Outsourcer: A 'global citizen' will emerge

Increasing language enrollments may signal future U.S. workers to apply for jobs in San Francisco, Delhi and Dubai

WASHINGTON -- There's a lot of worry in India about whether the U.S. Congress will restrict H-1B visas -- but not so much for Phaneesh Murthy, president and CEO of IT services firm iGate Corp.

The company, headquartered in Fremont, Calif., is an offshore IT services provider. Of the 6,500 employees in his company, only about 10% are in the U.S., or roughly 650 people. And out of that U.S. workforce, 35% are permanent residents, or like Murthy, U.S. citizens. The balance of iGate's U.S. workforce is temporary visa workers.

It's those kinds of workforce numbers that put Murthy on the firing line of the H-1B debate. But he believes he will be largely unaffected by anything Congress does. Some of it has to do with the way he operates his business, and the rest to do with how he sees the future.

Murthy envisions that perhaps 20 to 30 years from now, a world where restrictions on the movement of workers will melt way. U.S. workers will travel and work globally, in pursuit of the most interesting jobs and projects, something that is already going on. "Many countries in the world will start becoming melting pots for different cultures and skill sets," said Murthy.

It's a Star Trek-like Federation view of the world, but there is some evidence that students are preparing for a more global future.

Foreign language enrollments in elementary schools is believed to be increasing dramatically, driven by parents, many of whom "are looking at the growth and emergence of China as a major player," said Steve Ackley, a spokesman for the American Council on the Teaching of Foreign Languages.

Underpinning this is a belief that "those that can speak the language are going to have a leg up," Ackley said. The council is now updating a survey of foreign language enrollments in K-12, the first since 2000, and Ackley expects it to confirm its anecdotal reports of rising enrollments.

Foreign language enrollments at U.S. colleges and universities in the U.S. have increased. In 1998, there were 1,151,000 students enrolled in a language course in a survey of some 2,800 institutions by the Modern Language Association in New York. By 2006, the last available data (PDF document), that number had increased to 1.522 million, or more than 32%.

But much of that gain is due to increasing colleges enrollments overall, from 14.5 million in 1998 to 17.64 million in 2006. There was nonetheless a gain in course enrollments over that period, from 7.9 students per 100 to 8.6. This enrollment survey is being updated this fall.

A long list of reasons why someone wouldn't want to take a job overseas is there, but a major one may be salaries. Overseas wages in India and many other low wage nations are just a fraction of U.S. wages, particularly at the low end. But for senior level positions the gap is narrowing, says Murthy, and as that gap narrows, the migration is picking up. "I think it's starting at the senior level," he said.

Murthy said he believes wage rates globally will move closer but other forms compensation independent of salaries, such as profit sharing, will play a larger role in making overseas work attractive.

Tuck Rickards, leader of the technology sector at recruiting firm Russell Reynolds Associates, says foreign firms, especially in high-growth markets such as Brazil, China and India, are increasingly looking outside their local markets for talent, especially for workers who know how to manage large operations.

Unclear is how wage competition from overseas will affect U.S. worker salaries. H-1B visa use alone was blamed in one recent study for a decline of U.S. wages.

But for now, Murthy has to tackle more immediate concerns, and that means explaining to investors what steps he is likely to take if Congress acts to restrict visa use, imposing the so-called 50-50 rule to limit H-1B and L-1 visa holders to 50% of the U.S. workforce.

If that law passes, Murthy will need to increase his U.S. workforce by 15%. He will do this by hiring more permanent residents and citizens and using Mexican nationals who can work in the U.S. under the provisions of the North American Free Trade Agreement (NAFTA) without the need for an H-1B visa. He will increase the amount of work done offshore.

"It won't have a big impact on our company," said Murthy of any visa restriction. But he also believes that as wage levels rise in India and competition continues, his firm will compete on its ability deliver value and certain outcomes to a customer, not on the number of people it can assign to a project.

Copyright © 2009 IDG Communications, Inc.

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