Infosys’ A team hogged the headlines both in the sleepy US midwest and leading dailies across the country after CEO Vishal Sikka spoke at length in Indianapolis Tuesday on the company’s decision to hire 10,000 US workers starting with 500 in the first tranche.
The Washington Post led with Infosys being “under fire from President Trump for stealing American jobs” while The Wall Street Journal chose “Infosys, Feeling Pressure on Global Outsourcers, Plans to Hire 10,000 in U.S” to headline the company's sudden decision to hire local soon after being called out by the world's most powerful office for its deluge of applications in the H1B lottery system.
While the timing of the announcement so swiftly after Trump’s EO on heightened scrutiny and review of the H1B visa continues to raise eyebrows among the tech worker community, the Infosys deal is being called the the largest jobs announcements in Indiana history, rivaled by Honda's decision to hire 2,064 workers over a decade ago.
What's the wonk circuit saying? Professor Ron Hira, whose research powered the White House assault on the H1B system, says that if this (Infosys decision to hire in the US) is indeed a response to President Trump’s statements then it "demonstrates the power, but also the limitations, of the bully pulpit".
"A few individual cases of self-reform, no matter how large they may be, are no substitute for real reform – by both the administration and Congress. The abuse of the H-1B program is widespread and endemic to the program. A major overhaul of the H-1B program’s design is needed. There are hundreds of employers that have built an H-1B business model, of which Infosys is merely one.
But these H-1B business model firms are not the only ones abusing the system.
No employer should be allowed to hire an H-1B worker instead of a US worker because they are cheaper. The H-1B workers should be filling genuine labor market shortages and bring truly specialized skills.
Real reform for the H-1B program must include:
1) a bona fide demonstration of a shortage by the employer (i.e., active recruitment of US workers prior to filing for an H-1B worker);
2) raising the wages for H-1B workers so they are not used for cheaper labor (at the 75th percentile); and,
3) a compliance system that enforces those rules (a random audit process to ensure compliances and steep penalties meted out when abuses are identified). But most importantly these rules must apply to all of the employers, whether they have built an H-1B business model or not," says Hira.
— Ind. Econ. Dev. Corp (@Indiana_EDC) May 2, 2017
"Consider this thought - 10000 hires is like an indirect tax to the American economy,"says Arun Mohan Sukumar, head of cybersecurity and internet governance at Observer Research Foundation, a think tank.
"Announcing 10,000 hires to get around the H1b visa problem is not going to create new technologies. What is the current role of an Infosys or a TCS in the IT ecosystem? You can have companies that do cutting edge AI work like Google or even Uber or be a company that does AI-plus as in AI driven research but a company like Infosys or a TCS is not going to tranform its ethos or vision by hiring 10,000 locals in America. The 10,000 will add to your workforce but Infosys or TCS will remain the same. I don't see how companies that have traditionally provided back-end enterprise driven solutions to America can turn their game around by hiring American. They are not going to come out with IOT driven applications because thats not bread and butter for them," says Sukumar.
— Infosys (@Infosys) May 2, 2017
Local newspapers are reporting that the deal is also a whopper incentive package with up to $31 million in conditional tax credits and training grants.
Infosys CEO Vishal Sikka detailed his “what, when and how” of the Indiana decision standing alongside Governnor Eric Holcomb in Indianapolis - the capital city of Indiana where the cost of living is significantly less than either the east or west coasts of America.
Go to the CNN money site and check out the arbitrage advantage of how far, say a New York salary would go in Indiana. A $ 95,000 in Brooklyn, NY would work out to just around half - say $ 52,000 in Indianapolis.
This is not the first time a company has chosen the US midwest or for that matter even Mexico - ‘nearshoring’ allows all the benefits of the US time zone minus the cost of a NY or SFO.
Indiana is bordered by Michigan in the north, Kentucky on the south, Illinois on the west and Ohio on the east.
Infosys is the first off the blocks among Indian IT heavyweights to commit on hiring numbers in the US - Infosys has a total workforce of 200,000 and the Indiana maneovre will make this Infosys’ max hiring ever in the US market.
Indiana also happens to be US Veep Mike Pence’s home state.
Infosys has not disclosed how much this hiring spree will end up costing or whether its U.S. jobs plan would account for a large percentage of its overall hiring in the coming two years.
Reuters reports that based on Infosys' recent trends, the U.S. plan could account for a large portion of net hiring additions in the period. Infosys added nearly 18,000 jobs in 2015, but just 6,000 in 2016, amid uncertainty about the impact of Brexit and calls from some U.S. politicians and the public for tougher U.S. immigration rules that led some U.S. clients to hold-off on new projects. "Hiring locally is a compulsion and it's not just because of what's happening in the U.S.," said Harit Shah, research analyst at Reliance Securities, adding that bringing in workers on temporary visas was "not sustainable" as a model.The company said last month that it would struggle to reach its ambitious $20 billion revenue target by 2020, as the Indian software service sector has been hit by cautious client spending due to a rising protectionist wave globally.The United States is the largest market for Indian software service companies. Other countries, such as Australia, have also started to target Indian IT service companies that use temporary visa programs.
Updated Date: May 03, 2017 04:31 AM