(Also See Paul McDougall's InformationWeek Blog Microsoft's Canada Plan Highlights Need For Immigration Reform.)
Microsoft (Nasdaq: MSFT) will open a software development center in Canada by the end of the year, a move that will enable the software giant to hire more foreign workers without running up against the limitations of U.S. immigration law.
Microsoft cofounder and Chairman Bill Gates has been among the most outspoken critics of the current limits on foreign workers who can enter the country. Gates has repeatedly pressed lawmakers to raise the cap on the number of so-called H-1B visas, which are given out to "highly skilled" workers.
A bill that would have raised the current cap of 65,000 visas each year -- part of a sweeping immigration reform measure -- failed to gain enough votes to stay alive in the U.S. Senate last week, dashing hopes that more workers would be let into the U.S. in the near term.
But only a few are picking up that immigration is a red herring. CNET got it right in Microsoft sings 'O Canada' amid immigration challenges:
"Microsoft spokesman Lou Gellos said that while the immigration issue was a factor, the company would be opening the center in Vancouver even if it were not for the immigration challenges. "Reuters included this fact also, albeit buried as a virtual footnote in an article that mostly discusses the H-1b visa - Microsoft expands in Canada amid U.S. visa crunch:
Microsoft said in a statement that the Vancouver center will "allow the company to continue to recruit and retain highly skilled people affected by the immigration issues in the United States." But company spokesman Lou Gellos said Microsoft's frustration with the U.S. government's visa policy wasn't the only reason for the expansion in Canada. It is part of a larger program to diversify software development outside of Microsoft headquarters in Redmond, Washington, Gellos said. . . "We would be opening this center in Vancouver even if this visa situation didn't exist," Gellos said.
Furthermore it is not "news" that Microsoft is doing software development in Vancouver, Canada, as this 1992 article reveals: Canada: Microsoft opens workgroup software R&D facility
VANCOUVER, BRITISH COLUMBIA, CANADA, 1992 JUL 28 (NB) -- Microsoft has opened a workgroup software development operation here, the only Microsoft research and development facility outside the United States that will develop products for world markets.
In short, Microsoft is pulling a PR stunt, timing this announcement to make it appear that it was related to failure of the Comprehensive Immigration Reform, which contained a massive H-1b increase provision. Industry raises similar false threats that they are offshoring due to a shortage of H-1b, when in fact H-1b is a primary tool in offshoring.
And the point of this post is????? Is the poster trying to say, MS is spending so much money in Vancouver, Canada to pull a stunt? I am not sure, whether they would spend so much on building new infrastructure unless they are *REALLY* frustrated with the existing setup...
If you go to any top tier engineering grad school, about 80% of the students are going to be non-americans (believe me, it is not the non-americans fault to study in top grad school), and if MS wants to hire FRESH TALENT OUT OF TOP TIER GRAD SCHOOL, they need Visas...
Would any of you here going to offer a solution to MS wanting to hire grads from Top tier schools? Dont tell me, they should hire US Citizens and not fresh talent...We both know, who is more fired, possessed, works harder, brings in fresh knowledge...You and me studied in grad school few years back and you will understand what I mean, if you have a family now...We have other priorities in life to take care of...And fresh grads' only priority is to make that first impression on the job and get a secured life...And naturally, they are going to work harder than experienced programmers like you and me...Ofcourse, we bring in a different valuable ingredient to the table, called, "EXPERIENCE"...
But, if the company's focus(like MICROSOFT) is to hire fresh talent, how are they going to do it, without any Visas?
Do you guys have a solution?
Now, now, settle down. You're being a little disingenuous. It's obvious to everyone, even to you, that Mr. Berry is NOT saying they are opening a software development center in Vancouver just as a PR stunt. It's the TIMING of the announcement on the heels of the H-1B visa setback in the US Senate that smacks of a PR stunt.
This post clearly shows that "The Nile" is not just a river in Egypt.
Keep on dreaming while Canada and other nations start to benefit from the taxes paid by successful businesses relocating there.
The US, like Canada, should have a point-based visa system to separate the innovators from the practitioners.
Points should be given for inventions, patents, running a successful - job creating - business, proven teaching/mentoring skills with a commitment to do the same in the US, leading development of a successful open source software project, college education level/grades, years of experience, current salary level and position (i.e. are you a chief architect or an entry level engineer).
Then, these cream-of-the-crop innovators should be paid as such, in the top 5% of their field.
A point based system would help cleanup the loopholes (e.g. cohen and grigsby) and misuse (7/10 top H-1B users are foreign outsourcers, body shops, ...) - thus freeing up more visas for legitimate use.
Good point, most of these H1b visas benefit entry level jobs for Indian companies. That is a fact.
Let's see. M$ starts a new location in Vancouver. Hires a bunch of cheap labor. Then imports the whole lot of them on a L1 visa, without limitations.
What's that sucking sound? Oh yeah. Americans being sucked out of their jobs and into the unemployment line.
This is not the first Microsoft facility outside the US nor will it be the last. The issue is that Microsoft is falsely spinning this as being due to H-1B restrictions, when it's not. They are falsely spinning this as a job loss for America, which it is not, because their harping on the visa issue shows they had earmarked the jobs for foreigners anyhow. This is just Bill pitching a fit because his demand for unlimited visas was spurned, nothing more. Hardly the death knell for American IT.
What I wanna know is Who the HECK is this Kim Barry ?
And who gave her right to represent American programmers?
When was the last time she coded anything?
Hey Kim.. What was the last language you used?? Fortran?? or dBase?? ha ha ha ha
Bunch of outdated jokers and losers complaining about competition..
methinks this is another racist KKK group of "hatriots" masquarading as genuine americans..!
Go .. cry in the corner your loser!!
In reply to,
"Let's see. M$ starts a new location in Vancouver. Hires a bunch of cheap labor. Then imports the whole lot of them on a L1 visa, without limitations.
What's that sucking sound? Oh yeah. Americans being sucked out of their jobs and into the unemployment line."
