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Infosys' hiring plans in U.S., Indiana come after Trump criticism

May 2, 2017

India’s Infosys Ltd. said it plans to hire 10,000 American employees in the next two years, following criticism from the Trump administration that the company and other outsourcing firms are unfairly taking jobs away from U.S. workers.

Infosys, which employs about 200,000 people around the world, will expand its local hiring in the U.S. while adding research capabilities. It plans to open four hubs in the country focused on cutting-edge technologies such as artificial intelligence and machine learning, with the first location to open in Indiana in 2017. That center is expected to create 2,000 jobs for American workers by 2021, the company said.

The moves come after India’s outsourcing firms have come under fierce attack for using foreign workers in place of American employees. Last month, President Donald Trump signed an executive order aimed at overhauling the work visa programs that Infosys and other firms use to bring overseas workers into the U.S.

“In the fast-changing world of today, we need the ability to be local. We need to be trusted by our customers as being local,” said CEO Vishal Sikka in an interview from Indiana. “To work with a mix of global and local talent is absolutely the right thing to do.”

Sikka has come under particular pressure. The Trump administration’s promised clampdown on the work visas has hit his company’s stock. In addition, a group of Infosys founders publicly accused the board of corporate governance violations and questioned hefty pay raises given to Sikka and his deputy.

Sikka, a former SAP SE executive, took the helm of India’s No. 2 technology services provider almost three years ago with a mandate to remake the company’s business model. Instead of charging customers such as Goldman Sachs Group Inc. and Toshiba Corp. for the hours spent by technicians and engineers to build and manage corporate computer systems, Infosys set out to build automated software and tools that would detect problems and solve them with less human intervention, freeing up consultants to provide more specialized and proactive services.

Indian outsourcing firms have said that they need to hire foreign workers in part because the U.S. has a shortage of qualified employees. Yet Sikka says that is something Infosys can overcome.

“We are not only hiring computer science specialists but also engineers with software development aptitude and potential who we will train and prepare,” he said in the interview. “In the past two years, through the non-profit Infosys Foundation, we’ve trained 2,500 teachers and over 135,000 students and that has gone extremely well. The number of people we have trained is almost getting to the size of our delivery organization and we will be tapping these.”

Under pressure

It’s been a tough year so far for Sikka.

First, a group of founders publicly accused the board of corporate governance violations and questioned hefty pay raises given to Sikka and his deputy. That ended in a truce. Then, Trump’s administration promised a clampdown on the work visas, triggering a 10 percent drop in the stock. In response to the criticism, Infosys unveiled plans on Tuesday to hire 10,000 American employees.

“The whole thing has become quite complicated,” Sikka said in a recent interview. Asked about his haggard appearance, the 49-year-old said he didn’t sleep the previous night because he was thinking about the changes overtaking the industry.

“Vishal Sikka is a great technologist and has all the right ideas,” said Ashutosh Sharma, who heads Forrester Research in India. “But he inherited a firm with a culture and history that doesn’t lend itself to his vision.’’

Sikka, the Bangalore-based company’s first non-founder CEO, declined to talk about the skirmishes with the founders, who also questioned large severance packages given to two departing executives. Chairman R. Seshasayee backed Sikka, and the public spat was put on hold in February when co-founder Narayana Murthy, who previously served as CEO, said it was time to stop and focus on the company’s business. Sikka said his pay is “fully aligned” with shareholders’ interests.

The steps that Infosys announced to hire more people in the U.S. will also help fend off pressure from the current U.S. administration.

Infosys posted revenue of $10.2 billion for the fiscal year that ended in March, up from $7 billion five years ago. “We want to hit $20 billion in annual revenues by 2020,” Sikka reiterated when Infosys reported results this month. “Yes, it is an aspirational goal but then what is life without dreaming about a moon shot?” the CEO said. Analysts are projecting, on average, sales of $13.4 billion in three years, according to data compiled by Bloomberg.

To reach his goals, Sikka is spending more time with clients and scouting out opportunities across the globe. The CEO said he took 99 commercial and 17 private flights in 2016, amounting to 800-plus flying hours. Sikka blamed his fading mirth on the constant travel.

“The job travel wears you down but it is the only way to level with customers,” he said. The U.S. accounts for more than 60 percent of Infosys’s revenues, and Australia another 10 percent.

What’s harder is coming up with technology that can boost sales or cut costs. Unlike high-margin businesses such as SAP or Microsoft Corp., Infosys traditionally charges clients based on the number of staff needed for a job. Two-thirds of Infosys’ employees work on legacy, commoditized jobs like maintaining computer systems, building applications and running verification processes for retailers, automakers and oil & gas companies.

Yet wage costs are rising in India and contracts are under tremendous margin pressure, making it harder for Sikka to free up capital to develop new technologies. “In the IT services industry, the script is not so straightforward,” Sikka said.

For too long, Infosys’ employees worked only to client specs and lack agility, Sikka said. To fix this, all college hires are trained in three computing languages instead of one. For existing workers, there are intensive training programs. Almost 135,000 people have been trained to develop automated solution. Online tutors are schooling 90,000 employees on artificial intelligence and other advanced computing tools.

One of Sikka’s initiatives is the Zero Distance program, which pushes employees to come up with ways to help solve customers’ complex problems and needs. In one example, a team working on a big bank’s loan processing application cut the time to six weeks from eight. A new AI platform has amassed 50 customers, which in one case helped a Singaporean bank reduce its reliance on a small army of lawyers to vet agreements.

“We are approaching a time when any problem that can be mechanically articulated can be automated,” Sikka said. “I want us to become a company of 200,000 innovators where entrepreneurship, risk-taking and agility are ingrained in everyone.”

Sikka admits that he’s running out of time to make all of this happen, even though his tenure was recently extended until 2021 despite the spat with the founders.

“This will be the last year when we can be ahead of the curve in technology,” Sikka said. “Next year, we will be abreast. Two years from now, it will be too late.”

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