New strategy after visa limitations, slashed contracts.
By R. Chandrasekaran
CHENNAI: The budget cuts in the United States and the limitation of H-1B visas is affecting Indian technology companies adversely, and new strategies being put in place to counter them.
Infosys, the second largest IT software exporter disclosed during an interaction with analysts that it will prefer to hire as and when needed rather than indulge in campus hiring in the next fiscal year. This is in contrast to regular campus hiring it has been doing for years.
Infosys’ new policy assumes importance on at least two counts.
One is the curb on the H-1B visas, resulting in sending less number of professionals to the US for onsite work. The reduction in visas has forced many IT companies to scout for local talent for onsite work or give it on a sub-contract locally. This should be music to Obama’s ears, whose policies in the past have seemed to be protectionist to many Indian corporates who do business in the US.
Second is the cut in budget on spending. The Obama plans allow the establishment to slash $85 billion in spending thus making it a big struggle to win over new clients for any Indian IT bigwigs. Interestingly, at least 15 percent of the potential contracts were reportedly cancelled in the case of Infosys during the March quarter.
The manufacturing and financial services sector in the U.S. will also be compelled to cut down their investments in IT products. This will undoubtedly put the IT companies to hire less number of professionals in the coming quarters. It is no secret that all the major Indian IT companies generate over 50 percent of their revenue from the U.S.
Incidentally, National Association of Software Service Companies or NASSCOM predicts a minimum of 20 percent and a maximum of 38.5 percent cut in IT professionals’ hiring in the next fiscal year over the last year’s 0.18 million jobs. Though the trade body attributed a large scale of filling up of back logs last year, it failed to produce the number of back logs to substantiate its claims. On the attrition rate, NASSCOM indicated that it had slowed down due to adjustments in demand and supply curve. But it is an admission that there is less opportunity for IT professionals.
Though India’s biggest software exporter Tata Consultancy Services has refused to acknowledge any unfavorable impact from the IT spending cut, analysts’ believe that everyone in the sector will be bound to get impacted.
It was also no secret that many of the new recruits were not given a joining date. The engineering professionals, who passed from the 2012 batch, are the sulking lot. But the IT companies are not willing to admit the delay in joining date for recruits and claim that they will honor their offer letters. At the same time, they have admitted to global uncertainty forcing them to rework their strategy.
While the current situation in India on IT hiring is certainly viewed with concern as the number of jobless engineering youths are increasing every passing year, the forced budget cuts on the establishment is proving to be a blessing in disguise for Obama for different reasons.
To contact the author, e-mail: rchandrasekaran@americanbazaaronline.com