September 21, 2010 8:31 am

Indian outsourcers in US hiring push

Indian IT outsourcing companies have launched a recruiting drive in the US, stung by tougher immigration regulations for foreign software engineers on short-term contracts who have been accused of “stealing” American jobs.

Tata Consultancy Services, Infosys and Wipro – the three largest Indian outsourcing companies – are together to hire 2,300 staff, which would increase their combined US payroll by about 13 per cent.

S Gopalakrishnan, Infosys chief executive, told the FT the hiring campaign, which takes place in advance of US President Barack Obama’s visit to New Delhi in November, was partly a response to increasing business in the US and partly a reaction to a recent tightening of US visa rules.

However, Indian outsourcing companies could face challenges at any concerted effort to ramp up their US workforce. They had told the FT last month that the scant availability of engineers made hiring difficult in the US.

Asked if the industry was worried about US protectionism, Mr Gopalakrishnan said: “Until now, it has not been a factor in our business. But certainly sentiment has changed and this is a cause for concern. Hopefully, it won’t be sustained.”

The changes to immigration rules and associated increase in visa fees had increased costs; “a small impact” that companies had had to absorb, he added.

Last month, the mid-western US state of Ohio banned the outsourcing of government contracts to overseas operations, a decision that sent a chill through the Indian outsourcing industry.

Infosys, which employs more than 115,000 worldwide, is to increase its currently 1,600-strong US payroll by 1,000.

TCS, which derives more than half its revenues from North America, has about 16,000 working in the region, of its 160,000 staff. It intends to increase its global workforce – currently only 7 per cent are foreign nationals – by 40,000 this year, adding 800 US jobs.

“A US presence helps TCS compete against US rivals to win some of the expected $52bn in contracts that the US federal government will have outsourced in 2010 alone,” said Ken Chan, vice-president of Moody’s Investment Services. “However, TCS’s hiring a worker in the US can cost seven to eight times as much as one hired to do similar work in India, so it has kept its permanent local US workforce at a small fraction of the global total,” he said.

Wipro plans to double jobs in its Atlanta Development Centre to 1,000 within three years. About 85 per cent of recent hiring in the US has been of US nationals. The company, with about 110,000 staff worldwide, wants non-Indian nationals to comprise half its overseas workforce within two years.

The drive to hire in the US comes before a high-profile Indian visit by Mr Obama. Access for outsourcing companies to the US economy is likely to be high on the agenda as the US wrestles with an unemployment crisis.

Mr Gopalakrishnan said that in spite of global economic uncertainty the industry would see revenue growth of 13-15 per cent this year over last year’s $60bn.

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