Monday, October 3, 2011

Jobs in America: Offshoring Angle

As the global economy flounders, the debate over job creation rages. In America the debate is getting an additional political overture due to the heating debate over 2012 Presidential elections. Given the focus on economy and job creation, immigration and globalization is a hot-button topic a few policy makers want to entertain. While politicians and policy makers take a macro view of jobs in America, business leaders are factoring job creation into their social-outreach program. This is an angle offshoring firms also seem to be pursuing.


According to a recent Knowledge Wharton/ Network article, the big-three of Indian Offshoring are already taking focused steps towards global hiring:


Infosys: At its recent analyst meeting, Infosys revealed that by next year, it plans to increase the number of local employees at onsite client locations to 50%. Infosys, which has a total employee base of over 130,000, currently has around 27,000 employees at client locations. Of these, around one-third are local hires. With the U.S. accounting for the biggest chunk of Infosys’s revenues, the maximum local hiring will happen there.

TCS: In its annual report for 2010-2011, Tata Consultancy Services, the leading Indian IT firm, notes that protectionism in major markets is one of the key risks that the company faces. “Restrictive legislations that impede the free flow of talent in key markets could disrupt operations and hamper growth in those markets,” the report says. One of the solutions to mitigate this risk: “more local recruitment.”

Wipro: At Wipro Technologies, plans are also in the works to increase local hires at onsite locations — from around 35% currently to more than 50% over the next couple of years.

There is a steady economic activity around corporations that have been sourcing work. In anytown USA, one can still encounter IT development centers that continue to staff high-paying jobs. In addition to people working for end-client organizations, local economies are spurred by transient workers from sourcing/vendor firms. Such activities include apartment and extended-stay hotel, motel rentals, local grocery chains, supermarkets, malls and restaurants. Those on short-term visas and contracts also pay taxes that includes federal, state and local income taxes.


ps: One can als make an argument that if it were not for offshoring, similar – if not more – economic activities would continue around IT development centers and hubs; with a difference, the economic transplants would have been from out-of-state and not out-of-nation… but that is not the point here.


A few interesting articles: