Indian outsourcing companies deliver services ranging from software coding to running business processes for customers in the U.S., Europe and other countries by taking advantage of low-cost, highly-skilled staff on their home turf.
These companies also sometimes send people to deliver services onsite to customers.
This time-tested model, backed by state-of-the-art facilities in India, could now be challenged by President Donald Trump's plan to bring jobs back to the U.S. North America accounted for 62 percent of fourth quarter revenue for Infosys, one of India’s key outsourcers.
Trump has so far focused on manufacturing and has not talked specifically about the return to the U.S. of IT services jobs, said Sudin Apte, CEO of research firm Offshore Insights.
However, the uncertainty surrounding proposed legislation governing the H-1B visa program, used by Indian outsourcers to send their staff to work on projects in the U.S., could lead some customers to delay signing contracts, thus affecting the revenue growth of Indian companies in the short term, Apte said.
Offshoring will not go away, though. Wary of being seen shipping jobs abroad, some customers may publicly announce that they are doing work in-house, while continuing to move work to India on the quiet, Apte said.
Indian companies are typically not willing to discuss on record a possible threat to their business from Trump’s plan to bring jobs back to the U.S. “This would be an existential threat, if it at all exists, as there is no way we can hire in the U.S. as many skilled people as we have in India and at such competitive costs,” said a senior executive of an Indian outsourcer on condition of anonymity.
But there seems to be a quiet confidence among Indian companies that there isn’t a viable alternative to outsourcing offshore, since there aren’t enough suitable staff available to be hired in the U.S. India’s key outsourcers employ tens of thousands of staff, some of them hired from the country’s top engineering colleges.
The country’s largest outsourcer, Tata Consultancy Services in Mumbai, had over 378,000 staff at the end of December. U.S. tech companies have also turned to India for talent by setting up development centers there or by moving Indian staff on non-immigrant visas to facilities in the U.S. “Where are you going to get this many staff in the U.S.?” Apte said.
Reacting to proposed legislation on H-1B visas from U.S. Rep. Zoe Lofgren, a Democrat from California, Indian software industries body NASSCOM said Tuesday that the bill does nothing to address the underlying shortage of workers in the U.S. trained in STEM (science, technology, engineering and math). This lack of workers has forced companies “to have a calibrated strategy of hiring locally and bridging the skills gap by bringing skilled workers on non- immigrant visas including H-1Bs," NASSCOM said. The bill aims to curb the replacement of American workers by lower-cost workers by hiking the minimum salary of H-1B visa holders.
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