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Who's hiring in America? Indian firms!

June 21, 2007 09:04 IST

Bennett Kalcevic's saga offers ample evidence of how the winds of globalization can unexpectedly shift.

In the mid-1980s her parents lost their mill jobs when Pittsburgh's steel industry was hit by cheap imports.

Now, with a business degree from Michigan State University, Kalcevic has just landed a plum position with Infosys Technologies Ltd, one of the low-cost Indian outfits that many blame for taking jobs from American programmers.

After a six-month training stint in India, Kalcevic will return to the U.S. and write software for an Infosys customer. "Outsourcing has angered some people," she says. "It might be easier for clients to deal with Americans locally."

Think of it as offshoring in reverse. In the past, Indian companies almost always transferred Indians to work in the U.S. on temporary visas. But now Infosys and other Indian outfits are hiring aggressively in the U.S.

Wipro Ltd, for instance, is scouting U.S. locations for two big software writing centers that eventually could employ hundreds of programmers each. Cities on its short list include Austin, Tex., and Atlanta, because of their deep tech- talent pools and reasonable salary costs.

"The work we're doing requires more and more knowledge of the customers' businesses, and you want local people to do that," says Wipro Chairman Azim H. Premji. Today only 2.5% of Wipro's global workforce is non-Indian, but the company wants to boost that to more than 10% in a few years.

The Indian outsourcers say their U.S. expansion plans predate the latest concerns over immigration and jobs. But they acknowledge the trend might ease tensions as the Senate mulls regulations that would require companies applying for H-1B visas--temporary working papers for foreigners--to try hiring Americans first.

"If we can hire close to our clients, we don't have to bring in somebody from India on an H-1B,"

says S. Padmanabhan, human resources chief for Tata Consultancy Services Ltd, India's largest outsourcing firm. About 1,000 of TCS's 10,000 U.S.-based workers are Americans (out of 90,000 total employees worldwide). And it plans to hire an additional 2,000 Americans within three years.

Surprisingly, it often costs more to ship in Indians on a temporary basis than it does to hire Americans. Base salaries are comparable, because Indian companies must by law pay market rates for people they bring in on work visas.

But the companies typically have to provide the Indians with housing, and retirement benefits cost more because of India's social security contribution requirements. Also, as the Indian rupee has risen more than 10% against the dollar this year, hiring Americans has gotten cheaper.

At the same time, 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.

Allure On Campus

The Indians are recruiting a combination of fresh college grads and experienced vets who have worked at American companies. They're especially active at campus job fairs, and unlike a few years ago students know who these companies are and respect them. In fact, the Indian connection has become an attraction.

"I thought this would be a fantastic opportunity, especially because they send you abroad for training," says Brian Oswald, a 23-year-old Rutgers University graduate with a 2006 degree in industrial engineering who joined TCS in February.

The U.S. hiring by the Indians echoes the strategy Japan's auto industry devised after soaring levels of imports sparked political outcry in Washington in December, 2000. "The Indians are doing to the world's IT processes what the Japanese did to manufacturing," says analyst John McCarthy of Forrester Research Inc.

And now, like Japan's carmakers before them, the Indians are becoming major employers in the U.S. as well.

Steve Hamm, BusinessWeek