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Financial Express Article, 16/08/2010, Ganesh Natarajan
 
 
The last week has been full of announcements! The first was the bill introduced by Senator Schumer—the Emergency Supplemental for Border Security, FY 2010 seeks to increase funding for US border security by approximately $600 million to be paid for by increasing fees for each new H-1B or L-1 visa application for applicants that employ 50 or more employees in the US, if more than 50% of those applicant’s employees are under H-1B or L-1 status. The rather unfortunate reference to a leading Indian firm and others of their ilk as “chop shops” and President Obama’s pronouncement that future US jobs would stay in the US added grist to the mill of industry watchers and a lot has been said and written to add to the confusion.
Beyond the furore, there are some simple solutions that can be addressed. The US President’s intentions are praiseworthy and a strong focus on innovation and clean environment should indeed create the local employment that is necessary for the US to continue the thought leadership that it has enjoyed for many decades. While this statement has been linked in many quarters to the old rhetoric on reduced outsourcing, there is no doubt that a healthy creation of jobs in all parts of the world will lead to sustainable partnerships and should be welcomed. The “chop shop” issue has been laid to rest by the Senator himself in his speech on August 12 through his point that he meant “body shop” and not “chop shop”, though this new nomenclature is not likely to bring great cheer to Indian industry players. Probably the good Senator is not aware that most Indian firms have matured in the offshore model and quality of deliverables and the days of wage arbitrage focus have long ago given way to an environment of multiple process and technology optimisation and innovation.
The real matter of concern is the increase of visa application and renewal fees, not so much because of the direct financial impact but because of the direction of public policy it demonstrates in a country which is struggling to fully shake off the recession and get back to solid economic and employment growth. The industry in India is justifiably aggrieved, as the fee increase will significantly affect only the larger Indian firms who have significant on site resources of Indian origin among their workforce. The Schumer amendment, if enacted into law, could have a financial implication of roughly a quarter billion dollars on an annual basis, which as many analysts have pointed out is not a show stopper for the industry though it could have significant impact on firms which have a large on site component to their revenues and rely largely on visa holders for executing assignments. The US has long been held in high esteem as one of the foremost champions of free trade and it would be a matter of concern if short term compulsions come in the way of this reputation.
Our industry has reinvented itself many times and the recent development may well provide the trigger for a new phase of globalisation. Most Indian IT-BPO firms have been conscious of the need to globalise their resource base. At the beginning of this decade, a resolve to have over 10% of employees of global origin was one of the goals we had set at a strategy meet. Many companies have made rapid strides in terms of their diversity and inclusion policies in this decade with one of the majors today employing people from over 60 nations and even a smaller company like Zensar boasting of 14 nationalities represented in its employee base. Zensar has plans to have a majority of local passport holders in its onsite workforce in most of the countries where it has operations, something that would work well with the new amendment. However being forced to accelerate this shift because of external legislation would not be welcome for any company in this industry.
As an industry, we have been very proud of the innovation movement that Nasscom had initiated at the beginning of this decade which had embraced not just the product development imperative but also the various ways in which process and business model innovation could transform the country and the industry. Global business models have emerged with over 400 centres of Indian firms sprouting in all parts of the world. Significant investments in technology have ensured that global development centres serve as a collaborative network where local talent could be deployed for consulting and analysis of requirements. Near shore centres would chip in for design and requirements gathering and centres in India and China would create the new technology and testing services that would complete the model. We need to intensify these efforts and use highly skilled talent that the US and other countries are committed to create locally to be part of the global sourcing missions of the future. The industry can only mature and grow stronger with these developments !
   
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