Indian IT majors plan to increase the number of foreign employees working abroad by 10 to 20 per cent over three to five years.
They reason that hiring locals abroad -- where they have 'near-shore' (with proximity to the client) development centres -- would help them tap local markets and serve global clients better, win more deals and goodwill in those countries, besides scoring brownie points with the US in an election year (over H1-B visas).
The current number of foreign workers employed abroad is less than 3 per cent of the total Indian IT-BPO workforce of 1.6 million. The numbers should only increase, said company executives.
Hiring locals could also be cheaper than sending Indians abroad. Salaries for international recruits in the IT space have increased between 3 and 5 per cent for 2007-08, while those of Indians have been rising between 13 and 15 per cent.
Besides, the rupee has been appreciating against foreign currencies. There are also issues like insurance, family expenses and other expenditures that add up.
Moreover, fluency in a foreign language cannot compensate for the cultural understanding native speakers have.
"As you do a higher degree of sophisticated work, you are not just looking at technology solutions but business solutions. And then you need people to understand the context of the problem, which might be easy for a local. This helps you serve global customers better. Indian IT firms have realised this and started the process," said Pradeep Udhas, Global Partner in-charge, Sourcing Advisory, KPMG.
For instance, over the last five years, TCS has set up operations in 14 countries including China, and major centres in Argentina, Brazil, Chile and Uruguay -- employing over 5,000 professionals and catering to more than 150 clients.
"Hiring foreign locals is a natural evolution of our business process. It is also helping us win deals. These centres will pay for themselves once they scale up over the next 18 to 24 months," said a TCS spokesperson.
Satyam recently announced its expansion plans in China to serve Japanese and South Korean clients besides its forays in other countries.
Mukund Menon, Satyam's Global Head of Talent Acquisition, says: "In China, 90 to 95 per cent employees are Chinese. So is the case in Brazil, Hungary and Malaysia. All our employees help us build our presence in these countries."
However, even as more foreign locals are being hired, India remains the country of choice for outsourcing.
"India still has an 8 to 10-year cost-advantage against other countries despite the rising rupee," said Udhas.
Salaries, for instance, in China are 20 per cent higher than in India. Brazil and Chile salaries too are 20 per cent higher while in Mexico salaries are nearly 30 per cent higher.