The Infosys Visa Fraud Case and the Indian IT and BPO Sector

The recent case filed in the US about alleged visa fraud at the Indian IT bellwether, Infosys has raised several questions for the Indian IT and BPO sector. However, the case was partially struck down with the allegations being referred to a criminal probe instead of jury decision, the larger issues about how to deal with the increasing anti-outsourcing rhetoric in the US as well as ensure that Indian IT and BPO companies play by the rules are yet to be addressed.

The point here is that the Indian IT and BPO companies do send employees on short-term business visas to the US for work, which is clearly against the rules. However, a point in their favor is that unless the employee is going for a longer term like a year or more, it makes no sense to send him or her on a work permit. Hence, the alleged visa fraud depends on the perspective of the US government and the visa rules that pertain to them.

Since this is a presidential election year in the US where the anti-outsourcing rhetoric is going to get shriller, Indian IT and BPO companies have to tread cautiously lest they get into the trap laid out for them by the anti-outsourcing lobby. This means that right from pay and benefits to its employees posted onsite to the way in which their visas are processed, Indian IT and BPO companies have to ensure that they take legal opinion about everything that they do to not fall afoul of the prevailing laws and procedures.

The point here is that the Indian IT and BPO sector is now progressing into the next stage of the capability maturity and hence, it cannot afford any slipups in its journey. This is the bottom line for the Indian IT and BPO sector as it grapples with the challenge of ensuring that its business stream remains intact and at the same time, it does not violate any rules.

A possible solution to this imbroglio is to hire locals in the US and Europe to work at their offices there instead of sending employees from India. This would also satiate the anti-outsourcing lobby because they cannot claim that Indian IT and BPO companies are not creating jobs in the US. Another way out would be open full-fledged subsidiaries in the US and Europe and then staff them with locals as is being done in many transnational companies.

Indeed, many Indian IT and BPO companies have the necessary financial muscle to set up fully owned subsidiaries in the US and Europe and this would be a great idea if handled properly. The reason for this qualifier is that the Indian IT and BPO sector relies on the wage differential and hence, opening foreign subsidiaries would defeat the purpose. However, instead of sending Indian employees onsite, they can ensure that Americans do the work that is required and then come to India to do the knowledge transfer. Though this solution might anger the Indian employees who like to go for onsite trips for various reasons (including monetary, the thrill of visiting other countries etc), the decision must be taken in the larger interests of the Indian IT and BPO sector.

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