Overseas hiring eases H-1B visa burden on IT firms, but at a price

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Overseas hiring eases H-1B visa burden on IT firms, but at a price

On a recent earnings call, VV Apparao, Chief Human Resources Officer at HCL Technologies, said that the company will continue its localisation efforts that now stand at 65.6 percent, and that the company is looking to hire 2000 more people overseas in the next fiscal.

HCL  is not the only company that is stepping up its talent pool overseas, though it has the highest among its peers. In the last two to three years, most IT firms have increased their hiring overseas, in the wake of tightening visa regulations in their biggest market — the US.

For instance, Infosys has made a commitment to hire 10,000 locals by over a two year period and has already hired close to 7,500 people so far. TCS and Wipro too are investing significantly in this space.

But this overseas recruitment come at a cost to the company and the industry ecosystem as a whole, according to industry experts.

Kris Lakshminath, chief executive officer and managing director, The Head Hunters India, said, “They have no option but to hire locally with visa regulation tightening.” That means that the companies have to spend more as hiring talents overseas is more expensive than hiring Indian talent. This spend is further augmented by the rising demand for special skills such as big data analytics. For instance if a fresher with a basic qualification is paid Rs 4 lakh per annum in India, his/her data analyst counterpart is paid Rs 8 lakh. The same talent in the US would be a lot higher.

“Due to this, the companies’ margins have come down by one to two percent in the last couple of years,” Lakshminath added. “The way it is going, we will be 70-30 hiring patterns where 70 percent of the workforce will be in India and 30 percent overseas. It was 95-5 few years back and is going at 80-20 now,” he said.

The shift is also having a large impact on human resources consultancy firms, who are highly dependent on the US’ hiring patterns. Umesh Belludi, Co-founder, BrainHR, a HR consultancy firm based in Bengaluru, said, “Our business has come down by 30-35 percent since the US started imposing visa regulations from 2015.” Between 2015 and now, the business has come down by 30 percent for the company.

A majority of the company’s business comes from processing H1-B visas and matching H1B visa holders in the US with the right company, which nets a decent margin from the company’s vendors. The new visa regulations meant both businesses have take a hit. “Though we are still profitable, our profits have come down. Our margins have come down by 25 percent,” he added.

To offset the loss, the company is now focusing on finding jobs for Green Card holders and citizens. It is also entering different verticals and bringing more clients on board. “Earlier we used to work only with fewer companies. But now we have expanded our client base to over 30,” he added.

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