Infosys plans to hire 10,000 U.S. workers after Trump targets outsourcing firms

SAN FRANCISCO/MUMBAI: India-based IT services firm Infosys Ltd plans to hire 10,000 U.S. workers in the next two years and open four technology centers in the United States, starting with a center this August in Indiana, the home state of U.S. Vice President Mike Pence.

The move comes as Infosys and some of its Indian peers such as Tata Consultancy Services and Wipro Ltd have become political targets in the United States and have been accused of displacing U.S. workers' jobs by flying in foreigners on temporary visas to service U.S. clients.

The IT service firms - which advise large companies on tech issues and carry out a range of tasks for them, from managing back-end computing systems to high-level programming - rely heavily on the H1-B visa program, which U.S. President Donald Trump told federal agencies to review.

Other Indian outsourcing firms have recruited in the United States, but Infosys is the first to give concrete hiring numbers and a timeline for its plans, following Trump's visa review.

The move marks a huge increase in U.S. hiring by Infosys. In 2014, when Vishal Sikka became chief executive, the firm had said it would hire 2,000 people in the United States.

In a telephone interview with Reuters from Indiana, Sikka said Infosys had achieved that goal and now wanted to hire U.S. workers in fields such as artificial intelligence, cloud and big data.

"The reality is bringing in local talent and mixing that with the best of global talent in the times we are living in and the times we're entering is the right thing to do," said Sikka.

He said the timing of the decision was not related to the visa review. The company started active talks with Indiana in late February, Deputy Chief Operating Officer Ravi Kumar told reporters in Indiana.

"More and more as we look at the future, we have to decrease the dependency on visas," Sikka told CNBC earlier on Tuesday. "That is something we have been working on for the last two and a half years."

The 10,000 new U.S. jobs will form a small part of Infosys' overall workforce of over 200,000.

Infosys did not give details on specific jobs it would bring to the United States, but said it would seek experienced tech professionals and recent graduates from universities and community colleges.

Kumar said some of the Indiana jobs would likely come from nearby universities such as Notre Dame and Ball State, and would chiefly serve the company's U.S. manufacturing, pharmaceutical and life sciences clients in the United States.

Infosys did not say where the other three tech centers would be located.

FEWER H1-Bs

Last month, two industry sources told Reuters that Infosys was applying for just under 1,000 H-1B visas this year. One of the sources said that was down from about 6,500 applications in 2016 and some 9,000 in 2015.

Indian IT service firms, which typically flood the lottery system each year with thousands of applications, have been among the largest H1-B recipients annually.

U.S. politicians accuse IT firms of paying workers only just enough to meet the minimum wage of $60,000 a year required for the visa, well below others in the U.S. tech sector. Indian industry lobby group NASSCOM says the average salary paid by Indian IT Service firms for H-1B visa holders is about $82,000.

Analysts said more U.S. hirings would push up costs for Indian IT firms as they chase people with the right skills.

"The supply of science, technology, engineering and mathematics skills is not that much in the U.S., so to get the right talent they might have to pay higher salaries," said PhillipCapital analyst Shyamal Dhruve.

Indian politicians and IT industry heads have been lobbying U.S. lawmakers and officials from the Trump administration not to make drastic changes to visa rules, as this could hurt India's $150 billion IT service sector.

The four U.S. hubs Infosys plans would focus on technology and innovation, as well as serve clients in financial services, manufacturing, healthcare, retail and energy, the firm said.

The first hub, which would open in Indiana in August, was expected to create 2,000 jobs by 2021, Infosys said. Kumar said it would hire 500 of those people in the state by 2018.

UNSUSTAINABLE MODEL

Infosys did not disclose the cost of its plans or say whether its U.S. jobs plan would account for a large percentage of its overall hiring in the coming two years.

Based on Infosys' recent trends, the U.S. plan could account for a large portion of net hiring additions in the period.

Infosys added nearly 18,000 jobs in 2015, but just 6,000 in 2016, amid uncertainty about the impact of Brexit and calls from some U.S. politicians and the public for tougher U.S. immigration rules that led some U.S. clients to hold-off on new projects.

"Hiring locally is a compulsion and it's not just because of what's happening in the U.S.," said Harit Shah, research analyst at Reliance Securities, adding that bringing in workers on temporary visas was "not sustainable" as a model.

The company said last month that it would struggle to reach its ambitious $20 billion revenue target by 2020, as the Indian software service sector has been hit by cautious client spending due to a rising protectionist wave globally.

The United States is the largest market for Indian software service companies. Other countries, such as Australia, have also started to target Indian IT service companies that use temporary visa programs.