With localised hiring strategy gaining ground and the Covid-19 pandemic restricting travel, the overall dependence on visas among the top tier-1 IT services firm will come down further in the next two to three years, opine industry experts.
While US President Joe Biden has signed executive orders that will reform the overall immigration system and also rescinded several acts announced by President Trump that impacted the IT industry, it seems the industry has finally found a way to reduce dependency on visas such as H1-B and L1.
Tata Consultancy Services (TCS), the largest IT services firm, has been working on hiring more locals for more than 6 to 7 years. The company, like its India hiring strategy, has been strengthening its tie-ups with colleges in the US and hiring college students. For the period April 2020 to January 2021 (experienced + trainee) the total onshore hirings stood at 10,938, of this over 3,000 were hired in the October-December quarter. The Q3 hiring number is the highest ever for the company, said HR experts.
In the US, over the last five years, TCS has hired a total of 20,000 employees, according to the company’s FY20 annual report. In FY20, TCS hired over 2.5 times their usual fresher intake. The company also said for very short-term assignments, it used sub-contractors. “All this has brought down our use of work visas to a small fraction of what it used to be five years ago, de-risking our business significantly. Looking into the future, as I mentioned earlier, the virtualisation of many activities with SBWS will reduce the need for travel and co-location even further,” said Milind Lakkad, CHRO, TCS in the annual report.
Infosys Chairman and co-Founder Nandan Nilekani, at an event organised by Public Affairs Forum of India (PAFI), recently said that with increased protectionism, companies need to be active players in every market. Last year, the Bengaluru-based firm revealed plans to hire 12,000 American workers over the next two years, bringing its hiring commitment in the US to 25,000 over five years.
‘Peter Schumacher, CEO, Value Leadership Group shared that the thinking underlying the decisions by Indian IT services firms to hire more employees in the US goes beyond simply responding to Covid-related travel restrictions and immigration barriers.
“All these companies are looking for ways to forge even deeper synergies with their customers by strengthening their relationships. Moving staff closer to customers and customer-based delivery teams will allow the Indian companies to sharpen their customer focus, understand their customers better, and gain the ability to act faster in response to or in anticipation of changes in the customer situation,” said Schumacher.
Pareekh Jain, founder and lead analyst, EIIRTrend, explains that onshore hiring has always been related to margins. However, with the strategy of hiring locals by creating a pyramid structure finally making an impact and with Covid making virtual working a norm, the dependency on visas has come down.
“It is still a long way to go. But over the last two to three years we have seen dependence on visas coming down and going ahead over a similar time period we expect this going down further. Covid has also made customers realise that work can happen from anywhere. We have seen contracts where the onshore-offshore ratio has moved from 25-30:70 to 10-15 per cent onsite,” added Jain.
Rather Nilanjan Roy, CFO, Infoys, during the analyst call post Q3FY21 results had acknowledged that with the current travel restrictions and work from home a norm clients are more open to offshoring.
“Our localisation and local hiring in the US as a pyramid is something unique to Infosys, creating the 6 digital hubs, recruiting from universities, community colleges. Historically, the IT industry had a steep pyramid onsite. Seventy-five per cent of employee cost is actually onsite whereas only 25 per cent of the headcount sits there; and therefore, if you do not address the onsite pyramid you really have a battle up your hand,” said Roy on the call.
For instance, HCL post its third quarter numbers said that they will be hiring 20,000 over the next four to six months and of which 15 per cent will be onshore.
Experts point out it is not just about simply hiring locals and empowering local staff to create, capturing added value doesn’t happen without preparation. It requires a thorough conceptual understanding of what customers perceive and experience as value enhancing and are willing to pay for.
“Three key areas are particularly important for creating more successful customer relationships. The first is a growth driver and is the ability to identify opportunities to provide added value for the customers beyond the original project/engagement scope. The next concerns the ability to create, maintain, and pace momentum for change and advancement of the customer’s agenda. Finally, local employees must be capable of applying a skillful level of experience, judgment, and local perspective to quickly identify emerging issues and likely solutions. Both of these areas of competency are becoming increasingly important given the growing number of transformation projects that Indian firms are engaged in,” said Schumacher.