How a Contrived H-1B Message Can Backfire on an Indian IT Services Provider

Don Tennant

I had an interesting conversation earlier this week with a senior U.S. executive at an Indian IT services provider, and I came away from it with a deep sense of gratitude that I’m not in his shoes, and in the uncomfortable position of feeling like I have to tap dance around the awkward H-1B visa issue.

The executive was Scott Staples, president of the Americas operation for Bangalore-based Mindtree. I had interviewed Staples about two years ago, and the thrust of that interview was captured in the headline: “How to Run the U.S. Ops of an Indian IT Firm: Don't Depend on H-1Bs.” Staples explained at the time that Mindtree’s business model was different from that of the other Indian IT services providers. “H-1Bs,” he said, “are not a core part of our business.”

Fast-forward a couple of years to April 1. I was invited to interview Staples again, specifically about the U.S. delivery center that Mindtree opened in Gainesville, Fla., in October, and about the trend among Indian companies to tap the IT talent pool in the United States. If H-1Bs weren’t a core part of Mindtree’s business two years ago, they’d be downright rare in Mindtree’s ranks in this new era, right? Well, not so much.

The first red flag was a March 29 Times of India article about the big rush for H-1B visas, and how the quota for this year was expected to be exhausted within five days. Here’s an excerpt:

"Most of our customers are optimistic of a faster US recovery, which in turn will lead to higher IT spending in the coming months. And this cautious optimism is reflecting in the higher demand for H-1B visas this year," said Parthasarathy NS, COO of Bangalore-based IT company Mindtree.

Wait a minute. The optimism of Mindtree’s U.S. customers is reflected in a higher demand for H-1B visas this year? That certainly didn’t mesh with the picture Staples had painted two years ago, so I asked him to explain the contradiction. Staples said the company is in a process of transformation:

You can’t just flip a switch and transform a company overnight. So he’s absolutely correct in that we do have increased demand for H-1Bs and L-1s in the U.S., and at the same time we have a greatly increased demand for our local U.S. delivery center offerings. So as we take the company on a transformation path from being seen in today’s market as more of an India-based service provider, we really want to be seen in the future as a global service provider, and that’s going to include a lot of U.S. hiring and creation of what we call “U.S. delivery centers.”

Well, OK. But what about what Mindtree’s COO said next? Also from the Times of India article:

The visa quota getting exhausted in 5 days doesn't bode well for the Indian IT industry. "It will be a constraint to our plans. We will use other approaches to service our customers. Specifically, we will use local talent in our US delivery centre," said MindTree's Parthasarathy.

I told Staples that no matter how you slice it, the message conveyed by the COO in India was that since the H-1B quota problem is constraining Mindtree’s plans, it’s turning to other approaches, specifically using local talent in the U.S. delivery center. I asked him to explain the inconsistency between that and the message he’s been conveying here in the States. Staples said he saw no inconsistency:

I just think if you look at it on a month-to-month, quarter-by-quarter basis, visas are still a core component of our business—transformation just takes a while. I’m looking at it more on a year-to-year basis, where we go from one point to the next. We’re going to do some significant hiring and opening up of new centers, and transform the company. But it just takes a while. So I guess it’s just a matter of the lens you’re looking through.

Uh-oh. This wasn’t good. Visas are still a core component of Mindtree’s business? I reminded Staples of that direct quote from the interview two years ago: “H-1Bs are not a core part of our business.” I told Staples he was going to have to clarify that one. The tap dancing began in earnest:

I guess it’s just a matter of a single word, what’s “core.” Let’s just say visas are a necessary part of our business. We still have people in the States on visas, and we still have the need to bring people over on visas. But we clearly see a transformation model in place. Maybe we would like to have gone a little faster on it, but it’s a lot of work setting up a U.S. delivery center, and setting up all the infrastructure to make that happen—putting in the recruiting and training and all of that kind of stuff. So we’re probably a little behind plan on where we want to be, which is why we still hold to the fact that we do need people on visas to fill our business. But our model clearly is to be a global service provider.

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