Have you worked with anyone with M$? Do you know what their average entry level salary is? Do you have any friends over there? DuH...Their entry-level salary for fresh graduates is much more than what you and me received when we started our careers...You wouldn't accept that coz you live in your own shell and wouldn't want to see the truth...Dont believe what I say...Just google out and check the facts on how much M$ pays to fresh college grads...Dont distort the facts if you dont have anything to say...DuH...Disgusted with your attitude...
And whats the unemployment bullshit ? If you aint willing to take the paycut to compete with fresh talent, honestly mate, you dont deserve to be in the IT field...You will just hang on to your 130$ billing rate of yours and if you dont get any, you directly go to the unemployment office rite? There are other options like taking a pay cut to be more competitive..and by paycut I dont mean, working for 20 or 30 or even 40$ an hour..I am talkin more than that..and that wouldn't suit the lavish lifestyle you have lived so far...So, you are better off claiming unemployment than working for say, 60 or 70$...DuH...Go and check the average US household income and see where you stand...Atleast then, you will stop talkin about CHEAP LABOR and realise how privleged you are, to work in IT field..
As usual, the ignorant, ranting anti-American worker shills are showing up. How can anyone in American IT not know who (Mr.) Kim Berry is? It must make job thieves with inflated resumes feel better to believe all their smack talk about American workers. I'd watch the rupee if I were you - soon you won't be cheaper.
In reply to,
"As usual, the ignorant, ranting anti-American worker shills are showing up."
Dude! When I talk about truth, I become ignorant? I made the first post on this comment section. Read that. If you are a CEO of Microsoft, what would you do? Answer honestly.
And do you really think, the wage you earn CURRENTLY in these days of H1Bs and outsourcing is REALLY CHEAP as you claim to be? What do you think, IS CHEAP? Do you know the average salary, MS pays to fresh grads out of college? Do you think, that is cheap?
Yah right..You will start your rant about how these H1B workers are foreign and how they dont deserve to be here without directly answering any of my questions...Coz, thats all the knowledge you have...
And, by building near the US in Canada, Bill will get his wish of unlimited visas, because Canada grants citizenship easily after 3 years and then they can get a NAFTA TN visa which has no cap.
This is to the posters that seem to think “Fresh Talent” is the end all be all of the computer industry.
I am a 40+ year old software engineer and I have 20 years programming experience. I design large software projects. I interact directly with the salesmen, users, managers and company executives in order to create the specifications for new software projects and then lead a team of programmers that write the programs. Typically I will do the harder multithreaded server side code while the junior developers and interns build GUI apps and web applications that connect to the server. I also train the interns and help the junior developers with the front end code if they get stuck.
Over time the company replaced all the junior and mid level developers with programmers from an Indian shop.
Recently I was asked to train an H1b from the shop to replace me. He was a very nice fellow and we got along well during the transition. He had a MS and a very impressive resume. Although I did find it a little odd that he claimed to have more years experience in AJAX and ASP.NET than .NET had even been in existence. I also wondered how he was able to complete his masters and get all this job experience by the tender age of 25. I brought both of these discrepancies to the attention of HR and management but they had already made up their minds about hiring him. I can’t really blame them since he was only asking for 1/2 the salary that I make. The transition went well. I showed him where the code repository was and how to access it. I set him up with an admin account and introduced him to the junior developers. It turned out introductions were unnecessary since they all came from the same shop and had worked together before.
I looked for another job for a while but no one was interested in hiring a programmer my age so I got together with 2 of the other laid off programmers and we opened up our own company making corporate web sites with ASP.NET and AJAX. Talk about easy money. We were getting $15k-$20 for a site that took us less than a day to build with the templates we created.
A few months went by and I got a call from my old boss. Seems they are having trouble with their new senior developer. Servers are crashing and the database is full of dupe records. Customers are canceling order and asking for refunds. He asked me to talk to him to find out what’s wrong. My old boss is not an engineer and does not understand what the new guy it talking about when he tries to explain what’s going on. I like my old boss so I agreed to talk to the new guy. It turns out that he is in the process of rewriting the whole system and it won’t be finished for about 6 months. In the mean time the system will not be usable since all the table structures are changing and the client applications need to be changed to match them. I asked him why he was rewriting the whole system and he told me “That’s what they told me to do”. It turns out what they had asked for in a meeting was to change the pricing structure system for the customers and the bonus system for the salesmen. (They like to shake things up once in a while in order to motivate the salesmen.) The new guy told them he would need to rewrite the table structures in order to do it and they told him “Sure, what ever you need to do to make it work”
I told me old boss that the problem is that he gave you exactly what you asked for instead of what you actually needed. My old boss offered me my old job back but since I already had my own company going I declined. Over the course of the next few months My old boss kept making offers of increasingly higher salaries to come back. The last offer was for 150% of my old salary. I’ll admit I was tempted but I’m glad I didn’t take it. The company declared bankruptcy a few days after the last offer.
I guess it all worked out in the end. My old boss works for me now.
No shortage just don't give bulk of visas to Infosys, TATA & Wipro
Turns out there's one thing folks on all sides of the often heated debate over H-1B visas can agree:
There's a startling lack of publicly available data about the program, which makes it almost impossible to know which companies are getting the controversial visas and why. And much of the data that does exist is disputed by one side or another.
A list of the top 200 employers of H-1B visa holders for 2006 compiled by the U.S. Department of Homeland Security and obtained by the Mercury News illustrates the problem. Of the dozen or so Silicon Valley companies on the list, Oracle ranked highest at No. 9. Cisco Systems was 13 and Intel was 14.
According to the list, Oracle was issued 1,022 H-1B visas in calendar year 2006, a figure that includes renewals of previously issued visas. But Robert Hoffman, an Oracle spokesman, said his company could only confirm that it made 170 new H-1B hires in the federal government's fiscal year 2007, which runs from October to September.
