Wednesday, June 20, 2007

Reverse Offshoring!! Indian companies hiring abroad!

In a recent article by Steve Hamm of Business Week highlights that Indian companies are hiring aggressively in the U.S. The reasons he attributes :

-their U.S. expansion plans predate the latest concerns over immigration and jobs.

-It often costs more to ship in Indians on a temporary basis than it does to hire Americans.

-the Indian rupee has risen more against the dollar this year, hiring Americans has gotten cheaper.

-Fierce competition for tech talent in India is pushing salaries there up by 12% to 15% per year, although they remain less than a third of those in the U.S.

I would like to believe that this has been necessary as the Indian software companies are taking the route up the value chain. As cost arbitrage becomes a given decision making point, it is the value add the consultants bring to the table-that is the cutting edge!

To give an example- while in late 90's anyone selling boxes -may have barely made it to a software services firm needing to sell software services. As the market matured, the same position needed some one with prior experience in selling to the 'end customer'. As the "India component' is being more accepted, the same companies now hire Americans in US, and Japanese to penetrate the local market.

Brand building is also another jargon for 'catch 'em young"!! Infosys has been inviting foreign students ( read Chinese, US among others ) for their training program in Mysore -essentially to improve the awareness of the average localite! These trainees are likely to be the 'influencers' when Infy visits these countries in the future -either as prospective employees if not prospective clients for their services.
Interestingly, I recall a presentation made by the HR Honcho of a leading IT major-mentioning while hiring people of foreign nationalities does add to the diversity, and the company had to revamp some of its HR policies to adapt the local practices, the biggest challenge was to convince foreign clients..about 'non Indians' writing code for an Indian company!!
Its all the offshoot of globalisation, and the growing presence of Indian MNCs...the faster we get used to not getting surprised, the better it is -for all concerned :-)!

3 comments:

Rithesh Nair said...

Its all about brand/image the Indian consulting companies want to portray in US. Many of my recruiting colleagues in US from TCS/Wipro tell me that they have been directed to hire more "American's" due to the backlash here and they are having a tough time due to fact that they aren't coming cheap and not coz hiring Americans has gotten cheaper...:)

Rise in Indian rupee is worry for IT co's who bid and won contracts on a low rate. With rise in Indian salaries the record making Indian consulting co's would Outsource from India to China and try reduce their cost further. Isn't Indian IT giants already opening shops in China?..............

Jeet said...

There has been so much talk about reverse offshoring and reversal of hiring - that I decided to pen down a whitepaper on the subject. As my research went forward - my thoughts about it being a real trend went backwards...
I would like to present the interesting findings of the paper to all of you...

Please download the paper at:
http://www.tholons.com/pages/publications.asp

The subject of the paper is Reverse Offshoring: Trend or Strategy

Knowledge Process Outsourcing said...

The Indian rupee has risen more than 10 per cent against the dollar this year, so that make hiring an American cheaper. On the other hand, cutthroat competition for IT talent in India is pushing salaries up by 15 percent every year, although it remains less than a third of those in the US.

The bottom salaries are comparable, because Indian companies have to pay market rates for people they bring in on work visas. Besides the companies have to provide the Indian workers with housing facility, and the retirement benefits cost more because of Indias social security contribution requirements.