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FAQ: Data shows overseas shift for U.S. IT jobs

If the Grassley/Durbin bill is approved, Indian firms will have to hire more U.S. workers

July 30, 2009 03:04 PM ET

Computerworld - U.S. IT providers continue to push jobs offshore, while Indian firms work to refine the amount of work they complete overseas. Although Congress may force the Indian firms to hire more Americans -- and Indian companies have been telling investors that they may have to indeed do that -- the change won't likely affect the overall trend and the shift in jobs outside the U.S.

Okay, so where are U.S. jobs going? What's the data show? Data prepared by Everest Group Inc., a research and outsourcing consulting firm, shows in broad brush fashion the shift of jobs overseas by some major IT services vendors. In 2006, U.S. and European firms typically had less than 20% of their workforces offshore; Now, for most companies that figure may well be generally over 30%. (See chart below; yellow indicates onshore percentage; blue, offshore percentage.)

The firms that have discussed their plans include Affiliated Computer Services Inc. and Perot Systems Inc. IBM's U.S. workforce declined 5% last year to 115,000, even as its workforce in Brazil, China, Russia and India grew 15%, to 113,000.

Though Indian firms now have roughly 75% to 80% of their workers in India and other low-wage countries, Western companies continue to close the gap. "It will never become identical, because the companies fundamentally have a different mix of businesses," said Eric Simonson, managing principal of research at the Everest Group.

Aren't Indian firms expanding the size of their U.S. workforces? Yes, there have been announcements by various Indian companies that they plan to open centers in the U.S. But the number of employees is small compared to their overall workforces. Look at Mumbai-based Tata Consultancy Services, for instance. That company earns more than 50% of its revenue from North America, but Tata has more Ecuadoran workers than American workers, according to data it released this month. (See page 18 of TCS's PDF.)

Of the approximately 123,404 employed by TCS, not including subsidiaries, 91.7% are Indian nationals. Of the remaining 8.3% of the company's workforce, just 900, or 8.7% are Americans. That's less than the percentage of TCS workers who are Mexican (9.8%); Ecuadoran (13.1%) or Chilean (15.3%). TCS has employees in every corner of the globe.

How dependent are Indian offshore firms on H-1B and L-1 visas? In a word, very. These companies' business models are based on their ability to move Indian and other foreign nationals in and out of the U.S. Here's a more direct answer: The "majority of [Indian] companies that operate here have significantly more [than] 50% of their workers on H-1B/L1 visas," Som Mittol, the president of the National Association of Software and Services Companies (Nasscom), an Indian trade group, SAID in a recent interview.



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