Infosys plays down cost concerns from U.S. hiring plan

The India-based IT services firm this week said it plans the hirings over the next two years and that it will open four U.S. technology centers. The move comes as Indian outsourcing firms 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.

An employee of Infosys stands at the front desk of its headquarters in Bengaluru. Photo: Reuters

Infosys played down concerns about cost pressures from a plan to hire 10,000 U.S. workers and boost its on-the-ground U.S. presence, saying it will enable faster deployment of staff in newer, more profitable projects in areas like big data and cloud.

The India-based IT services firm this week said it plans the hirings over the next two years and that it will open four U.S. technology centers. The move comes as Indian outsourcing firms 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.

While some analysts have said the plans will raise Infosys`s cost burden and impact its margins, deputy chief operating officer Ravi Kumar said it would make India`s second-biggest software services company nimbler.

"Training in the U.S. is obviously going to be more expensive than training in India, but as we ramp up significantly in the next few months this model is much more agile," said Kumar in a telephone interview from New York late on Wednesday.

"It (hiring locally) gives us agility, it gives us speed and it gives us local cultural alignment," said Kumar.

He did not say how much Infosys will be spending on the plan.

Infosys is keen to automate a big chunk of its legacy business such as routine infrastructure maintenance work for clients, and focus instead on transformational work in areas such as digital services, cloud, data analytics and cyber security that offer much better margins, said Kumar.

Its renewed focus on local hiring comes at a time when U.S. President Donald Trump has ordered a review of a critical visa program that Indian software services exporters use to fly engineers to the U.S. to services clients there.

It also comes as its traditional, largely outsourcing business is facing a margin squeeze as clients increasingly demand more work for less money.

The traditional business is unlikely to see any significant revenue growth and Infosys wants to apply "extreme automation" there to keep costs down, said Kumar.

"We want to take capital out of keeping the lights on and divert the money to the transform side of the business," he added.

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