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Indian outsourcing firms look to get ahead of immigration curbs

Newley Purnell & Daniel Stacey | The Wall Street J / 09 Mar 17 | 07:39 AM

Under pressure from President Donald Trump’s administration, Indian outsourcing firms are working behind the scenes to prevent potential immigration curbs in the US, their most important market.


Indian information-technology firms are boosting efforts to lobby US lawmakers and are considering ways to train American workers for tasks that Indian workers come to the US to do. Indian Prime Minister Narendra Modi last month met with a delegation of 26 US congressional members visiting New Delhi, during which he stressed the importance of skilled Indian talent to the US economy, according to a statement from the Prime Minister’s Office.

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The discussions centred on the H-1B skilled worker visa program, which permits Indian information-technology services firms to send thousands of workers every year to the US, according to senior Indian government officials familiar with the meeting. Indian outsourcers and US tech firms say the visa program, which Mr. Trump assailed on the campaign trail as “a cheap labour program," is necessary to fill jobs where too few workers with the right skills are available in the US Critics say H-1B visas are used as a cost-cutting method, with firms largely hiring Indians, who are willing to work for less than Americans.


Earlier in February, executives from India’s biggest IT services firms gathered in New Delhi to discuss a plan to address the skill shortage in the US by setting up schools in the US’s Rust Belt towns to train local workers to do simple IT jobs, according to Shalabh Kumar, an Indian-American businessman, founder of the Republican Hindu Coalition, and Trump fundraiser who coordinated the talks. Leaders from Tata Consultancy Services Ltd., Infosys Ltd. and Wipro Ltd. were among the executives at the meeting, which was partly organised by India’s National Association of Software and Services Companies, or Nasscom. The discussion included a proposal to fund new trade schools and collaborations with local universities in the US to teach basic tech skills in two- to three-year programs following high school.


TCS and Infosys directed queries about the meeting to Nasscom, which didn’t respond to repeated requests for comment. Wipro didn’t respond to requests for comment.


The moves are part of an effort by Indian firms to keep out of the crosshairs of the Trump administration by supporting his pledge to bring jobs back to struggling blue-collar areas. A draft of an executive order for Mr. Trump’s consideration calls for the Department of Homeland secretary to “consider ways to make the process for allocating H-1B visas more efficient and ensure that beneficiaries of the program are the best and the brightest." Analysts expect any changes to the rules to continue to allow large US tech firms that make use of H-1Bs to bring in workers with more sophisticated skills, such as those working in big data analytics, while Indian firms that import less skilled labour into the US could be singled out.


Meanwhile, US Citizenship and Immigration Services, the federal agency that oversees the H-1B program, said it plans to temporarily suspend fast-track processing for the visas, an option that allowed applicants to pay an additional fee of $1,225 to get a response within 15 days. The move is likely to slow down the hiring foreign workers in the US, with regular processing typically lasting between three and six months.


Mr. Modi’s meeting underscores the importance of the US to Indian IT services firms, which employ nearly 3.7 million people in India and abroad. The US accounts for some 60 per cent of the sector’s revenue, according to Nasscom.


A delegation representing Indian IT firms travelled to Washington, D.C., recently to meet officials in the new US administration and others, Nasscom said in a statement, and apprise them of the Indian IT industry’s contribution to the US “in terms of jobs created or supported and investments made." Among those who made the trip were C P Gurnani, chief executive of Indian outsourcing firm Tech Mahindra Ltd., and Nasscom President R Chandrashekhar.


Nasscom also has been increasingly spending money on pressing Indian IT firms’ case with US lawmakers. Federal US lobAddbying records show Nasscom spent $440,000 last year on services from Washington, D.C.-based lobbying firm Wexler Walker and Arlington, Va.-based Lande Group. That was up from the $350,000 it spent in 2015 on those firms, along with Washington-based BGR Government Affairs. The records show issues the firms were paid to address included “high skill immigration," “visa processing," and other “issues related to immigration."


Madhu Babu, an analyst who studies the tech sector at Mumbai-based brokerage Prabhudas Lilladher, said a push by Indian outsourcers to train Americans would be helpful in terms of “image boosting for the industry and showing they’re doing something for the local communities."


The number of computer and IT-related jobs in the US should increase 12 per cent between 2014 and 2024, adding 489,000 new jobs to reach 4.4 million positions, according to the US Bureau of Labor Statistics. That is a faster rate of growth than the average for all jobs.


In a survey last year of 3,352 chief information officers and other tech leaders by recruiter and outsourcer Harvey Nash and accountancy firm KPMG LLC, some 65 per cent said finding talent was hampering their IT modernisation efforts. That was up from 59 per cent in 2015 and the highest since the 2008 recession.


The unemployment rate for IT workers in the US is between two per cent and four per cent, depending on geography and method of measurement, according to Rod Bourgeois, who studies outsourcing trends as head of research at Old Greenwich, Conn.-based DeepDive Equity Research. The overall jobless rate in the US was 4.8 per cent in January. It is unclear how feasible setting up IT-training schools in the US might be, or how quickly it could be done. “Many IT workers in the US have legacy technology skills, and it’s not so easy to retrain them on new-age technology," said Mr. Bourgeois. Such workers are able to do tasks such as maintain traditional programs and deploy software, but aren’t as adept at cloud-based computing or mobile technologies, he said.


Rajesh Roy contributed to this article

Source: The Wall Street Journal

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