Tuesday, August 7, 2012

Indian Outsourcing Firms Hire “thousands” in U.S. Really?!

I don’t have to tell you that it’s election year in the US. Politicians are making promises, and so are some business leaders. A recent wall street journal has an interesting article on "Indian Outsourcing Firms Hire in U.S." This follows articles of similar genera in mainstream media in recent times in the US, Europe and other western markets. This article states several obvious reasons why Indian oursourcing firms want to hire Americans
  • Political reason: It is election year and economy and job-creation rhetoric is bound to veer towards outsourcing, which has already started to happen. Outsourcers and their lobby has to defend a viable business model "India's outsourcing companies also have defended themselves, saying they are creating jobs in the U.S."
  • Practical consideration: With a prolonged economic slump, protectionism in western countries is bound to continue to be a stated policy. "Outsourcing companies are faced with tougher U.S. visa rules that have made it difficult to relocate Indian employees to client locations in the U.S. to carry out technology projects."
The reasons quoted in the article are obvious, but a bit aspirational. The author picks on an interesting factorid that contradicts the rhetoric; Indian firms have been hard pressed to hire locally "At the end of June, nearly 93% of TCS's 240,000 employees were based in India, compared with a little over 1% in the U.S."
In my past life working for offshoring giant Infosys, I had seen more than a few North American and European natives jumping through the hoops to get hired. The few that survived and thrived in the offshoring culture were those who brought in niche Sales and technology Consulting skills. The synergies were obvious: Those in consulting and sales are inclined to be road-warriors, willing to pack a suitcase and fly to client locations on demand: A key occupational qualification if you will. In my book (Offshoring IT Services), I had quoted the late management guru CK Prahlad who observed how the mobility of (young) Indian technologists contributed to the success of offshoring. While explaining the tenacity of Indian professionals to an audience of global managers, he alluded to the fact that the real edge of people from India and other developing economies was their cultural adaptability and ability to travel/relocate to the west to participate in global projects.

A few years ago I wrote a viewpoint on Indian technology firms hiring in North America (re: Getting Hired in a Flat World). Most of the hiring "onsite" in western regions was primarily in consulting and sales support. Not much has changed in the basic business models of offshoring firms. Consulting and sales continue to be the tip of the iceberg when it comes to staffing roles at offshoring firms. The basic DNA of Indian software service firms is to offshore work from client locations in the west, to India and elsewhere where it continues to be cheaper to hire a majority of staff.

Even with continued political pressures and immigration hurdles, it is hard to picture Outsourcing Firms turning their back on offshoring. Nearsourcing - sourcing a large development or maintenance project from a fortune 500 or a global 2000 firm in a "more expensive" city in North America to another (cheaper?) development center - turns the clock back on traditional outsourcing (minus offshoring) that companies like IBM, EDS et al had practiced in the 1980s and 1990s.

This said, I would be hard pressed to bet against TCS, Infosys, Wipro and other software service firms that have been known to beat the odds before, without altering their offshoring DNA.