planned to hire 1,000 technology professionals from around the Midwest. The facility would also include a lab where work in such areas as industrial engineering and services would be done.
- Information Week also noted similar plans by Wipro Technologies who were recruiting 500 people, mostly recent university grads, for a new Atlanta development center. Plus they have already set up a center outside of Detroit and they were planning two more centers in other USA cities with up to 500 staff.
Why are Indian outsourcers hiring in the USA? One big reason is that a bigger USA presence will make Indian outsourcers a more viable option for potential clients who have concerns about sending sensitive data or doing product development work offshore while it will also allow them to bid on public outsourcing contracts. Moreover, global companies with global delivery models still need to have people close to customers who can work on innovation initiatives and new product rollouts.
Of course, not all employees hired by Indian outsourcers are American and as Business Week reported back in June, efforts to “reform” immigration threaten to derail the operating model used by Indian outsourcing firms. The reason: American firms use temporary visas as a way to bring in and get permanent residency for talented workers, Indian outsourcers have tended to bring in Indian professionals on a short-term basis – often for about 18 months. Thus, Indian outsourcers have tended to dominate the list of companies awarded H-1B visas. Moreover and when Indian firms win outsourcing contracts, they typically have 20% to 30% of their employees in the USA (only some of whom are Indians) and keep the rest offshore while Indians sent to the USA to work on the project will then return to India once its up and running. Hence, Indian outsourcers benefit from having lower cost structures offshore and are still able to do the critical or on-site work onshore.
In addition, Indian outsourcers have made and are actively seeking acquisition targets in the USA and in other developed countries. In fact, the recent Wall Street Journal article had noted that Infosys is on the lookout for acquisitions in France, Germany and Japan who have approximately US$300 million to US$500 million in annual revenue while other media reports have noted that Wipro is also on the lookout for acquisitions in the USA and Europe.
In other words, outsourcing is more than just a one way street. It directly and indirectly creates both jobs and investments in developed countries.