November 12th, 2011
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Indian IT giants to hire people from US &Europe

IT hubNew Delhi: India’s large multinational IT companies are making a ‘U’ turn and are now hiring people from US and Europe. These firms were accused of stealing jobs from the West. HCL Technologies Ltd intends to hire 10,000 people, or about 12.4% of its current work force, in the U.S. and Europe by 2015.

Infosys Ltd says, that it will increase the head count by 1,500 in the next 12 months from 3,000 now. Tata Consultancy Services Ltd also hopes to hire an additional 1,200 people in the U.S. by March. Wipro Ltd too would follow suit by training and hiring 400 American veterans of the wars in Iraq and Afghanistan.

There is “a natural need to globalize their operations as they increase in size,” said Siddharth Pai, partner and managing director at Bangalore-based TPI, a consulting firm. “This is also an attempt to reduce criticism on taking jobs away from these countries, by becoming significant local hirers.”

Vineet Nayar, HCL’s vice chairman and chief executive, said in an interview: “We want to be a socially responsible corporation. We want to be in the business of creating jobs in the economies where we get most of our business.”

Indian IT companies in the U.S. and in Europe have been often been perceived as job stealers. Enduring low economic-growth rates and high unemployment has only focused more attention on the issue. The U.S. government, for instance, is probing whether software-services giant Infosys abused a temporary business-visa program to get an unknown number of employees into the country.

The U.S. criminal probe stems from a civil suit filed in Alabama by an Infosys employee, who alleged his employer was using B1 visas—which are meant for short-term professional stays in the U.S.—for employees who were instead working on long-term projects and could have legally done that only on a different visa category, known as H1-B. Infosys says it is cooperating with the investigation.

In August 2010, the U.S. Senate also passed legislation that increased fees by about $2,000 for skilled-worker visas, the kind commonly used by tech companies.

However one of the challenges faced is that the addition of head count in the Western economies could challenge the economics of the outsourcing industry, which takes advantage of the lower labor costs in India and other developing nations.

Companies can charge higher prices to customers when work is done locally in developed countries. But profit margins on that work are typically lower since labor costs in developed countries are higher, too. The challenge for these companies will be to maintain a balance where revenue significantly outpaces these costs.

“If you manage the math correctly, and the rate and scale of hiring correctly, and truly end up increasing your revenue levels three times, the market won’t mind getting significantly higher revenues at lower margin rates,” said Mr. Pai, the consultant. “If you don’t manage that right, you’ll be punished.”


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