However, according to data from the U.S. Department of Labor, Oracle applied for 737 visas in 2006, up from 264 in 2005 but down from 1,627 in 2004. Hoffman, however, called those numbers "highly inaccurate."
"There's no good data," said Lynn Shotwell, executive director of the American Council on International Personnel, an industry trade group. "We know demand well exceeds supply, but we don't really know what the demand is."
The confusion over the numbers highlights the incredibly complex nature of the H-1B program, which involves three federal agencies. And the lack of real, fundamental data about who is using these controversial visas and for which jobs has frustrated folks on all sides of the debate.
"I think that's pretty indicative of the oversight of this program," said Sonia Ramirez, legislative representative for the AFL-CIO. "There are a number of agencies with responsibility. And in some cases, they don't know how many visas they've issued. And in the end, that weakens the enforcement of the program and protection for workers."
High-tech companies have been lobbying for years to raise the cap on the 65,000 H-1B visas issued every year. Critics who oppose an expansion argue that the visas take high-paying jobs from Americans and give them to lower-paid immigrants.
The comprehensive immigration bill that was recently defeated in Congress would have almost doubled the number of H-1B visas to 115,000 a year, exempting 40,000 people with higher degrees from any restrictions. It also would have accelerated the employer-based green-card system for workers already here, a provision that tech companies favor because it allows them to move current, temporary workers to permanent status and free up H-1B visas for other workers.
How steep is the demand for those additional visas? Here is what is known:
The federal government awarded 124,096 H-1B visas in the fiscal year ending October 2005, the most recent annual totals available. That includes renewed visas, which don't count against the annual cap. It doesn't include the 20,312 applications the government turned down.
Companies filed 119,193 applications for the 65,000 visas that will be awarded for the fiscal year starting in October 2007.
There were so many applications that, after two days in April, the government cut them off. It continued to take applications for the 20,000 visa exemptions for people with master's degrees until April 30.
Reaching the cap so quickly only further antagonized tech companies.
"I think one of the frustrations we have about the government running out of H-1Bs in April is that you have an entire graduation class that's not even eligible," Hoffman said.
Despite the demand, it's hard to know who gets the visas and how they are used.
In part, that's because of the byzantine process for applying and granting the visas. A company that wants H-1B visas files an application with the U.S. Department of Labor. The Labor Department screens the applications, then passes them to the Department of Homeland Security, which includes the office of U.S. Citizenship and Immigration Services. Applications approved by the immigration service are then forwarded to the U.S. Department of State, which actually issues the visas.
So who wants these visas? And how badly? To answer that question, the Mercury News first examined a series of databases on the Labor Department's Web site.
Looking at one company, Cisco Systems of San Jose, the data showed the number of H-1B applications filed by Cisco rose from 481 in 2004 to 1,027 in 2005 to 2,283 in 2006. When asked about those numbers, company spokeswoman Robyn Jenkins would neither confirm or deny them.
"There is currently a shortage of technically skilled workers in the U.S., and as Cisco hiring overall has increased in recent years, so has our use of H-1Bs to fill certain highly specialized positions," Jenkins wrote in an e-mail.
But Shotwell, the tech-industry lobbyist, said such tallies are misleading because companies often file multiple applications for a single person or large blanket applications for a number of positions they might not ultimately need because they want as many as possible before the cap is reached.
Still, the applications do show the types of jobs companies hope to fill. At the low end, Cisco wanted a visa for a customer support engineer position that would pay at least $46,900 annually. At the high end, Cisco wanted a visa for a director of manufacturing that would pay from $166,566 to $212,300.
To get a clearer picture of the H-1B numbers, a Labor Department spokesman recommended contacting the Homeland Security Department, where the immigration service conducts a lottery to award the visas.
Initially, a Homeland Security spokeswoman said the department doesn't release figures on the number of visas awarded to individual companies.
"I don't believe we compile that information," said spokeswoman Sharon Rummery. "And it may be that we don't have any operational use for that."
A short time later, Rummery found a list of the top 20 employers receiving H-1B visas in 2006. The list is dominated by India-based outsourcing companies, such as Wipro and Infosys, which at No. 1 and No. 2 respectively received 3,143 and 3,125 new visas. The only Silicon Valley company on the list was Intel, ranked No. 13 with 613. Microsoft was fifth with 1,297.
But another list circulating on Capitol Hill told a somewhat different story. That list was also from the Homeland Security Department and included the number of new visas as well as the number of renewal visas.
According to that list, Oracle outranked Intel, receiving 1,022 visas in 2006. Intel received 828, as did Cisco; Yahoo received 347; and Hewlett-Packard received 333.
HP spokeswoman Pamela Bonney couldn't offer any guidance on the accuracy of the numbers.
"HP does not track visa applications filed on an annual basis," she wrote in an e-mail. "I can confirm that the employees that have H-1B visas are less than 2 percent of HP's total U.S. employee population."
Last stop: the State Department. A spokeswoman said the department doesn't disclose detailed numbers regarding H-1B visas.
Contact Chris O'Brien at email@example.com or (415) 298-0207.
Lou dobbs and co do not want an immigration reform ( which included a points based system) - he likes to stir up the American emotions and in the meanwhile get rich himself.
His favourite place - Detroit
Kim Berry , Lou Dobbs and the likes have never learnt from Soviet Union, Berlin Wall and to a smaller scale - Detroit. The world is globalizing rapidly and protectionists who whine and never change with the times will will be lining up for joining the Army.
Kim, your time can be better spent elsewhere- btw do I need to preach about free markets in this country?
In my humble opinion the individuals who run this forum are delusional people who definitely can analyze data well but lack common sense. Only a conspiracy theory buff will belief that big and successful companies like HP, Oracle and IBM will hire H1B workers in thousands if they have suitable candidates available in the country. While it is not easy to get a H1B visa and move to USA to work, once on H1B visa a worker has lots of flexibility in moving jobs. The quota restrictions that create an artificail shortage of workers ensure that H1B workers can move to a place that offers them the best salary. So claims about H1B workers reducing salary are non-justified. Yes there are lies, damn lise and then statistics as said by the great American Mark Twain. You can dfinitely bring up statistics to show that H1B workers are paid n % les than US citizens.
t's see. M$ starts a new location in Vancouver. Hires a bunch of cheap labor. Then imports the whole lot of them on a L1 visa, without limitations.
