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Infosys,Wipro,HCL ramp up onsite presence to beat immigration blues

IT majors now hedging against vagaries arising from changes in immigration laws,client needs.

Written by Kirtika Suneja | New Delhi |
November 4, 2013 5:56:46 pm

Indian IT majors,who are known to hedge against currency fluctuations,are now hedging against vagaries arising from the changes in immigration laws and client needs.

For instance,HCL Technologies,the country’s fourth largest software and services firm, plans to considerably increase its headcount outside India to 25% in the next two years from 18% now.

“We are increasing our onsite presence because clients want certain capabilities for large transformation deals close to them. Besides,vendor consolidation is taking place which requires right shoring,” said Prithvi Shergill,chief human resources officer,HCL Technologies.

For Wipro,the onsite component increased to 54.2% in the second quarter ended September 30 from 53.9% in the trailing quarter.

“This is a natural progression for the industry as it matures. Companies want more people close to customers and global capabilities to have a balanced workforce across the world. It is important for the Indian firms to increase their onsite presence even though it adds to costs and it will become a greater proportion of their workforce over time,” said Sid Pai,partner and APAC president of technology advisory firm ISG.

Though this secular movement would have happened anyway,analysts maintain that the US Immigration Bill has triggered the IT majors to ramp up their onsite work. It will also reduce dependence on H1-B visas.

“We are looking forward to recruiting more and more locals even from colleges locally to create local talent. As we do more and more transformation and mission-critical programmes with our clients,it makes perfect sense to have local talent in the countries where we operate,” said Infosys CEO S D Shibulal.

In the quarter gone by,the company had an onsite utilisation of 94% and 87,383 persons were billed onsite till September 30.

This number was 86,551 in trailing quarter and 75,047 in year ago period. About a quarter of Infosys’ workforce is stationed at client locations overseas. The onsite component contributes to at least 46% of Infosys’ costs and contributes more than 50% to its revenues.

“With the kind of high-end and domain-specific work that the industry is getting,companies need to work closer to clients. Hence,both the onsite (Indian employees on client’s site) and offshore (local employees at the client’s end) component is on the rise,” added Sangeeta Gupta,vice-president,Nasscom.

Industry experts estimate IT firms to increase their onsite presence from the current 20% to 30% in the next few years even though offshore work will continue to be the larger proportion.

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