(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)
By Andy Mukherjee
SINGAPORE Nov 6 (Reuters Breakingviews) – Before writing
more programs for Fortune 500 clients, the Indian outsourcing
industry will need to reboot its own business model.
The writing is on the wall after Bangalore-based Infosys
, the industry’s Nasdaq-listed poster child, recently
agreed to pay the U.S. government $34 million to settle
allegations of “paperwork errors” in placing immigrant engineers
at American client sites. The company made use of
easier-to-obtain B-1 visitor visas instead of the harder-to-get
H-1B work permits, the Wall Street Journal reported.
At nearly a tenth of the software exporter’s latest
quarterly net profit, the fine stings. More importantly,
however, the penalty underscores the need for outsourcing
companies to cut their dependence on foreign techies. A
stubbornly weak U.S. job market five years after the 2008
financial crisis is making tighter immigration policies
inevitable.
A new visa regime is in the works, and the industry
is watching duelling bills in Congress with a mix of trepidation
and alarm. But it has few levers to pull. Replacing cheaper
foreign workers with more expensive American citizens and
permanent residents sacrifices margins. Infosys, whose
immigration filings have been under the scanner for two years,
has seen a “huge increase” in compensation costs outside of
India, Chairman N.R. Narayana Murthy said recently.
The scarcity of H-1B visas – this year’s quota of 65,000 got
filled in a week – has already prompted vendors to move as much
work offshore as possible. The way forward may be to package the
code-writing work done in India as customizable templates, which
can be sold to multiple clients. This will usher in a
much-awaited productivity revolution in an industry that has
traditionally thrived on cheap labor and a weak rupee.
Even then, an accelerated tightening of the U.S. visa regime
will hurt both sides. As Wipro chief T.K. Kurien told
analysts recently, if Indian software exporters don’t do well in
the United States, “we fundamentally lose the world.” And if
Indian companies were forced to retreat from competition against
IBM, Accenture and Deloitte, outsourcing
contracts could get pricier. That would also hurt American
multinationals.
Outsourcing 2.0 won’t capture the popular imagination like a
Facebook or Twitter. But getting it right is still hugely
important.
CONTEXT NEWS
- Infosys has agreed to pay $34 million to the U.S.
government to settle allegations of “paperwork errors” in I-9
filings, the Indian software exporter said in an Oct. 30 press
release. Employers in the United States use I-9 to document the
identity and employment authorization of new hires.
- A day earlier, the Wall Street Journal reported that
Infosys had been slapped with the fine, the largest ever
immigration-related penalty, for allegedly placing immigrant
workers at American client sites on visitor visas.
- Bangalore-based Infosys denied any claims of “systemic
visa fraud, misuse of visas for competitive advantage, or
immigration abuse” in an email. The company said it did not
“intend to circumvent the requirements of the H-1B
program”. U.S. businesses use the H-1B program to employ foreign
technicians.
- The fiscal year 2014 quota of 65,000 H-1B visas was
exhausted in the first week of the filing period in April.
Indians accounted for 64 percent of all H-1B visas issued last
year.
- Infosys statement: link.reuters.com/juw44v
- Reuters: India’s Infosys to pay $34 million in U.S. visa
case
RELATED COLUMNS
Second coming
- For previous columns by the author, Reuters customers can
click on
(Editing by Rob Cox and Martin Langfield)
BREAKINGVIEWS-Infosys visa woes stress need for Outsourcing 2.0
Không có nhận xét nào:
Đăng nhận xét