Really - that shows your world awareness. Canada does not have an L1/H1 visa system . Merit survies - and a professional can live comfortably if he is good. Also do you mind taking a look at Canadian Dollar now? Soon, US will be the source for cheap labor
"Kim Berry , Lou Dobbs and the likes have never learnt from Soviet Union, Berlin Wall and to a smaller scale - Detroit. The world is globalizing rapidly and protectionists who whine and never change with the times will will be lining up for joining the Army."
It's the lack of protectionism that has killed Detroit... you obviously don't live in the midwest... so many factories closed due to the free market that you think is so great? Tell me... what is so great about it, other than it takes away good paying jobs? It's free trade that is making Americans line up for the Army... not protectionism... if we had some more protectionimm, maybe we'd still be actually manufacturing things in this country..
"Really - that shows your world awareness. Canada does not have an L1/H1 visa system . Merit survies - and a professional can live comfortably if he is good. Also do you mind taking a look at Canadian Dollar now? Soon, US will be the source for cheap labor"
That shows YOUR world awareness... the immigrants would become canadian citizens... THEN be imported here in L1 visas... actually, as the other writer said, would be able to work on a NFTA visa...
"Atl east then, you will stop talkin about CHEAP LABOR and realise how privleged you are, to work in IT field..."
It's that typical "we make to much money" attitude that allows companies to screw with everybody... who is to say we make too much money? You? Do you have any idea how difficult our work is? Probably not... besides... someday, someone will be saying the same thing to you when they replace you with a cheap import... "you make too much money.. take a pay cut." Why are we supposed to take it up the behind just because you have a job that doesn't pay as well as ours?
Remember, first they came for the programmers, i didn't complain 'cos they made too much money.. then they came for the nurses, and I didn't complain 'cos they made too much money... then they came for me, but there was no one left to protect me?
Remember that when you have to train your replacement in 5 years... think it can't happen? Think again!
It's the lack of protectionism that has killed Detroit... you obviously don't live in the midwest... so many factories closed due to the free market that you think is so great? Tell me... what is so great about it, other than it takes away good paying jobs? It's free trade that is making Americans line up for the Army... not protectionism...
Remember that the economic prosperity of US had been achieved due to free markets, capitalism and immigrants (including your ancestors) . What if other countries think the same - every county decides to ban US products and Middle East decides to get rid of US oil companies? Do free markets work only for bringing oil to US?
"H1B workers are paid n % les than US citizens"
Wouldn't this have an impact on everyone's earnings in the company and the country.
Things are moving toward a disaster-
Go support numbersusa.com - they have the right ideas and can communciate..
Not only old programmers hate H-1b workers, they also hate any programmers who are much younger than them, period.
To the anti-business fella who is calling doomsday and asking support for numbersusa, read this:
It says that small tech companies do not outsource. To quote: "The tech industry has never made up more than 15% of the outsourcing market"
And those who did, they did so partly due to visa restrictions.
Like the founders of Google, Sun, Intel, and a slew of other successful technology companies, there are many would-be entrepreneur just wasting away, tied down by visa restrictions and stuck in the immigration black-hole championed by people like you.
These are the boys and girls who would build tomorrows Google/Apple, create local jobs and build an industry ... and make the country better in the process ... Or would you rather they do it in Australia/Canada/UK/whereever but not here?
PS: Oh by the way, if you are incompetent, you wont even get a job as a gutter cleaner.
It is that other anonymous who is lacking in common sense. The fee for an H-1B visa is pocket change compared to the salary savings over an American. How can it be good for America to displace American breadwinners, when 70% of our economic strength comes from consumer spending and property and sales taxation? But the big companies would sell off their grandmothers for better figures this quarter.
People all over the DEVELOPED world are taking a real dislike to globalization.
Unqualified American workers should all be moved to third world countries (like Mexico?) because they are the ones who really drag down US competitiveness.
Another H1b moron post about moving to Mexico.
All of Mexico's illiterate people are coming to US and we had the big showdown in congress.
Yes you are right in one sense Mexico is under represented by illitetrate people in society.
..Moreover, a balanced discussion of outsourcing abroad should reflect that, just as U.S. firms use the services of foreigners, foreign firms make considerable use of the services of U.S. residents. Many do not realize that, in contrast to its trade deficit in goods, the United States runs a significant trade surplus in services--particularly in business, professional, and technical services. This country provides many high-value services to users abroad, including financial, legal, engineering, architectural, and software development services, whereas many of the services imported by U.S. companies are less sophisticated and hence of lower value.9 A recent study of twenty-one occupations that are most likely to be affected by outsourcing found that net job losses were concentrated almost exclusively in the lower-wage occupations and that strong employment gains have occurred in the occupations that pay the highest wages.10 Further expansion of trade in services will help, not hurt, the U.S. economy and the labor market.
Just as discussions of the outsourcing o...
Bottomline : Nobody wants you if you are lowskilled..
What do you say about this?
he Indians are recruiting a combination of fresh college grads and experienced vets who have worked at American companies. They're especially active at campus job fairs, and unlike a few years ago students know who these companies are and respect them. In fact, the Indian connection has become an attraction. "I thought this would be a fantastic opportunity, especially because they send you abroad for training," says Brian Oswald, a 23-year-old Rutgers University graduate with a 2006 degree in industrial engineering who joined TCS in February.
urprisingly, it often costs more to ship in Indians on a temporary basis than it does to hire Americans. Base salaries are comparable, because Indian companies must by law pay market rates for people they bring in on work visas. But the companies typically have to provide the Indians with housing, and retirement benefits cost more because of India's social security contribution requirements. Also, as the Indian rupee has risen more than 10% against the dollar this year, hiring Americans has gotten cheaper....
