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Democrat Senator Charles E. Schumer says Indian companies like Infosys are like “Chop Shops”, who send their employees to US, have them learn the work that Americans do and then take them back to India.  Something like taking cars and dismantling to make their own cars.

It is a gross simplication and caricature of what companies like Infosys do.  They do such things, but the talent in India is not just purely unthinking bunch of nincompoops waiting to learn stuff from the Americans.  The kids there are smart and willing to work their backsides off to learn and deliver on projects.  I have seen Indian techies deliver on projects and areas where, sometimes, they had very little experience in.

Schumer, while making these statements, also said that he wanted the Government to raise the fees for H1B program such that it could raise $600 million to secure the U.S.-Mexican border.  So, triumphantly he proclaims – “The best part of this border package is it is fully paid for and will not increase the deficit by a single penny.”

Fantastic.  Quod Erat Demonstrandum QED!  Everything neatly falls into place doesn’t it?

Except that its all nonsensical.  Because this plan hits at the legal immigrants coming to US legitimately to control those who sneak in.  While his party people are busy defending the rights of illegal workers, its indeed intriguing that the same party leaves no occasion to demonize the legal worker.

The business model of companies like Infosys is not to bring people here, learn American work and then go back and deliver it there in India.  Outsourcing is a major part of their business, but so is delivery on the project, which they do living here and handing it back to the companies.

And, honestly, it happens to be a company with Indian name, because, the companies who outsource do not find it cost effective to open their own subsidiary there in India.  The work is to be shipped there as per their CEOs and CFOs.  Who does it there – whether its CISCO India or Infosys is just a matter of semantics.

The culprit is not the Indian company but the need for the CEOs to show profit margins from stagnant or low growth in sales.  Creating standards in the work and jobs and then shipping them out to cheaper locations helps them do that.  Indian companies come in to fill the niche.

Raising the H1B fees will hurt the legal workers for sure, but it will hurt the US economy even more.  For, out of every 10 H1B workers coming in, at least 3 would be staying back as Permanent residents and citizens of the US.

If, on the other hand, the work is shipped out, without the people coming in to do the work here, then the chances are that US will lose the benefit of well trained and educated immigrant citizens as well!  That’s double whammy!  Jobs gone and so are the workers!

Meanwhile, Infosys and other Indian companies need a better business model and some real innovation!  If some Senator and a bill can wipe off, say 10%, off of their margin, without any recourse, then something is drastically wrong with the business you are in.  Either you pioneer the Cloud and Virtual office to a point that travel truly becomes useless and one can work anywhere.  Or you hire Americans more to do the work.

CISCO has gone the Virtual office route when it made a conscious plan to move 20% of its top brass to India and aim to have $10 billion of its revenues worldwide coming from India in the next few years.  In that sense, I agree with the Senator, Indian IT companies – at least their honchos – are archaic and predatory at best.  They do not want to spend money for betterment of employees or for improving the business processes.  Actually, there is no special business process advantage with any of the Indian IT companies.  All they go for is scale.  Which is another way to kill yourself when things change in your business.

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Infy branded ‘chop shop’ by U.S. Senator