Outsourcing Turns Inside-Out as Indians Open U.S. Centers

[IndoCarib]

Janie James says she was cool at first when Indian outsourcing giant Infosys Ltd. (INFO) approached her about a job near Atlanta, even though she was unemployed. She didn’t know much about the company, and it seemed a step down from her old vice-president post at Primerica Inc. (PRI)

In the end, she decided she could use experience gleaned from her work at life-insurer Primerica and another stint at a financial-investment company to help Infosys build its insurance outsourcing business. Now James is an operations manager at the Bangalore, India, company’s first predominantly U.S.-staffed center, which opened in April.

“They saw this was a city with a lot of people who were out of work and had the skills they needed for this center,” she said. “Anything that can be done to decrease unemployment is a great thing.”

James is one of thousands of workers filling outsourced jobs that are coming back to the U.S., or at least not going offshore. Indian and U.S. outsourcing companies, along with corporate icons like General Motors Co. (GM) and General Electric Co. (GE), are reversing a 20-year outgoing tide.

These companies and others, including software developer GalaxE.Solutions Inc., say some complex functions, such as human-resources and software development, are better to have closer to their own operations and to respond to customers. Indian outsourcing companies are finding it tougher to get visas for workers brought from India, and some U.S. businesses want to outsource -- yet keep jobs in the country. State tax breaks also provide incentives to hire locally.
Lowest Cost

“It used to be just about getting the job done at the lowest cost,” said Madhusudan Menon, who heads Infosys’s Atlanta center and delivery of U.S. business-process outsourcing. “Now companies are saying some jobs are best done closer to where they are, not cheap as possible somewhere else. They’re rebalancing their onshore and offshore outsourcing.”

U.S. companies with more than $1 billion of revenue sent 1.1 million technology and back-office jobs offshore during the past decade, according to the Hackett Group (HCKT), a Miami-based consulting company. While it forecasts a slowing outflow beginning in 2013, it calculates another 400,000 positions will be lost offshore through 2016.

A survey of 617 outsourcing industry executives by Boston- based HfS Research in July and August found the U.S. is seen as the most desirable region in the world to expand IT and business-services delivery centers in the next two years. India was second.

Largely Satisfied

Respondents have been largely satisfied with the offshoring of low-end jobs, such as call centers and routine IT maintenance, according to Phil Fersht, chief executive officer of the outsourcing-research company. With more complex tasks, the survey showed the headaches may have outweighed the savings.

“We’re at an inflection point,” Fersht said. “They have picked much of the low-hanging fruit offshore, but they’re frequently not getting the quality they need with the more complex functions there.” For example, 72 percent of companies said they were satisfied or very satisfied with domestic outsourcing of human-resource services compared with 41 percent who had those tasks done overseas.

The Indian offshore giants are establishing beachheads in the U.S. for political, as well as business, reasons, according to Fersht. President Barack Obama and Republican presidential candidate Mitt Romney have traded charges of being “outsourcer in chief.”

Outsource Onshore

Menon sees opportunities for Infosys to capture business from companies that want to outsource some operations while not being accused of sending jobs overseas.

The principal customer at a Milwaukee center Infosys announced in July is Harley-Davidson Inc. (HOG), which insisted that the 75 business-processing jobs it wanted to outsource at lower cost remain in the country, according to Maripat Blankenheim, a spokeswoman for the motorcycle company. Infosys said it plans to have a total of 125 employees at the center by attracting other clients.

Picking up new onshore business from U.S customers could help Infosys buttress its position against competitors such as Cognizant Technology Solutions Corp. (CTSH), which surpassed it in revenue for the first time in the quarter ended June 30, according to data compiled by Bloomberg.

Market Share

Cognizant, based in Teaneck, New Jersey, has doubled its market share during the past seven years to 18 percent for the year ended in March, according to an April 19 report by CLSA Asia-Pacific Markets. Infosys’s market share fell 4 percentage points to 21 percent, the report said. Cognizant, whose workforce is mainly in India, has stepped up its high-end outsourcing services and is hiring more employees with relationship management, consulting and deep industry experience, President Gordon Coburn has said.

Infosys has been operating in the U.S. for 25 years, though up until the past two years, only 20 percent of employees were Americans, Menon said. Infosys had about 12,000 workers in the U.S. on H-1B and L-1 visas as of June 30, according to a Securities and Exchange Commission filing by the company.

Infosys and its Indian peers now are having more difficulty obtaining U.S. visas. Last year, 54 percent of Indian petitioners’ initial requests for L-1B visas, which allow employees with “specialized knowledge” to work in the U.S., were rejected by U.S. Citizenship and Immigration Services, compared with 4 percent in 2007. Infosys said in an SEC filing that the immigration agency has “increased its level of scrutiny in granting new visas,” and cited difficulties meeting the requirements for L-1 visas.

