Strategic CIO // Executive Insights & Innovation
Commentary
8/21/2007
04:52 PM
Rob Preston
Rob Preston
Commentary
Connect Directly
LinkedIn
Twitter
RSS
E-Mail
50%
50%

Are Offshore Outsourcers Invading the USA?

One company's strategic initiative does not equate to an invasion.

One company's strategic initiative does not equate to an invasion.Now that Wipro is expanding aggressively into the United States, the conventional wisdom is that India's other big outsourcers will also pile in. But No. 2 Indian outsourcer Infosys doesn't appear to be so bullish on U.S. expansion. At least that's the impression given by CEO Kris Gopalakrishnan, who sat down with me yesterday over lunch in New York.

While Infosys has several U.S. offices, employing 1,200 to 1,300 people, those professionals are mostly in client-facing sales, marketing, and support roles, and most of them are foreign nationals working in the States under H-1B visas. (Infosys received more H-1Bs last year than any other company, foreign or domestic.)

Unlike Wipro, which is acquiring five U.S. data centers as part of its $600 million deal to buy New Jersey-based infrastructure management vendor Infocrossing, Infosys has no immediate plans to own data centers in the States, Gopalakrishnan says. Nor does Infosys intend to build software development centers in the States. In contrast, Wipro, the No. 3 Indian outsourcer, plans to build four such centers in the U.S., the first one in Atlanta, and hire 1,000 or more people in the process.

Infosys won't be hiring tons of locals in the States. Gopalakrishnan gives two reasons. First, most of the back-end work Infosys does for U.S. clients is still sent to India, so the company wants mostly Indian nationals to maintain "project ownership" from start to finish in order to ensure "continuity," he says. Second, Infosys' "brand equity" among U.S. tech pros "is not where it should be," Gopalakrishnan says, meaning the company still has trouble recruiting the best local people -- though it's making more headway on such campuses as MIT, Stanford, and the University of Pennsylvania.

As for Infosys making acquisitions in the States, Gopalakrishnan says "they're something we need to look at," particularly in consulting. But he's less than enthusiastic. "They're risky," he adds, noting that most acquisitions don't deliver adequate returns to shareholders.

Infosys is more bullish about setting up "nearshore facilities," operations that are relatively close to the company's biggest clients and still offer access to cheap, plentiful talent. For example, Infosys announced today that it's creating such a facility in Monterrey, Mexico, that will employ 1,000 people within three years and serve clients not just in Latin America but also in North America and Europe. Infosys now has such a facility in Brno, Czech Republic, serving mostly European customers. For the Asian market, India and increasingly China are Infosys' bases of operation.

The United States, where Infosys generates 62% of its revenue, could "one day" represent 5% to 10% of the company's global workforce, Gopalakrishnan says, up from less than 2% today. Oh really? How soon-five, 10 years? Gopalakrishnan isn't saying: "No timeframes."

Comment  | 
Print  | 
More Insights
The Business of Going Digital
The Business of Going Digital
Digital business isn't about changing code; it's about changing what legacy sales, distribution, customer service, and product groups do in the new digital age. It's about bringing big data analytics, mobile, social, marketing automation, cloud computing, and the app economy together to launch new products and services. We're seeing new titles in this digital revolution, new responsibilities, new business models, and major shifts in technology spending.
Register for InformationWeek Newsletters
White Papers
Current Issue
Video
Slideshows
Twitter Feed
InformationWeek Radio
Archived InformationWeek Radio
Join us for a roundup of the top stories on InformationWeek.com for the week of June 21, 2015.
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.