I found this site recently and I am amused by the attitudes of the people who maintain this site- they should rather spend their time upgrading their skills in their chosen profession
I have known many people with outstanding current credentials who are sub employed. This includes many "older" experienced individuals with advanced technical degrees.
My first observations of current "employment trends" occurred during the mid 1980's. Friends were employed at General Electric as IT technical managers. A communications link was established with India. My friends had their reporting personnel eliminated. They then became responsible for generating system specifications and interacting with their new "staff."
With respect to Microsoft, I recall an article in a local Seattle Newspaper. This was during one of the many sessions where Microsoft was decrying the lack of "qualified" local talent. The Microsoft representative was asked, "Why do you not take advantage of people with advanced technical degrees who are currently employed as janitors and working in car washes?" To which, the Microsoft representative responded, "Microsoft has a unique culture that cannot be learned or taught."
To the person who wrote:
"I found this site recently and I am amused by the attitudes of the people who maintain this site- they should rather spend their time upgrading their skills in their chosen profession"
Unfortunately, this site (and others such as numbersusa.com) is a haven to the kind of people who believe that if there is a weed growing in a beautiful garden, then the way to eliminate that weed is to nuke the entire garden.
Actually bigger threat is L1 Visa compared H1B. L1 there is no restriction of salary. Also no Cap or no restriction. Also there is a rule of banning outplacement of L1B in Client Sites. But most companies overcome this by some loopholes. When a company does not get H1b they can apply easily L1 and place people. So H1b Cap does not serve the purpose.
Nowadays abuse of H1b and L1 had increased so much that some thing need to be done. Mainly consulting companies are using most H1b and L1. It is a good idea to make more tighter regulation so that Companies can recruit h1B/L1 only if US workers are not available
Is the Party Over for Indian Outsourcers?
Infosys, TCS, and Wipro still rake in profits, but they face challenges ranging from a stronger rupee to the likes of IBM and Accenture romping on their home turf
In late July, rumors swirled that Infosys Technologies (INFY) might be readying a takeover offer for Cap Gemini (CGEMY) or another major tech-services player in the U.S. or Europe. So on July 25, when the company alerted the press and the markets that it had a major announcement, there was a great deal of anticipation.
Instead, Infosys unveiled a $250 million outsourcing contract with Royal Philips Electronics (PHG) of the Netherlands. It was an acquisition of sorts, the company said, at least of the outsourcing centers that belonged to Philips. "We're taking the model to a newer level," said Chief Executive Kris Gopalakrishnan.
Landing a new contract certainly isn't bad news, but the development was somewhat deflating for those who believe that Infosys needs to redefine and reposition itself in the multibillion-dollar arena for global outsourcing services. In fact, Infosys and other Indian outsourcers are facing a raft of competitive challenges that will require some dramatic new strategies.
Adversities Add Up
True, India's biggest outsourcing firms continue to rake in the profits, at least judging by the latest earnings season. The top five players—Tata Consultancy Services (TACSF), Infosys, Wipro (WIT), Cognizant (CTSH), and Satyam (SAY)—reported robust profits in the quarter ended June, 2007. And executives generally forecast strong growth ahead.
"We're very happy with having beaten the forecast," said CEO and Managing Director S. Ramadorai of the $3.1 billion Tata Consultancy Services in Bombay. "TCS, as the leader, is doing well." Ramadorai predicts $60 billion in tech-services exports for the industry by 2010, nearly twice the current $35 billion, plus $20 billion in revenue from domestic business.
Yet behind this show of supreme confidence lurks deep unease. A confluence of adversities is at play. They include an appreciating rupee that is cutting into earnings, a severe shortage of qualified talent at home, and a cap on H-1B worker visas to the U.S., along with pre-2008 election protectionism threats.
On top of that, there is the end of preferential industry tax benefits at home and the growing success of multinational competitors such as Accenture (ACN) and IBM (IBM) on Indian turf. Perhaps most challenging for the Indian players is the pressing need to move up the ladder into business consulting, a domain that companies such as IBM have dominated for decades. Indian outsourcing firms need to invest heavily to secure a position in this arena, and that will erode their fat profits, at least in the short term.
For the first time, industry insiders are asking: Is the outsourcing game over for Bangalore? "The Indian IT companies have had an unusually long run in profits and growth," says Siddharth Pai, partner and managing director of global tech advisory TPI Advisory Services India. But that's "an anomaly," he adds. "As they mature, they can't expect the same kinds of returns."
And mature they must. For the past decade, Indian software-services firms, which pioneered the business of delivering tech services to the developed world from India efficiently and at 40% of the cost of companies such as IBM, have grown exponentially. Revenues exploded from a mere $1 billion in 1997 to $35 billion in 2007.
At first, their multinational competitors such as IBM Global Services, Accenture, and Electronic Data Systems (EDS) were taken by surprise. But then they joined in the new game, setting up shop in India and leapfrogging by making local acquisitions, hiring aggressively, and offering similar services to their clients. As of June, the three multinationals alone have 100,000 professionals on their rolls in India. That's about a third of the top three Indian players, and the multinationals only began hiring three years ago.
Now that the competition is evening out at the bottom of the business, the battleground will start to move up to the higher end—business consulting and the integration of the offshore and on-site services. Here, the multinationals clearly have an edge. Not only have they been providing consulting services for decades, but they have been doing it across geographic borders, using experienced talent and cultivating long-term and deep relationships with customers. More important, companies have been investing in research and product development for decades—in 2006, IBM spent $6.2 billion on research and development, and its largest R&D center outside the U.S. is in Bangalore.
Indian companies, in contrast, have almost no research and development and spend very little on it. They began building their high-end consulting services only two years ago, and all of them have done so organically. Infosys began Infosys Consulting in Fremont, Calif. Wipro has been making small but strategic acquisitions in the U.S. and Europe. And TCS, which has the widest reach with 150 offices and 79 development centers worldwide, says that 3% of its revenue now comes from consulting. That's peanuts compared with foreign rivals.
