So far firms have been dependent on sending engineers from back home to these markets
Indian information technology (IT) services companies plan to replicate their model of hiring freshers from universities and training them in important global markets such as the US and the UK.
So far IT services majors such as Infosys, TCS, Wipro and others have been dependent on sending engineers from back home to these markets, which rank number one and two in terms of generating revenues, for servicing their customers.
But, with the Donald Trump-led US government pushing for restrictions on talent movement to protect jobs for local people and Theresa May’s statements that visa norms for Indians in the UK may not remain as liberal as they are today, Indian IT firms are looking to protect themselves by hiring locally.
These developments certainly worry Indian IT firms which have created $108 billion export market largely by playing the cost arbitrage card. For them, sending Indian engineers on projects abroad has been more cost-effective than hiring locally.
Infosys said the company has made “similar attempts” to hire engineers from campuses in the US, the way started creating right technology talents three decades ago from Indian engineering colleges.
“Our endeavour now is to step that up in the US and that is the right thing to do because you want to …build local talent pools organically and then look for global talent to supplement it,” said Ravi Kumar S, deputy chief operating officer, Infosys.
Last year, the Bengaluru-headquartered IT services major hired fresh graduates from schools in the US and brought them to its training centre in Mysuru. “This year we are doing this in bigger numbers.”
Infosys is planning to set up a training centre in the US too. Industry body Nasscom recently claimed that Indian IT services firms collectively hired 50,000 local engineers in the US alone over the last decade and increased hiring too.
“We will have to staff at all levels. When you are building localisation by design you are building cadres. So, we went to campus this year and hired local engineers and have trained them. Now, it is a consistent programme for graduate and post graduate levels,” says Jatin Dalal, chief financial officer, Wipro. “it is a balancing act and the company has managed the cost despite localisation.” Wipro has put in place a dedicated localisation programme as part of its growth strategy.
“University hires bring new thinking, lower cost-structure and a vehicle around H-1B challenges. We see this not only as an Indian IT service trend, but an overall trend in general. More nationalism is set to occur in the next five to 10 years, as traditional western democracies brace for voter backlash on slow growth,” says Ray Wang, principal analyst and chief executive, Constellation Research, a Silicon Valley-based technology research and advisory firm.
All three large IT services firms, Infosys, TCS and Wipro, have applied for lesser number of H1B visas early this month when five-day window was opened by US Citizenship and Immigration Services for 2018.
Interestingly, Peter Bendor-Samuel, chief executive of global IT research firm Everest Group, says Indian firms can probably “get one last bite” of the H-1B visa lottery “apple”.
“Indian firms are moving to address their H-1B dependent workforce issues by increasing their hiring of experienced US workers and recruiting from US universities. Firms like Wipro are more advanced in this process and have already made substantial progress. However, I would stress that all of the Indian firms are still active in the H-1B lottery and will take as many of these as they can, but expect that the numbers will decline,” points out Bendor-Samuel.
Indian IT firms do not divulge numbers of Indians working on H-1B visas in the US or in UK. TCS had recently said it applied for nearly 4,000 new US visas in 2016, compared with about 14,000 applications in 2015.
Even though the visa applications crossed the cap of 85,000 (including 20,000 US Master’s degree holders) this year, USCIS witnessed drop in total number to 199,000, as against 236,000 last year.
Indian firms face a similar shift in multiple markets which can potentially increase cost of business, says Bendor-Samuel. “Unfortunately, this comes at a difficult time for the industry which faces increasing price completion which will make it difficult if not impossible for them to pass these cost on to their customers.”
Indian IT firms plan to have the right combination of local talent and collaborative technology-enabled models across US, Europe and other regions.
“Our strategy is to move to a regime where our operating model should be visa neutral.We will have to put the right model of execution; having the local talent, executing it out of the delivery centres in the onsite, offshore or nearshore,” says N G Subramaniam, chief operating officer, TCS.