Fearing tighter U.S. visa
regime, Indian IT firms rush to hire, acquire
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[November 28, 2016]
By Sankalp Phartiyal and Euan Rocha
BENGALURU
(Reuters) - Anticipating a more protectionist U.S. technology visa
program under a Donald Trump administration, India's $150 billion IT
services sector will speed up acquisitions in the United States and
recruit more heavily from college campuses there.
Indian companies including Tata Consultancy Services (TCS), Infosys and
Wipro have long used H1-B skilled worker visas to fly computer engineers
to the U.S., their largest overseas market, temporarily to service
clients.
Staff from those three companies accounted for around 86,000 new H1-B
workers in 2005-14. The U.S. currently issues close to that number of
H1-B visas each year.
President-elect Trump's campaign rhetoric, and his pick for Attorney
General of Senator Jeff Sessions, a long-time critic of the visa
program, have many expecting a tighter regime.
"The world over, there's a lot of protectionism coming in and push back
on immigration. Unfortunately, people are confusing immigration with a
high-skilled temporary workforce, because we are really a temporary
workforce," said Pravin Rao, chief operating officer at Infosys, India's
second-largest information technology firm.
While few expect a complete shutdown of skilled worker visas as Indian
engineers are an established part of the fabric of Silicon Valley, and
U.S. businesses depend on their cheaper IT and software solutions, any
changes are likely to push up costs.
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And a more restrictive program would likely mean Indian IT firms sending
fewer developers and engineers to the United States, and increasing
campus recruitment there.
"We have to accelerate hiring of locals if they are available, and start
recruiting freshers from universities there," said Infosys' Rao, noting
a shift from the traditional model of recruiting mainly experienced
people in the U.S.
"Now we have to get into a model where we will recruit freshers, train
them and gradually deploy them, and this will increase our costs," he
said, noting Infosys typically recruits 500-700 people each quarter in
the U.S. and Europe, around 80 percent of whom are locals.
ACQUISITIONS
Trump's election win and Britain's referendum vote to leave the European
Union are headwinds for India's IT sector, as clients such as big U.S.
and British banks and insurers hold off on spending while the dust
settles.
In India's IT hub of Bengaluru and the financial capital Mumbai,
executives expect a Trump administration to raise the minimum wage for
foreign workers, pressuring already squeezed margins.
Buying U.S. companies would help Indian IT firms build their local
headcount, increase their on-the-ground presence in key markets and help
counter any protectionist regulations.
Indian software services companies have invested more than $2 billion in
the United States in the past five years. North America accounts for
more than half of the sector's revenue.
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![](../images/112816pics/busine33.jpg)
An employee speaks on a mobile phone as she eats her lunch at the
cafeteria in the Infosys campus in Bengaluru, India, September 23,
2014. REUTERS/Abhishek N. Chinnappa/File Photo
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"We have to accelerate acquisitions," said Rao at Infosys, which in the
past two years has bought companies including U.S.-based Noah Consulting
and Kallidus Technologies.
Jatin Dalal, Wipro's chief financial officer, said his growth strategy
is to buy companies that offer something beyond what Wipro already does,
or new, disruptive firms - such as Appirio, a U.S. cloud services firm.
The chief executive of Tech Mahindra, C.P. Gurnani, said his firm, which
two years ago bought network services management firm Lightbridge
Communications Corp, is on the look-out for more U.S. acquisitions,
particularly in healthcare and fintech - financial technology firms that
are disrupting traditional banking services.
OFFSHORING & AUTOMATION
In a broader shift from labor intensive onsite projects, Indian IT firms
are also turning to higher-tech services such as automation, cloud
computing and artificial intelligence (AI) platforms.
With better technology and faster networks, IT firms are encouraging
Western clients to adopt more virtual services.
Infosys CEO Vishal Sikka says he has focused on automation and AI as
growth drivers since 2014. "The AI platform is 5-6 percent of our
revenues," he told Reuters. "Three years ago, it was zero."
More automation would mean fewer onshore developers.
"The 'Plan B' would be to accelerate the trend ... to reduce their
reliance on people and increase their focus on delivering automation,
leveraging the cloud for their clients," said Partha Iyengar, Gartner's
head of research in India.
(Reporting by Sankalp Phartiyal and Euan Rocha in BENGALURU and MUMBAI,
with additional by Arno Schuetze in FRANKFURT; Editing by Ian Geoghegan)
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