Lagging the Competition
Nor have the Indians attempted to leapfrog into the big league through a major acquisition. "They have to, they should, to get a global footprint," says Avinash Vashistha of New York outsourcing consultancy Neo-IT. Do they lack confidence? Certainly, "the levers and supportive environment they have in India are not available to them overseas," says Kris Wadia, executive partner, global sourcing, at Accenture.
Indeed, the tech industry in India is so pampered by New Delhi, and so admired by ordinary Indians, that they have been lagging behind the competition. Industry trade group Nasscom recently released a report on the necessity of Indian companies to begin to innovate to survive, and suggested the establishment of an ecosystem for innovation, helped by policy initiatives.
But while India lacks a formal innovation culture, one would never know from the assumed superiority over foreign rivals. Indian firms are simply unable, culturally, to absorb a Western company. Industry analysts say Indian companies such as Infosys are hierarchical, and have an elitist view of their business and suffer from "conceptual Brahmanism," referring to the group at the upper echelon of the Indian caste system.
IBM's India Buildup
There's a ring of truth in that. While the companies all employ Indians and some foreigners from across economic and social lines, the top rungs of both Infosys and Tata Consultancy are dominated by upper-caste South Indians. Satyam has a big contingent of employees from the company's native state of Andhra Pradesh. Integrating a Western firm into that closed culture could be problematic. Infosys Chief Operating Officer S.D. Shibulal dismisses the inability to acquire, saying only: "We are perfectly capable of building things organically."
Combine India, China, Isreal, and ( now ) Canada and the ever increasing European appetite for skilled professionals - wait and see what happens to these people with their narrow minded attitudes- a lot of these guys drive big SUVs, go to walmart, use oil from middle east and talk about protectionism.
In five years,these guys will be a bunch of ex white collar UAW folks ( rather USW? ).
From Businessweek Article:
Industry analysts say Indian companies such as Infosys are hierarchical, and have an elitist view of their business and suffer from "conceptual Brahmanism," referring to the group at the upper echelon of the Indian caste system.
These supremacist & racist will be first ones to find themselves in a commodity business. Looking forward when Eastern Europeans are tapped for best and brightest are they going to work for "conceptual Brahmanism" or IBM?
John Edwards sold out. He says he is por-worker and then says he is pro-H1b to the Silicon Valley Leadership Group last week.
Which candidate is for computer scientists here?
H1Bs are the modern day equivalent of bonded labor. They should eliminate H1-Bs and bring in a points based system and have no caps so that there is no difficulty in getting top talent.
Whiners and losers in a global economy are at the bottom of the barrel - they usually get thrown out.
we should have "no caps so that there is no difficulty in getting top talent?"
sorry, loser. there is a labor shortage myth in our country and we our talented citizens take top priority.
sorry, loser. there is a labor shortage myth in our country and we our talented citizens take top priority...
Hard to believe that talented US citizens are not getting jobs,
No surprise its the same thing in Information Tech,its not that there are no Americans , there are very talented geniuses who earn top dollars, but thats a minority.
Thats why Microsoft moved to Canada, there is no H1-B or bonded labor concept there and they can get top talent from anywhere in the world.Who is the loser - not me anyways and I am not scared of losing my job.
BTW Canada is consistently ranked higher than US in standard of living ( US social security and retirement benefits are on oxygen support, Currency is crashing, Mediical insurance companies plunder , none of these in Canada ), its not that Canada undercuts US wages now that CAD is very strong
Good place to start.
The agenda should be getting back to the basics and going from t from the ground up and not to bring in a narrowly focussed issue like H1-B.
Being a parent,I can vouch for the difference in standards. Ditch the calculators and gadgets-use the brain instead-in India calculators are banned up to the age of fifteen.
First thing to do is to change the education system in US and bring the math and science to international standards - then everything will fall in place in due course.
Disclaimer: I am not affiliated with this site.
i am 25 years old and when i was in india i was the oldest programmer in my team. the rest of them were around 21-22 and few of them even 19. what do 19 year old kids do in US ?
i seem them all around in new york working in bars as strippers or waiting tables. its the nature of *ALL* men to search for comfortable life. the fit and wise will migrate and survive and kick ass where they build their base. and you know what the host does ? they build guilds and start whining.
i can see the youtube video of a 50 year old guy who says that he has a 1.6 billion dollar project and is java programmer blah blah blah. oh yea big deal ? kids in india work on such project. my kid bro worked on multi-billion britian to euro bank transfer project. he doesnt go about bragging. we lost jobs in 2001. i was unemployed for nearly a year. the only thing i did was persevere. i loose 4k every month in taxes here.i am never going to get that back. should i whine and crib ?
you sick bastards. get a job.
Google is vying for MORE H-1B visas also!
