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New hiring strategy by Indian software firms - Views on News from Equitymaster
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  • Jun 27, 2011

    New hiring strategy by Indian software firms

    Indian software companies seem to be on an altogether different path as far as their hiring is concerned. Earlier they used to maximize offshoring to boost their profits. But if you look at the recent data of overseas hiring done by these companies, it will tell you a completely different story.

    Tata Consultancy Services Limited (TCS), India's largest software company by sales, recruited nearly 1,150 people in the US in the last fiscal year. The buck doesn't stop here. The management of the company plans to hire more than 1,200 Americans in the current financial year. And it is not just TCS which is hiring there. Infosys, India's second largest software company, plans to hire as many as 1,500 workers in the US. Other India-based software firms such as Wipro and Cognizant are also joining the race to hire fresh engineering graduates from the different universities of the US.

    Is all this hiring just to negate the anti-outsourcing sentiments in the US? Not really. North America is not the only place, where these companies have plans to hire. In other part of the world such as in China, Infosys plans to triple the number of its employees to 10,000 in three years. TCS also plans to add more than 900 employees in China. All this shows that they are ramping up their hiring outside India.

    There are many reasons behind this change in the hiring strategy. The stricter and costlier visa permits in the US is one of the main reasons. But there is more to it.

    As their business expands in terms of global footprints, these companies are increasingly looking at optimizing their employee mix. As a result, these companies are trying to diversify their talent pool by creating an optimum and healthy mix of nationalities, experience levels etc. The idea is that this will help these companies deliver the services to the overseas clients in a better way.

    By ramping up the hiring outside India they want to address many existing project delivery related problems. For example, while dealing with the local businesses in China, an Indian company may typically face issues related to language barriers and cultural differences. These problems can be sorted out by hiring Chinese locals.

    Indian software firms are planning to invest more in different part of the world. For example, Infosys plans to invest US$ 135 m in Shanghai in the next few years to build a new office capable of housing more than 7,000 employees. TCS aims to double its foreign workforce from 10,000 currently to 20,000 over the next five years. If all these steps continue, these software companies will have different employee mix after 3-5 years. Share of non- Indian employees in the mix may go up to 10-15% from the present 5% level.

    We believe that this change in hiring strategy will help Indian IT companies deliver the overseas projects in a better way. In the light of rising anti-outsourcing sentiments, it will also project a better image of these firms.



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    5 Responses to "New hiring strategy by Indian software firms"


    Jul 6, 2011

    Author needs to get the right perspective before publishing article which has conclusive arguments. This is is nothing but half baked story.


    Rad sub

    Jul 6, 2011

    makes better business sense



    Jun 28, 2011

    no doubt it is good for the company to hire the local us citizens but it will be very difficult for these cos as they will make their unions and bargain with the co.
    instead of that the co should start to teach chinese lang to sr personalies
    and even they should not employee more than 20 percent



    Jun 28, 2011

    Indian software companies would lose the cost advantage and in the long run margins would considerably fall.



    Jun 28, 2011

    I think Indian software companies are becoming true multi-nationals. Just as one would expect foreign companies in India to employ Indian people, hiring foreign people for foreign offices makes good business sense.

    Equitymaster requests your view! Post a comment on "New hiring strategy by Indian software firms". Click here!

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