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[IndoCarib]

Indian companies created 50,000 jobs in US: Burns

At a time when unemployment is a major issue in the US due to its poor economic status, Indian companies through its massive investments in America have created 50,000 jobs in the country, a top US diplomat said.

"Our economic relationship is very much a two way street. Both of us are focused on attracting growth and investment to our shores. Indian owned Tata factory in Ohio puts thousands of Americans to work, part of the over 50,000 jobs Indian firms have created in the US. Opportunities for small, medium and large American businesses in India are staggering," US Deputy Secretary of State William Burns said yesterday.

Burns added that India is being projected as world's third largest economy by 2025. But 90 per cent of India is still without broadband, 80 per cent of India's infrastructure for 2030 hasn't yet been built, according to McKinsey, India plans to invest one trillion dollars on infrastructure in the next five years alone.

Burns praised the recent Indian decisions with regard to next phase of economic reforms.

"Of course, for our companies to provide the technology and expertise to help India prosper, India's government must create an environment that encourages growth," he said.

He added that India's recent easing of some restrictions on Foreign Direct Investment are promising. Indian multi-brand retail, aviation, power grid and broadcasting companies and markets will be more open to investment, technologies and best practises from all around the world. It will be easier to bring food to market.

He emphasised that greater economic openness is not a concession to the US. It is one of the most powerful tools India has to maintain and expand its growth.

Burn Observe that India has no more important partner than US. Total direct investment of US in India in 2000 was USD 2.4 billion which in 2010 get to USD 27 billion. During the same period Indian direct investment in America grew over USD 200 million to nearly USD 5 billion, which is more than a twenty fold increase. So we have never invested in each other's country to such extent.

Indian companies created 50,000 jobs in US: Burns - PTI

 

[Capt.Popeye]

Good on the Indian firms. There are still sufficient business opportunities in North America and the Indian companies are grabbing them is a good sign. Indian IT companies have achieved critical mass and have know-how to give competitive services.

Next area of Indian growth in N.America can be in Pharma though it is likely to be less spectacular.

 

[Awesome]

Indian outsourcing companies in the US are essentially defrauding the system, but they are sort of getting away with it, due to a lot of red tape in the US checks and balances on Indians.

I keep getting calls from Indians who essentially say if you want to work in the US, all you need to do is sign a job contract with them, arrive in the US on a visit visa, go there, and they will convert your status into a work visa, you will get a work permit and they will show you are a hired consultant under them. No with a work permit you can easily go and find another job, quit with them and get hired at the other place and hopefully this other place won't have any problems applying for your green card and voila US immigration complete.

Oh and somewhere in between these outsourcing firms ask you for some money which can range from 5,000 to 10,000 USD oh and till you don't get a green card you can't leave the US.

Some of them are total scams, the others help you defraud the system in the US - now of course Infosys might have legitimate needs to have something there but 90% of them are a one man/two man op and most of them are based in small towns where the immigration checks are low.

I personally cringe at such things, but then the US has made legal need based immigration nearly impossible that people need to do all these things to get in. Straight forward way would be if there's a job opening in the US and if company wants to hire you, it should be able to hire you on the spot. Instead you need a work permit which takes months to process and they go through hurdles of proving why they only found you... A whole mess.

What other countries have done is to start a skills based immigration. First get a work permit, then get on a level playing field and then apply for jobs. Seems fair and need based. The US is filled with weirdo immigrants, sometimes you see them and you yourself feel embarassed that these guys are representing us.

This is downright suspicious:

Infosys had about 12,000 workers in the U.S. on H-1B and L-1 visas as of June 30

I bet what they are doing is hiring you from India and then lending you to another company. You get a low salary and they get a big amount from that company. They are taking care of that company's HR needs.

They have done the same to the IT market in UAE, totally screwed it up. All the jobs are controlled by Indian outsourcing 'recruiters', they won't hire you or they would hire you for ridiculous pay. A guy from India might see it as a step up...

If Americans are taking note - take this as a bad thing - a very bad thing. I'm not saying do not hire Indians, hire them, but hire them directly by the company that needs to hire them otherwise you will never be able to compete with Indians in low salaries!

 

[IndoCarib]

Good on the Indian firms. There are still sufficient business opportunities in North America and the Indian companies are grabbing them is a good sign. Indian IT companies have achieved critical mass and have know-how to give competitive services.

Next area of Indian growth in N.America can be in Pharma though it is likely to be less spectacular.

Right. The next big money spinner for Indians in US is Pharma, which is a $350 billion opportunity

Indian pharma companies are in the forefront of this never-seen-before opportunity to make a lot of money in the US, thanks to a wave of drugs — such as Lexapro, Actos and Diovan — that will see their patents expire in the next few years. This is what happened to billion-dollar drugs such as Sanofi’s Plavix and Eli Lilly’s Zyprexa in the last decade or so, but the next wave will be even bigger. And no company worth its generic salt can afford to watch the action from the sidelines.

Indian pharma eyes US generic gold rush