top 200 H-1B Visa companies are:
Rank Employer H1-B Visa Count
1 INFOSYS TECHNOLOGIES 4,908
2 WIPRO 4,002
3 MICROSOFT 3,117
4 TATA CONSULTANCY SERVICES 3,046
5 SATYAM COMPUTER SERVICES 2,880
6 COGNIZANT TECH SOLUTIONS U.S. 2,226
7 PATNI COMPUTER SYSTEMS 1,391
8 IBM 1,130
9 ORACLE 1,022
10 LARSEN & TOUBRO INFOTECH 947
11 HCL AMERICA 910
12 DELOITTE & TOUCHE 890
13 CISCO SYSTEMS 828
14 INTEL 828
15 I-FLEX SOLUTIONS 817
16 ERNST & YOUNG 774
17 TECH MAHINDRA AMERICAS 770
18 MOTOROLA 760
19 MPHASIS 751
20 DELOITTE CONSULTING 665
21 LANCESOFT 645
22 NEW YORK CITY PUBLIC SCHOOLS 642
23 ACCENTURE 637
24 JPMORGAN CHASE 632
25 POLARIS SOFTWARE LAB INDIA 611
26 COVANSYS 611
27 PRICEWATERHOUSECOOPERS 591
28 QUALCOMM 533
29 GOLDMAN SACHS 529
30 KPMG 476
31 MARLABS 475
32 UNIVERSITY OF MICHIGAN 437
33 UNIV. OF ILLINOIS AT CHICAGO 434
34 UNIVERSITY OF PENNSYLVANIA 432
35 THE JOHNS HOPKINS UNIVERSITY 432
36 SYNTEL CONSULTING 416
37 CITIGROUP GLOBAL MARKETS 413
38 BEARINGPOINT 413
39 UNIVERSITY OF MARYLAND 404
40 KEANE 386
41 HTC GLOBAL SERVICES 382
42 IGATE MASTECH 378
43 HEXAWARE TECHNOLOGIES 362
44 CAPITAL ONE SERVICES 362
45 COLUMBIA UNIVERSITY 355
46 LEHMAN BROTHERS 352
47 YAHOO! 347
48 U.S. TECHNOLOGY RESOURCES 339
49 INTELLIGROUP 336
50 HEWLETT-PACKARD 333
51 RAPIDIGM 330
52 MERRILL LYNCH 329
53 GOOGLE 328
54 CITIBANK 322
55 DIS NATIONAL INSTS OF HEALTH DHHS 322
56 YALE UNIVERSITY 316
57 NOKIA 314
58 TEXAS INSTRUMENTS 313
59 CAPGEMINI 309
60 HARVARD UNIVERSITY 308
61 EMC 305
62 SUN MICROSYSTEMS 303
63 RITE AID 301
64 BLOOMBERG 298
65 GENERAL ELECTRIC 292
66 AMGEN 289
67 McKINSEY U.S. 286
68 MORGAN STANLEY 285
69 STANFORD UNIVERSITY 279
70 WASHINGTON UNIV. IN ST. LOUIS 278
71 VERIZON DATA SERVICES 276
72 NYC-HHC HARLEM HOSPITAL CENTER 276
73 UNIVERSITY OF PITTSBURGH 275
74 INDIANA UNIVERSITY 273
75 OHIO STATE 271
76 EVEREST CONSULTING GROUP 269
77 UNIV. OF MINNESOTA 269
78 AMTEX SYSTEMS 268
79 UNIV. OF WISCONSIN AT MADISON 268
80 SUNY-STONY BROOK 262
81 AMAZON GLOBAL RESOURCES 262
82 CLEVELAND CLINIC FOUNDATION 256
83 DALLAS INDEPENDENT SCHOOL DISTRICT 255
84 UNIV. OF CALIF. AT DAVIS 254
85 NORTHWESTERN 251
86 SYNTEL 250
87 UNIV. OF MISSOURI AT COLUMBIA 247
88 GLOBALCYNEX 247
89 KANBAY 246
90 AMERICAN SOLUTIONS 242
91 UNIV. OF FLORIDA INTL. CENTER 240
92 UCLA 239
93 DUKE UNIV. MEDICAL CENTER 238
94 MOUNT SINAI MEDICAL CENTER 236
95 BANK OF AMERICA 236
96 SOFTWARE RESEARCH GROUP 234
97 BAYLOR COLLEGE OF MEDICINE 234
98 MASSACHUSETTS GENERAL HOSPITAL 232
99 CIBER 232
100 VERINON TECHNOLOGY SOLUTIONS 230
Rank Employer H-1B Visas
101 EVEREST BUSINESS SOLUTIONS 226
102 VOLT TECHNICAL RESOURCES 224
103 OKLAHOMA STATE UNIVERSITY 223
104 COMPUNNEL SOFTWARE GROUP 222
105 U.S. TECH SOLUTIONS 221
106 SYMANTEC 220
107 JSMN INTERNATIONAL 218
108 UBS 216
109 CVS PHARMACY 213
110 THE PENNSYLVANIA STATE UNIVERSITY 213
111 UNIVERSITY OF WASHINGTON 213
112 NORTEL NETWORKS 212
113 UNIV. OF CALIF. AT SAN FRANCISCO 211
114 UNIVERSITY OF MASS. MEDICAL SCHOOL 210
115 SPRINT/UNITED MANAGEMENT 209
116 HOUSTON INDEPENDENT SCHOOL DISTRICT 209
117 PURDUE 208
118 GLOBAL CONSULTANTS 207
119 EMORY UNIVERSITY 207
120 UT HEALTH SCIENCE CENTER 207
121 UNIV. OF COLORADO 207
122 VANDERBILT UNIVERSITY 205
123 OBJECTWIN TECHNOLOGY 205
124 DIASPARK 204
125 HSBC BANK USA 203
126 EBUSINESS APPLICATION SOLUTIONS 203
127 BROADCOM 203
128 PRINCE GEORGES COUNTY (MD.) PUBLIC SCHS 203
129 MICRON TECHNOLOGY 202
130 COUNTRYWIDE HOME LOANS 198
131 TEXAS A&M 198
132 APPLIED MATERIALS 195
133 SCHLUMBERGER TECHNOLOGY 194
134 UNIVERSITY OF IOWA 194
135 IBM GLOBAL SVCS. INDIA 194
136 DELOITTE TAX 194
137 CUMMINS 193
138 ITECH U.S. 191
139 COMPUWARE 189
140 INTL. STUDENTS AND SCHOLARS OFFICE 186
141 UNIV. OF CALIF. AT SAN DIEGO 185
142 WALGREEN'S 184
143 HOWARD HUGHES MEDICAL INSTITUTE 184
144 USC 183
145 VISION SYSTEMS GROUP 182
146 T MOBILE USA 180
147 MULTIVISION 178
148 ELECTRONIC DATA SYSTEMS 177
149 MASSACHUSETTS INSTITUTE OF TECHNOLOGY 175
150 CALIFORNIA INSTITUTE OF TECHNOLOGY 174
151 CASE WESTERN RESERVE UNIV. 173
152 UNC AT CHAPEL HILL 173
153 UNIV. OF ALABAMA AT BIRMINGHAM 172
154 DEUTSCHE BANK 170
155 CATERPILLAR 170
156 HALLMARK GLOBAL TECHNOLOGIES 169
157 CYBERTHINK 169
158 CORPORATE COMPUTER SERVICES 167
159 ADVANCED MICRO DEVICES 167
160 MEGASOFT CONSULTANTS 166
161 ENTERPRISE SOLUTIONS 165
162 FREESCALE SEMICONDUCTOR 163
163 UT SOUTHWESTERN MEDICAL CENTER 163
164 FIRST TEK TECHNOLOGIES 161
165 MICHIGAN STATE 161
166 RESEARCH FDN OF THE STATE UNIV OF 160
167 COMSYS SERVICES 160
168 VIRGINIA TECH 160
169 JUNIPER NETWORKS 160
170 UNIVERSITY OF ARIZONA 158
171 IOWA STATE UNIVERSITY 157
172 UNIVERSITY OF VIRGINIA 157
173 FEDEX CORPORATE SERVICES 157
174 CREDIT SUISSE FIRST BOSTON 156
175 BRISTOL-MYERS SQUIBB 156
176 VERIZON SERVICES 156
177 EBAY 155
178 AJILON CONSULTING 154
179 GENERAL MOTORS 153
180 CAMO TECHNOLOGIES 152
181 MARVELL SEMICONDUCTOR 151
182 CMC AMERICAS 150
183 UT M.D. ANDERSON CANCER CENTER 149
184 NVIDIA 149
185 AT&T SERVICES 147
186 WEILL MEDICAL COLLEGE OF CORNELL 146
187 AXIOM SYSTEMS 146
188 WAYNE STATE UNIVERSITY 146
