Nasscom rejects Murthy's comment calling Indian IT firms 'immigration agents'

N R N Murthy, co-founder Infosys, may have stirred up a hornet's nest by saying Indian IT firms behave like immigration agents, but the model that he claims he created to be less dependent on visa's did not yield the desired results at Infosys, say industry sources.

In 2010, Infosys, India's second largest IT services provider, had started experimenting with a model called 'extreme offshore'. This was to help Infosys reduce its dependence on H1 and L1 visas.

The company then under the leadership of Kris Gopalakrishnan, and Murthy as chairman, had said that it is capable of increasing its offshore utilisation capabilities to 95 per cent. It said the intent was to prepare the company to face an extreme situation should negative sentiment brewing in the US intensify further.

Infosys has already conducted pilot programmes with a couple of clients in the US with which it has proven the model. By sitting at remote offshore locations, the company successfully transitioned outsourced projects to India. The Infosys extreme offshoring model was expected to have a far-reaching impact on the delivery of IT services, as this could lead to increased hiring at offshore locations like India and fewer jobs being created on site. Front-end sales and support jobs would have to be primarily manned by US citizens.

However, the company did not pursue the model, as Murthy said: "I introduced it in 2011, but the model has not been pursued after my exit in 2014." A check by Business Standard after a year of the programme was implemented found that the model was not 'feasible'

An email sent to Infosys asking them about the model and its impact remained unanswered.

"These are not the view of the industry nor does it reflect the reality of what the industry is doing for companies in the US. The industry has evolved hugely over the years, and the value and efficiency they created for their customers is tremendous. One should also not forget that there is a skill shortage in the US," said R Chandrashekhar, president Nasscom.

Analyst tracking the company said that Infosys did experiment with the model but nothing much came of it. "I suppose they still work with a few clients but it did not have any major impact. Moreover its not possible for the industry to be visa free. There are no enough talent in these markets," said an analyst of a leading brokerage firm.

But more importantly, analyst believe that with deals getting smaller and competition increasing being closer to the client matters most. "If you notice closely the companies that have done well are the one who have been close to the customer. Whether it is sales people or senior management as well as talent at ground," said an analyst that tracks the sector.

Moreover Indian IT firms have stepped up their local hiring in the US, especially at the fresher level. In 2014, Infosys had said that they hired 250 people from campuses in the US and were to further up the number to 1,000.

India's largest IT services provider Tata Consultancy Services (TCS) is among the largest hirer in the US and European markets among the Indian IT players. The company which has stepped up its hiring from campuses, had a hired in total 3,0000 people in the US alone.

"I think his comments are a bit exaggerated. The Indian services model is just not about offshore. It is balancing the three aspects-onshore, offshore and near shore- strategy. Rather the investments that have gone to balance these three strategies," said Sanchit Gogia, chief analyst and CEO, Greyhound Research.