Occupy Wall Street A Threat To Outsourcing?

The chief executive of one of India's largest providers of offshore outsourcing services said he's convinced that Occupy Wall Street's clamor for more and better jobs will cause many U.S. companies to limit their use of foreign resources.

HCL Technologies CEO Vineet Nayar is no stranger to controversial remarks--he once said most American college grads are unemployable. That statement was ridiculous, but his latest bomb is more on target.

"The current anti-Wall Street protest is a frustration emerging out of joblessness and pent-up demand for more work," Nayar said in an interview with the Times of India. "Tomorrow, no company will do business with you if you are not in the business of job creation."

In light of the OWS protests and a national unemployment rate above 9%, U.S. companies will increasingly require their IT suppliers to employ workers on U.S. shores, in the same way that some manufacturers stipulate that their component suppliers meet standards for humane working conditions or the use of green technologies and business practices, Nayar said.

[OWS isn't the only trouble outsourcers see from the United States. See India Tells U.S.: H-1B Process Too Slow.]

I disagree with his conclusion that OWS is proof that America has turned "neo-socialist," but it's evidence that a spectrum of the population, from the left and right, thinks big business isn't acting in the country's best interests. In response, some companies are killing their least popular practices before Congress does it for them.

On Tuesday, for example, Bank of America backed off its plan to impose fees on debit card transactions after an online petition against the charges drew more than 300,000 signatures. Nayar said he's convinced that U.S. businesses that ship jobs offshore in big numbers during a time of high unemployment will similarly have to accede to the vox populi--which gets louder and bolder after each victory--and keep more workers onshore. Otherwise, anti-offshoring legislation, which has failed in Congress many times, might finally have enough momentum to pass.

To get ahead of the curve, Nayar said HCL will shift more work to the United States, where most of its customers are anyway. He said about 8,000 of the company's 83,000 employees are now in the United States, and that number will grow. In September, HCL announced the opening of a development center in Redmond, Wash., where it plans to hire about 400 workers over the next two years. HCL's Collaborative Engineering Hub will provide development services for Microsoft.

EnterpriseSeattle, a local economic development group, worked with state and municipal officials to facilitate the center's opening. "Not only will HCL be adding hundreds of fantastic jobs, they will further our reputation as a world center for technology," EnterpriseSeattle CEO Jeff Marcell said in a statement.

About 40% of HCL's U.S.-based workers are Americans or greencard holders; the rest are on H-1B and other temporary visas. But company officials say they want a larger percentage of their U.S.-based workers to be citizens or permanent residents. At least 80% of the people HCL will hire for the Seattle area center will be locals, the company said.

"We consider the U.S. to be the hub of innovation and have recognized that there is enough talent here that can bring tremendous advantages to our existing skill set," HCL America president Shami Khorana said in an email to InformationWeek.

How does Khorana's comment square with Nayar's statement in June 2009, while addressing a group of customers and partners in New York, that HCL's U.S. operations rely heavily on foreign employees because U.S. college graduates are "unemployable"?

The answer is that HCL said it is now taking a more active role in ensuring that American colleges and universities produce graduates that can step directly into customer-facing positions in IT services. "HCL will try to partner as much as possible to tap as well as train local talent," Khorana said. "We are leveraging local organizations and universities to train and hire talent."

The company, for instance, is working with universities in Seattle, Rochester, and North Carolina to recruit and train students to ensure that they are up to speed in technologies and processes like .Net, Azure, and Automation Testing.

OWS notwithstanding, hiring U.S. workers is just good business for foreign-based IT outsourcing companies, according to some industry experts. "As they grow, there's an expectation that they should have delivery capabilities that are global," said Sid Pai, managing director for outsourcing consulting firm TPI's India operations. "Some work needs to be close to the client."

Pai said other offshore IT service providers, including Wipro, Infosys, and TCS, are boosting their U.S. presences and hiring more Americans. In other words, Indian outsourcers intend to Occupy America--at least with more homegrown workers than in the past.