189 MAYO CLINIC ROCHESTER 146
190 NORTH CAROLINA STATE 146
191 GENENTECH 146
192 MAKRO TECHNOLOGIES 145
193 SVAM INTERNATIONAL 144
194 MEMORIAL SLOAN-KETTERING CANCER 143
195 NUTECH INFORMATION SYSTEMS 143
196 XPEDITE TECHNOLOGIES 143
197 AUTOMATIC DATA PROCESSING 143
198 LOUISIANA STATE 142
199 FANNIE MAE 141
200 MINDTREE CONSULTING/TD> 141
Immigration Fight: Tech vs. Tech
BusinessWeek reveals the top 200 users of H-1B visas and how the likes of Microsoft and Oracle compete with outsourcers for them
Skilled Immigrants' March on Washington
While immigrant advocates want more green cards, tech companies also seek more work visas. As workers hit the streets, the debate is just beginning
This site is disgusting. It's stinks of entitlement and a drive toward unionization. As a former union worker and now programmer, I see this kind of activism and creeping collectivism as a dark cloud looming over the industry - a bunch of parasites ready to pounce at every opportunity and drive us all into the ground so they can consume just a little more of others' productivity. I'll switch professions again before ever letting a union or anything like it get near me again.
The only people who complain about what others are getting in a free market are those who know they can't cut it and can't compete.
You're right about one thing, though, H-1B visas are immoral. Nobody should have to get permission to hire anyone they want to, or to work for whomever they want to, so long as they mutually agree on terms. Hurrah for those companies that have successfully used loopholes in these insane laws to be able to hire who they want to hire.
Hey former union member-turned programmer, how long do you think it will be before you're replaced by an H-1B or you job is offshored? Get a little more programming experience on your resume and you'll find out your true worth pretty quickly.
This site is supported by a bunch of lazy people who are supposedly programmers who do not want to work hard. Heard of UAW , they should name this UPW, the main difference is they don't have restrooms in a website. They do not realize that they have lost the fight already; if these people retrain themselves and learn to compete they would be much better off.
I agree, H1-B is immoral, it hinders free market economy and is reminiscent of plantation labor.
If Indians are so smart, then howcome they dont innovate anything in IT. Howcome, its still a Third World country. The biggest joke is, USA looking for 'highly technical skilled IT manpower' from India, a Third world country which itself is depending on Western countries for technical goods. They boast of 50 million IT people in India. They feel they are smart.But in reality its the opposite. Ofcourse, there maybe few thousands brilliant people in India but it also has 1.1 Billion population. Also India has the worst infrastructure, rampant corruption, pollution, child beggars, very young prostituted girls etc. Ever since 1997 when Indians came in large droves on H1 and L1, the quality of the IT along with wages started to go down drastically.
According to survey, only far less than 25% of the Indians on H1B visa are really qualified to do the highly skilled technical jobs. No big suprises. These Indians only want quick money in short term and IT industry is the answer. Thats why the immigants from the Third World (in particular, Indians) choose this path and the quality is declining.
After all, it is the Western companies who are outsourcing the projects to India. These Indians
make us believe that if we ban H1B visas, then USA will loose competitive edge because these folks will go back to their country. But the point is, they still work for the Western companies where much of the Software life cycle is done and these Indians involve only in lousy coding and testing part of the software life cycle.
Also,i can bet you that Indian H1B'S hire only their own kind. And their code smells bad too.
Good luck to those employers who hire these Indians because the applications will crash due to these Indians semi-skilled low productivity.
95% of the Indian H1B programmers are not involved in any of the complex programming tasks whether it is Compilers, Debbuggers, Assemblers, Open source projects, Frameworks, Automation Tools etc. I bet they are just 'Copy and Paste' coders. This shows they have no passion and they are just in it make quick buck. They have no clue of their projects.
Afterall, most of the software is invented from the 'basements or garages' of the Western households (eg- Google).
As someone pointed out , Indians 'need to code' (just for only money) whereas Western Programmers 'want to code' (both Passion and money). This is why Indian code smells very bad and has to be again re-coded at the later stage by the non-Indian programmers hence defeating the main purpose of the 'cheap hence profitable' IT oursourcing.
The Wall Street will repent in the future regarding the pitfalls of the IT industry outsourcing to India.
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