Indian IT firms increase offshore work
By siliconindia   |   Monday, 22 June 2009, 21:06 IST   |    1 Comments
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Indian IT firms increase offshore work
Bangalore: Technology firms in India have now started increasing their offshore work, to cut down the costs for themselves and the clients. In fact, some IT companies have even started calling back onsite (on foreign shores) Indians, reports Economic Times. For instance, Tata Consultancy Services has called back more than 1000 employees to increase offshoring. Infosys and Wipro have also called back around these many employees. "We achieved our overall target of 45 percent offshore leverage, an improvement of 310 basis points on an annual basis from Q4 of '08 to Q4 of '09," said a TCS spokesperson. Part of this profit is due to costs saved as employees shift back to India. Meanwhile the H1-B visa quota has still not touched the cap of 65,000. Till May 2009, the US Citizenship and Immigration Services (USCIS) had about 45,500 H-1B petitions. (The cost of one H-1B visa is around $3,000.) The number of H-1B visa holders in Infosys, which was 8,700 as of December 31, 2008, came down to 8,200 as of March 31, 2009. It is expected that the number will scale down by another 500 at the end of the first quarter of fiscal year 2010. The salary difference of an onsite and offshore employee can range between 40 and 60 percent. A software coder with 3-4 years of experience will get a salary of Rs 6-8 lakh per annum in India, while the same person will get minimum $40,000 (around Rs 19 lakh) per annum in the U.S. according to an HR consultant. Also, offshoring is much cheaper in terms of billing rates. IT firms are said to have helped U.S. based customers to save $12-16 billion in 2008, and European customers between $8-10 billion. "Bringing back employees from onsite centres will surely lead to substantial savings but you also have to understand that customers are getting stringent and looking at all possible ways to reduce costs," explains Venkatesh Subramanian, VP-IT Practice, TMI Network, an HR consultancy firm. The bench period for employees onsite is also being reduced. "We have observed that the bench availability has been reduced to 30 days. So, if an employee is able to get absorbed in the project, he/she can continue, otherwise they are being asked to return. Employees that are not billable, are also being asked to return," said an HR consultant on condition of anonymity. Ganesh Shermon, Partner and Head of people and change advisory services, KPMG, adds that the utilization level among firms has also gone up. "Besides, when you call back a senior executive other costs also reduce. There is travel cost; there is consolidation of real estate, among other measures," said Shermon. Analysts estimate that during the last six months alone, Indian IT-BPO firms have created over 10,000 jobs in international locations. For instance, HCL alone has created approximately 2,500 jobs in the U.S. and U.K. combined in the past six months. TCS has added 2,146 employees in its overseas branches, including those in the U.S., U.K. and Mexico. "It is but natural for the U.S. government to talk about protectionism. Anyone would have if you have an increasing number of unemployed citizens. So, in that sense, I think this is temporary," said Shiv Aggarwal, CEO, ABC Consultants.

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