Facing visa issues, Indian outsourcers have strength in numbers

Proposed regulations could still present challenges

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.

Lofgren's legislation and other H-1B bills in the pipeline could prove to be disruptive and push up costs for IT services companies, but Gartner research director D.D. Mishra thinks it could be overcome by measures such as increasing process automation.

“The risks to the IT services sector include an increase in cost per professional, more local hiring and a disruption in service continuity, which may have a negative impact on the profitability of companies that are visa-reliant,” Mishra wrote in an email. “A potential offset, however, could be the accelerated use of technology-based solutions, such as robotic process automation and disintermediating human labor.” A number of Indian companies are already using automation to cut down on the number of staff required for routine coding tasks.

Concerns about protectionism in the U.S. have surfaced in the past, including during the Barack Obama administration. Indian IT companies have meanwhile been expanding their operations in the U.S. by setting up facilities there, or through local acquisitions.

“It is important to note that irrespective of the legislative environment, we continue to hire and invest locally. However, given the skill shortages in the U.S. and the availability of technically skilled workforce in various global markets, we also rely upon visa programs to supplement these skills,” said Pravin Rao, COO of Infosys, in an emailed reply to questions.

The company is exploring new operating models that will reduce its dependence on visas in the long term and make it a preferred employer in the U.S., he said.

Another Bangalore-based outsourcer, Wipro, has set up new delivery centers in Mountain View, Calif., and Dallas, and plans to further expand existing centers in Atlanta, Tampa, Fla., and Indianapolis, Ind., a company spokesman said. The outsourcer invested about $1 billion in U.S. technology companies over the last year.

“These localization efforts will bear fruit at many levels including reducing our dependency on visas and deepening our engagement with the local communities,” the spokesman said.

It is not likely that at this stage that Indian companies will look to buy up service providers in the U.S. just to boost their employee count in the country, Apte said. They will more likely focus on acquiring intellectual property or try to enter niche markets, he added.

But for possible bruises over visas, it seems it will be business as usual for Indian outsourcers, despite Trump.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

John Ribeiro

IDG News Service
Show Comments


James Cook University - Master of Data Science Online Course

Learn more >




Back To Business Guide

Click for more ›

Brand Post

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?