Infosys after US H1 B regulations: Plays down cost concerns in hiring

By Sankalp Phartiyal and Euan Rocha
MUMBAI (Reuters) – Infosys said its plans to hire thousands of workers in the United States would enable faster deployment of staff in areas such as big data and cloud, dismissing concerns about additional labor costs.
The Indian IT services firm said on Tuesday it aims to hire 10,000 U.S. staff over the next two years and open four technology centers in the United States, its biggest market.
The move comes as U.S. President Donald Trump has accused Indian software firms of displacing U.S. workers’ jobs by flying in foreigners on temporary visas to service U.S. clients. He has pledged to review the visa program.
Some analysts have said Infosys’s U.S. expansion will increase its cost burden and squeeze margins, but deputy chief operating officer Ravi Kumar said it would make the company nimbler.
“Training in the U.S. is obviously going to be more expensive than training in India, but as we ramp up significantly in the next few months this model is much more agile,” Kumar told Reuters in a telephone interview from New York late on Wednesday.
“It (hiring locally) gives us agility, it gives us speed and it gives us local cultural alignment,” he said, but would not disclose how much Infosys will spend on the plan.
The company will offer competitive salaries as it will compete with the likes of Google and Microsoft for campus hires, Kumar said, adding that the impact on margins will only be ascertained after a few quarters.
Infosys is keen to automate a big chunk of its legacy business such as routine infrastructure maintenance work for clients, and focus instead on transformational work in areas such as digital services, cloud, data analytics and cyber security that offer much better margins, Kumar said.
Its traditional outsourcing business is facing a margin squeeze as clients increasingly demand more work for less money and Kumar said Infosys wants to apply “extreme automation” there to keep costs down.
“We want to take capital out of keeping the lights on and divert the money to the transform side of the business,” he said, adding transformational business currently enjoys double digit percentage revenue growth versus low-single digit growth in the traditional business.
The first tech center will open in Indiana in August, giving Infosys easy access to talent from good universities and colleges across the Midwest, Kumar said. The company has not said where the other there centers will be located.
While Infosys will hire from Ivy League schools, it will hire more heavily from lesser known schools and community colleges, as it does in India, he said.
The company typically trains Indian staff at its site in Mysore for six months, but is condensing its program for new U.S. recruits to as little as 10 to 12 weeks, Kumar said.
“The flavor of how we do it in the U.S. will be different to the flavor of how we do it in India.”
(Reporting by Sankalp Phartiyal and Euan Rocha; Editing by Muralikumar Anantharaman and Susan Fenton)