Offshore Providers to Expand Onsite Presence
Outsourcing has come through a lot of changes since its inception. Its evolution depends on a number of factors like how the market reacts, government intervention, partnerships, and geographical positioning to name a few. The industry adapts to changes in the business environment which is crucial to its survival.
Last month, India’s IT-BPO trade body NASSCOM issued the following statement; “Protectionist overtures of the US government has got the Indian business process outsourcing (BPO) firms scurrying to gain its favor by revealing plans to increase their onsite presence in the next few years.”
Infosys Technologies Limited (NASDAQ: INFY) is planning to send about 5% to 10% of its workforce to onsite centers in the next few years. According to Infosys CEO and managing director Amitabh Chaudhary, “while the move is driven mainly by company’s intent to chase the onsite component of their global customer’s business processing deal, there is also a political angle to it”.
Infosys’ strategy make sense, considering the fact that one of the issues offshore providers face is the lack of onsite presence to address their client’s immediate needs.
NASSCOM’s announcement came in response to a proposed bill to amend the H-1B and L-1 visa program. U.S. senators Dick Durbin and Chuck Grassley introduced the bill last April. The senators proposed that employers wanting to hire H-1B guest-workers should first make a “good-faith attempt” to hire a qualified American worker. The bill is aimed at improving the capacity of the Department of Labor to regulate fraud that allows U.S. firms to hire foreign workers even when there are qualified U.S. workers available. The bill will reportedly put a stop to the outsourcing of American jobs, since hiring “guest-workers” are cheaper than hiring locals.
It may sound anti-outsourcing, but the proposed bill also suggests that it is intended to decrease U.S. unemployment rate while sustaining company needs to cut costs. “This means foreign firms — including Indian players — working on projects in the US would have to maintain a minimum 50% ratio of local workers,” reports DNA India.
If the proposed bill is passed, it has the potential to change the ratio of offshore to onshore workforce. IT outsourcing firms currently have onsite projects in the U.S. done by about 80% of H-1B and L-1 visa holders, and employ less than 20% locals.
U.S. firms are not the only ones hiring “guest-workers”, UK-based Lloyds Banking Group (LON: LLOY) is also reportedly replacing local workers with Indian staff. Lloyds currently has 400 employees and according to the bank’s vendors the company is planning to replace 80% of its workers with Indian IT professionals.
Author: Kim G.
Tags: Business Process Outsourcing, Infosys, Infosys Technologies Limited, INFY, LLOY, Lloyds, Lloyds Banking Group, NASSCOM, offshore providers
July 9th, 2009 at 5:23 am
Of course legislator in U.S. would favor their locals especially now that we’re experiencing global recession. They do not like to be dominated by foreigners. I guess that will the problem that they will face in every country.
July 20th, 2009 at 9:58 am
If this proposed bill will be implemented for sure a lot of countries will be affected, countries that engaged in outsourcing industry like the India one of the biggest player when in comes to outsourcing, but we cannot blame US for this as they also protecting their own economy.
August 6th, 2009 at 7:48 am
It is understandable for politicians to protect the welfare of their constituents. I figure it is best that enterprises in the US should look into hiring within their borders, even offer personnel to fly from other states.
Besides, it’s only a matter of right justification why they have to hire from outside the country. It’ll be about getting the RIGHT person for the job.
August 6th, 2009 at 4:44 pm
I just don’t understand this protectionism. For years the US were taking advantage of offshoring and at once they want to turn everything back. Let’s wait what happens when the economy recovers ….. http://bit.ly/X7rqR