Bangalore: Indian software firms Infosys Technologies, Wipro Ltd, and Tata Consultancy Services are going shopping in other parts of the world.
They aren’t just looking for companies that fit the bill in terms of expertise or access to markets; they are looking for people. Both are a response to demands from customers and a desire to become true multinationals such as larger IT services firms IBM, Accenture, and EDS.
“Companies such as TCS, Infosys and Wipro are looking to expand their global footprint by hiring locals as their customers demand more geographic proximity and cultural empathy,” S. Sabyasachi, senior director at offshore consulting firm NeoIT, told Mint. Large customers, such as General Motors, are looking for technology and back-office support from North Asia to South America, said analysts.
By 2010, by some estimates, a full fifth of TCS’ 1,50,000 workforce could comprise foreign nationals. The comparable figures for its peers and rivals Infosys and Wipro, according to analysts, could be between 15% and 20%. Currently, foreign nationals account for 2.5-3% of the workforce of the two firms and 9% of TCS’ 83,500 workforce.
All three companies will hire from campuses, poach from other companies, and take on staff from customers as they strive to grow the number of foreign nationals on their rolls.
“We are looking to grow faster in terms of employees in locations like Philippines, Vietnam, Latin America, Eastern Europe and China,” said Mohandas Pai, director of human resources at Infosys.
TCS, for instance, will take on staff from clients ABN Amro and Pearl Insurance, and from its acquisitions. Last year, it bought back-office firm Comicrom in Chile and Australian banking products firm FNS. The company is also hiring in Ecuador to support a $140 million deal with Banco del Pichincha, one of the country’s largest banks, and in China.
“We currently have around 700 professionals in China, and the plan is to have almost 5,000 software programmers (there) by 2010,” S. Padmanabhan, global head for human resources at TCS, said in an e-mail interview. And Raja V., a senior vice-president at Wipro, said the firm will more than treble its workforce in China from 110 professionals currently to anywhere between 300-500 by this year end. “We are also exploring a near-shore centre in the US and a centre in Mexico by 2007,” Raja told Mint over the phone from New Jersey, US.
The increased overseas hiring will reflect in higher wages at the software service companies. But, analysts say, that’s part of a hard choice before the vendors: whether to preserve healthy margins of more than 20% with an India-centric workforce or chase better growth by growing where customers want them to. “These recruitments are definitely going to be at a higher cost, but they (the companies) will have to do it to evolve further,” said Sid Pai, partner with outsourcing consultant Technology Partners International.
European destinations are almost twice as expensive as India, while software professionals in Latin American nations cost 50% more than their Indian counterparts, but the cost differential with India could narrow in the years ahead.
“We are already seeing salary costs in India go up, and with short-sighted tax policies, vendors will have no other option but to expand outside the country,” said Pai. Last week, in the Budget, India levied a 11.33% tax on software service firms.