Thursday, March 22, 2012
Why Indian IT majors want an image makeover in America
For Wipro, Infosys and others, multi-billion dollar outsourcing giants with US-listed shares, the challenge is to be seen less as a cheap Bangalore dump for U. companies shipping work overseas, and more as responsible firms creating jobs and investing in America's future.
"If young people in America look at us as a career opportunity, we have succeeded," T V Mohandas Pai said six years ago when he was a board member at Infosys.
Today, India's $100 billion IT and Business Process Outsourcing (BPO) industry says it directly employs 107,000 people in the United States, close to a third of whom are Americans, a figure that has doubled in five years.
The industry's makeover takes on a new urgency ahead of the US Presidential election in November where jobs will be a crunch issue. President Barack Obama has sharpened his criticism of US firms 'exporting' jobs, seeking to tax them more and use that money to help those that keep jobs at home.
"I'm responsible for transforming the organisation into one having a look and feel of a US corporation ... changing Infosys in USA to Infosys USA," Padmanabhan Rao, who heads the company's US operations, writes as his LinkedIn profile.
It's increasingly a business reality.
The outsourcing industry, championed by India but spreading to other Asian centres such as the Philippines, expects to hit $225 billion in annual revenues by 2020 - an unrealistic target without strong growth in the United States, the biggest market.
Infosys has 15,000 employees in the United States, including those with shorter-term work permits, and will have hired another 1,200 locals in the past year. North American clients generate close to two-thirds of global revenue. Infosys employs more than 145,000 people worldwide.
Rao told Reuters the goal for Infosys is to double local recruitment, and that may happen as early as the next fiscal year. Part of his job, Rao says, is "to get Infosys to think global, but act local."
Indian outsource firms are "willing to step up and do things a little bit different to show their investment in the US economy," said Helen Huntley, a vice president at Gartner Inc, noting the tone of political debate has grown harsher in line with greater economic uncertainty.
"That's political motivation as well as motivation for clients ... (who want to see) feet on the street," she said.
By setting up shop in the United States, Indian outsourcers could win more business from smaller US customers under pressure in an election year to hire and outsource locally.
"It plays naturally to Indian providers who want to show a presence in the US," said Huntley.
The Indian firms are increasingly looking to transfer staff from their clients on to their own books to secure orders. This also helps as a public relations tool to raise their profile as local job creators, Huntley noted, and can qualify for certain state incentives.
When Tata Consultancy Services opened a centre in Cincinnati, Ohio in 2009, the state governor attended the ribbon-cutting ceremony.
"The Indian companies are very engaged" in getting local political support, noted Huntley. TCS, India's No.1 software services exporter, last month opened a technology centre in Santa Clara, California to serve as global headquarters for its mobile computing work.
Wipro, which began after the Second World War as a sunflower oil producer and moved into India's fledgling IT sector in the early 1980s, also wants to boost its overseas, or ex-India, workforce. Chairman Azim Premji wants as much as half his total staffing to be local, in the United States and elsewhere, and he holds up the firm's Atlanta, Georgia centre as an example of how Wipro has successfully recruited local talent.
"That's our goal for the next 2-3 years and I think it's completely do-able ... even if I have to thrust it from the top," Premji said in January after Wipro reported a 10 per cent increase in quarterly profit.
Wipro employs some 10,000 people in the United States, Chief Marketing Officer Rajan Kohli said in response to an e-mailed request, adding Atlanta is a "strategic development centre", with US citizens making up 80 per cent of its 675 staff. Wipro's global workforce tops 120,000.
"We're driving diversity in our hiring by consciously inducting local talent, military veterans and campus recruits," Kohli said, and expects to replicate the Atlanta model in at least two other US cities.
At Infosys, CEO SD Shibulal is looking to add small development centres in the United States. As well as its large campuses in India, Infosys has 15 delivery centres worldwide, from the Czech Republic and Poland to Brazil and China - facilities where software programs are written and applications developed and tested.
"I can say this: One-third of all growth in talent (in the US) will be local," Shibulal told Reuters.
The larger outsourcing firms are not alone in buffing up their global credentials.
MindTree Ltd, a $500 million IT and electronics engineering services provider with a client list that includes Microsoft and Kraft, has engaged global branding consultant SiegelGale for its image makeover, co-founder Subroto Bagchi told Reuters.
Bangalore-based MindTree will soon open its first 400-seat delivery centre in the United States, and expects eventually that as much as a third of its workforce will be local to wherever it does business, s ai d Scott Staples, another co-founder of the company.
And that's another challenge for Indian companies hoping local US recruitment will give them a more American face.
"We don't have a lot of (local) Java programmers with two years' experience running around," said Stephanie Moore, a vice president at Forrester Research Inc, echoing Obama's lament that too few Americans opt for STEM (science, technology, engineering and maths) streams at schools and colleges.
Wipro's Premji agrees, noting that while most customer-facing sales and support hires are local, the majority of technical staff is on Indian-origin visas.
"There's a huge shortage of technical IT professionals in the United States," he said.
For now, the vast majority of the 2.8 million people employed in the Indian IT/BPO industry work in India. At the top five Indian providers, only 40,000 - fewer than 1.5 per cent - are non-Indian, according to the National Association of Software and Services Companies (Nasscom), an Indian software industry lobby group.
"Wipro isn't yet a household name on US campuses, but we have been able to generate significant and increasing interest," said Kohli. "We've kicked off major initiatives on campuses to showcase our differentiators and attract the best talent."
Kiran Karnik, a former Nasscom President and author of "The Coalition of Competitors" published in February, sees parallels between now and the first backlash against the loss of US jobs to India's outsourcers following the dotcom bust - with the United States slowly emerging from an economic downturn and facing presidential elections where jobs will figure large.
Back then, Nasscom made itself invisible, but engaged a PR/advocacy agency and networked with 'sister body' the Information Technology Association of America, the US Chamber of Commerce and the US-India Business Council.
This week, Nasscom has published a report to showcase just how it is contributing to the US economy, by creating jobs, paying more than $15 billion in taxes over five years and investing another $5 billion through US acquisitions.
Indirectly, India's IT/BPO industry supports 280,000 jobs in the United States, the report said.
Wipro, Infosys and other Indian firms in the U.S. market help run local community marathons and university fun runs and, at last August's InfosysConnect in Las Vegas, an event for the company's partners, analysts and clients, tennis star Andre Agassi was an invited guest to share the stage with Stephen Pratt, Infosys' top business consultant.
"Incremental goals add up over time," Pratt tweeted from the event.