Infosys joins Indian peers in boosting hiring in US
4 min read . Updated: 06 Nov 2014, 11:51 PM ISTOf these, 1,500 will be experienced professionals, while the rest will be hired from American colleges and universities
Bengaluru/Mumbai: Infosys Ltd, India’s second-largest software services exporter, said on Thursday it will hire more than 2,100 people in the US, from where it gets about 60% of its overall business.
About 72% of the total new hirings in the US would be experienced professionals and the rest will be hired from American colleges and universities. This, according to Infosys, will help it boost its expertise in client relationship management, consulting and technical delivery.
This will take the company’s total strength in the Americas to about 8,000, also making it the latest among the big Indian information technology (IT) services companies to increase hiring in the US, following the threat of tighter immigration laws and a need to be closer to clients.
India’s largest software services exporter Tata Consultancy Services Ltd (TCS), which gets about 55.5% of its business from the US, does not give region-wise employee figures; analysts reckon the number is about 20,000, with about 60% of those in Latin America.
Nasdaq-listed Cognizant Technology Solutions Corp., too, does not break up its US numbers, but said it plans to hire 10,000 people in the US over the next three years. It gets about 77% of its business from there.
HCL Technologies Ltd currently has 8,000 employees in the US across 15 states. On 18 September, it said it will hire 1,237 people in North Carolina in the US by the end of 2018 with an annual average payout of $64 million. HCL gets 50% of its revenue from the US.
The US is an important market for Infosys. Vishal Sikka, who took over as the first non-founder chief executive officer of the company on 1 August, spends most of his time in the US as he tries to rebuild the fortunes of the company in a shifting technology landscape.
Earlier this week, Infosys appointed David Kennedy as its executive vice-president and general counsel, who will be based out of Palo Alto in California.
Infosys said the professionals among the proposed 2,100 recruits will join consulting, sales and delivery units in the current fiscal while the undergraduates and graduates will be hired over 12 months.
“This is a terrific time for young, smart and talented leaders to be graduating from the best American schools and choosing a career in the technology industry," Sandeep Dadlani, executive vice-president and head of Infosys Americas, said.
Among its university recruits, Infosys will hire 300 management and technology graduates for its digital, big data, analytics and cloud domains, apart from 180 for its consulting practice. The firm will also hire 100 MBAs for its sales team from leading business schools as part of its global recruitment programme.
“IT companies have started increasing the number of people they hire from onsite locations since the past couple of years," said Sangeeta Gupta, vice president of research for Indian software lobby body Nasscom.
Gupta attributed the trend to two factors.
One is that contracts have changed from the tradition “time and material to fixed price, risk and reward, etc., that require employees to be closer to the customer and understand their business".
The other is that IT companies are trying to increase their onsite—client location—hiring to address any possible fallout of the Immigration Bill.
In April 2013, a US senator accused Indian IT companies, including Infosys and TCS, of abusing the H-1B visa system and said they were hiring employees on business visas to do work typically done by engineers on long-term work visas.
US senators have repeatedly been pushing for an Immigration Bill to be passed that would double visa-application-related costs for top Indian software services firms.
It would also increase the cost of doing business and force them to hire more local workers at higher costs.
Last October, Infosys had agreed to pay $34 million (about ₹ 210 crore) to settle the US government’s claim that it violated the country’s visa laws.
The firm was being probed over its use of temporary work visas and was being accused of failing to maintain accurate immigration paperwork. Infosys had denied any claims of systemic visa fraud, misuse of visas for competitive advantage, or immigration abuse, and said the use of B-1 visas, or short-term visas, was for legitimate business purposes.
As of October 2013, H1B visas cost up to $4,300 each, while B-1 visas cost $200.
The trend of hiring more US locals may also marginally increase wage costs.
A fresher in India would typically be paid around ₹ 3.5 lakh annually, while a fresher in the US would get around $30,000-35,000 ( ₹ 18-21 lakh), according to Anurag Gupta, chief executive officer of IT staffing firm Magna Infotech Ltd. A lateral—someone with over a year’s work experience—would typically get around ₹ 4.5 lakh annually, while his US counterpart would get around $40,000, Gupta added.
But the benefits of being politically and culturally correct may outweigh the rise in costs, say analysts.
“There is at least a 60-70% variable pay gap between onsite and offshore employees on average. However, these onsite employees are much fewer than the rest of the employees hired, and generally such onsite staff is hired for market-facing roles, and not the back-end or development. We are seeing a trend in terms of Cognizant, Wipro, TCS and HCL Technologies also looking to increase onsite employees, just like Infosys," said Sanchit Vir Gogia, founder and chief executive officer of Greyhound Research.