Indian firms are receiving a rousing welcome in the US as they make their way there following the proposed changes in the law by the new Trump government. Various states are doing their best to reel these companies in, considering that they are likely to create a large number of jobs for their citizens. Indiana for example, has broken all past records and has offered Infosys, an incentives package of $33 million.
The H-1B visa and president Trump’s anti immigrant policy, are said to be the driving factors behind Indian IT frim’s move to the US. Up until now, they took up outsourced work from all over the world, and got it done in India, where the labor rates were cheaper. However, these changes in the law are forcing them to look back to the US not just to get work, but also to provide it.
Along the same, Indiana is offering Infosys one of the largest incentive packages it has ever offered to a company looking to set up shop. Indeed, the incentives would cover the expenses incurred by Infosys’ many times over. The company has said that it will spend just under $9 million in leasing and equipping office space. The Indiana grant on the other hand, is worth a massive $33 million and will be made available through tax concessions and training grants.
Considering the nature of IT job and the training imparted by the company to make new employees job ready, Infosys doesn’t really need to make its hires from MIT or offer huge packages to top graduates. A local college will suffice just as well in many cases. Considering this, there are a huge assortment of benefits associated with having the company set up shop in your state and that is exactly why these states are rolling out the carpet for Indian IT firms.
Indeed, Indiana Governor Eric Holcomb is planning to visit India and meet with IT bigwigs in a bid to get them to set up shop in his state. The state is planning to offer $15,000 in tax credits to each job created by the company as well. In Infosys’ case, if the company takes up all the 2,000 employees it is planning to hire, just the tax benefits would equate to $31 million.
Speaking on the topic to ET, Raman Roy, chairman of industry body Nasscom, said:
here was a study that shows that for every one job that is directly created, there are five or six indirect jobs. States understand that this has a catalytic effect. But companies won’t set up in states just for incentives, there has to be a business case.” To be sure, the incentives will not mitigate all of the increased cost of hiring onsite. “The cost structure onsite is higher. The incentives are a small drop in the bucket because just the wages, even for the freshers, will distort the margin.
The question here is, whether creating jobs in the US, will lead to job cuts in India? If it does, then that will be something to worry about. The cost of running operations in the US are going to be significantly higher than those incurred by running them in India. IT firms could look to make up for that gap by making job cuts and streamlining their workforces.