Indian Outsourcers Looking to Capitalize on U.S. Unemployment

Ann All

IT Business Edge blogger Don Tennant has on several occasions written about U.S.-based outsourcing companies that employ workers in low-cost rural areas. But U.S. companies aren't the only ones taking advantage of low-cost work forces in the United States. As the Financial Times reports, increasing wages in India and high unemployment levels in the United States are prompting Indian outsourcing companies to expand their foreign staffs.


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The trend encompasses skills at the high and low ends of the spectrum. The article indicates Indian business process outsourcing companies are finding it as cost-effective to employ call center workers in some parts of the United States as in India. At the same time, Genpact CEO Pramod Bhasin says it can hire "some seasoned executives with experience in the U.S. for less money." Some U.S. residents are "open to working at home and working at lower salaries than they were used to."


Bhasin says Genpact will triple its current U.S. work force of 1,500 over the next two years. Even after the increase, only about a ninth of the company's global staff would be employed in the United States.


Indian companies like Genpact may also hope adding more U.S. workers will help them retain North American clients while the continued poor economic conditions lead to more anti-outsourcing political rhetoric. The article notes Sen. Charles Schumer, D-N.Y., recently described Indian companies that employ lots of H-1B visa holders in the United States as "chop shops." (According to a Computerworld article, Schumer later amended his remarks to say he meant "body shops.")


Some Indian companies were expanding their staffs in the United States and Europe even before the global economic crisis really took hold. In that post, which was also based on a Financial Times article, I quoted Wipro Technologies Chairman Azim Premji as saying the company hoped to boost the percentage of native Europeans in its European work force from 28 percent to 50 percent. Wipro is now reportedly recruiting more native-born workers in Europe, the Middle East and Africa, with the intention of increasing the non-Indians in its overseas work force from 39 percent to 50 percent.


Salaries in India will likely continue to increase as outsourcing companies try to suppress attrition. As I wrote last month, attrition is once again becoming a problem for Indian outsourcers.


Indian companies are making other investments in the United States as well. For instance, a recent Wall Street Journal article mentioned two investments by CG Power Systems USA.: construction of a $20 million transformer manufacturing facility in Missouri and the establishment of a $20 million nanotechnology research center at the University at Albany's College of Nanoscale Science and Engineering. The company is a subsidiary of Crompton Greaves, which is part of Indian conglomerate Avantha Group:

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Add Comment      Leave a comment on this blog post
Aug 20, 2010 7:10 PM John John  says:

This coupled with the number of illegal Middle Eastern Indians in this country should bring alot of those jobs back to the USA. There are more illegal Indians than the Latin community but there hasn't been any light shined on this statistic.

Sep 27, 2010 2:11 PM Jenny Adams Jenny Adams  says: in response to John

This is a new information for me. Actually the first time I've read about Indian companies outsourcing to US. This is great. Especially to countries like India that belongs to the poorest countries. Now, they are showing a lot of improvement especially in terms of economy. Yet, I am at the same time disheartened, because there's a lot here in US who are struggling because of the recession which is supposed to be over by now. I hope our economy gets a lot more better soon. A lot of individuals lost their jobs during the worst parts of the recession. Huge cash advances were drawn for government stimulus programs, with the idea that jobs would be created and unemployment reduced. The stimulus programs really had the opposite effect, as joblessness has actually worsened. This past month has been the worst for a while. There were 27 states that really had a rise in joblessness. No change was recorded in 10 states, and 13 states had decreases. The recession is supposedly over, yet the economy as a whole does not seem to be improving quick enough.


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