IBTimes.com

India’s second largest software services company Infosys Technologies Ltd is studying the introduction of an ‘extreme offshoring’ model to help cut its dependence on H1 and L1 visas from the US, Indian financial daily Business Standard reported.

The US had recently effected a steep hike in visa worker fee on Indian companies under a new law effective August 14, which could pinch the pockets of software firms.

Infosys says it is gearing to raise its offshore utilization capacity to 95 percent from the current level of 53.3 percent when it clocked a revenue of 121.215 billion rupees for the year to March 31, 2010 as against its onsite revenue of 104.61 billion rupees during the same period.

Infosys chief executive and managing director Kris Gopalakrishnan was quoted as saying in the report that the cost element due to the visa fee hike has been increasing but manageable. He said as long as unemployment remained high, the negative sentiment would continue.

The Bangalore, India-headquartered company has already gone a step further by conducting pilot programmes with a few of its US clients to prove that the new model works. The company managed to successfully move outsourced projects to India by sitting at remote offshore locations.

The new “extreme offshore model” envisages increased hiring in India and fewer jobs created onsite as front-end sales and support functional jobs will have to be manned by US citizens.

Gopalakrishnan sees the new visa clampdown as an opportunity for countries like India and China as he believes there is no reason why US companies should completely stop shipping work to India. “As long as globalization is not reversed or stopped, I think the growth of remote delivery of services should continue,” he said.

Today, Indian software companies are following a delivery model which is a mix of offshore, onsite and near-shore after they got a boost in the early 1990s when clients leveraged offshore work to gain cost advantage and access to India’s vast talent pool.

Indian software companies continued to send its employees to the US on H1 and L1 visas on a temporary basis to move clients’ work to India though offshoring continued to be at the forefront of its delivery roadmap. Offshore development required deep knowledge of the clients’ business requirements and a framework to transition work offshore.

Gopalakrishnan said Infosys has the technological capabilities for ‘extreme offshoring’ given the video conferencing facility that allows a person to be there virtually than in person. He said the quality of video conferencing is high with the availability of telepresence technologies.

S D Shibulal, chief operating officer of Infosys, says the company’s offshore-onsite ratio had shifted towards offshore in the last two to three years and that it looked forward to further shifting it offshore. “In fact, we have many clients who are pushing us to reduce onsite work further,” he was quoted as saying.

Infosys, which employs around 13,000 people in the US, says the number of visa renewals had dropped 80 percent in the last three years, thus cutting its dependence on H1 and L1 visas. Of its total number of US employees, 8,900 of them hold H1-B visas while around 1,800 of them hold L1 visas, which does not include figures for its BPO subsidiary and other wholly-owned subsidiaries.

PROTEST AGAINST 'DISCRIMINATORY LAW'

Meanwhile, India has protested against Washington’s “highly discriminatory law” that would affect Indian software companies like Tata Consultancy Services, Infosys Technologies, Wipro and Mahindra Satyam.

Indian officials and the US-India Business Council, representing 300 US firms doing business with India, have also warned that the new law could hurt growing India-US business ties.

The new law is aimed at raising $600 million for securing the US-Mexico border that would cost Indian IT firms sending thousands of professionals to US on H-1B and L1 visas an additional $250 million annually.

VISA FEES

The law which came into effect on Aug 14 imposes an additional fee of $2,000 for certain H-1B petitions and $2,250 for certain L-1A and L-1B petitions. The new rates will remain in force till September 30, 2014, according to the United States Citizenship and Immigration Services (USCIS).

These additional fees apply to petitioners who employ 50 or more employees in the US with more than 50 percent of its employees in the country in H-1B or L (including L-1A, L-1B and L-2) with a non-immigrant status.

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