Posts Tagged ‘Obama’

Why IT Honchos are Queuing up to Meet Barack Obama

January 27th, 2015

The US is the biggest market for India’s over $100-billion outsourcing industry and it also contributes to the creation of lakhs of jobs in the IT sector. Unsurprisingly, the delegation of Indian CEOs meeting US President Barack Obama is packed with IT honchos. Infosys founder NR Narayana Murthy, current CEO Vishal Sikka, M&M chief Anand Mahindra, who is also the chairman of Tech Mahindra, and Cyrus Mistry, who as head of Tata Sons is also the chairman of India’s biggest outsourcer TCS, are all representing India Inc at the meeting with President Obama on Monday.Outsourcing57

Here’s why the IT industry is key to Indo-US trade:

1) The IT industry is estimated to contribute nearly 25 per cent to total domestic exports (merchandise plus services).

2) Indian firms get a lot of business from US, while American companies benefit from lower costs in the country; they also gain access to extensive intellectual capital, which enables them to concentrate on their core competencies.

3) Initially, Indian IT firms provided low-cost technical support and fixed software bugs, but now they optimise financial transactions and develop advance technologies. So, companies are moving up the value chain.

4) Indian firms are increasingly expanding their presence in the US by setting up onshore businesses. Most of the leading Indian IT companies have set up their sales and marketing offices and delivery operations in various US cities.

5) Till 2010-11, Indian IT-BPO sector supported 2.80 lakh jobs in the US, according to Nasscom. Over the last few years, the trend has picked up. Infosys hired 2,000 employees in Wisconsin in 2012; TCS hired 1600 in 2013-14 and plans to add another 2,000 in 2014-15.

6) The IT industry leads in total merger and acquisitions with US companies. Between October 2012 and December 2014, the IT sector led the M&A pack with 29 out of 71 total outbound acquisitions in the US, according to a study by EY on behalf of industry body Ficci.

7) US is likely to continue to be the favourite destination for Indian IT-BPO players because of large scale reforms in the healthcare segment (being undertaken by the US government) and Big Data and automation wave is luring tech companies.

8) According to a study by Egon Zehnder, in 2011 S&P 500 companies had more Indian CEOs than of any other nationality except American. Shantanu Narayen (CEO, Adobe Systems) and Satya Nadella (CEO, Microsoft) are some of the leaders heading global US tech firms.

9) People of Indian origin dominate US-based tech-start-ups funded by immigrants. According to an EY-Ficci study, India-born entrepreneurs represented 33 per cent of such companies.

10) A significant number of workforce in tech companies such as Google and Microsoft are of Indian origin. Sundar Pichai is leading Google’s Android, Chrome and Google app divisions; Amit Singhal is heading Google’s core ranking team and Krishna Bharat is leading Google’s news product team.


PM Modi bats for IT companies

January 27th, 2015

PM reminds Obama that Indian IT industry helped US in creating jobsOutsourcing56

Prime Minister Narendra Modi on Monday lobbied for easy norms for Indian IT companies as they are contributing to the creation of jobs in the United States.
“Indian IT companies are creating skilled jobs in the United States; and, helping US companies stay ahead. They have also helped US military veterans rebuild their lives,” Mr Modi said in his joint address with the visiting US president Barack Obama to the India-US Business Summit, attended by nearly 500 business leaders from US and Indian industry.

He said that Indians are powering US businesses.

Mr Modi’s remarks assume significance in the wake of growing opposition to outsourcing in the United States, which triggered concerns in the IT industry, whose mainstay continues to be American companies.

The proposed US Border Security Economic Opportunity and Immigration Modernisation Act, if passed by the US Congress, requires companies functioning in America to reduce their foreign workforce over the next few years.

This law is expected to force Indian companies to hire local talent in the US at a higher cost. If the bill is passed in its current form, it has the potential to hurt the margins of the Indian IT sector. India’s IT exports make up a major part of India’s services exports and a major foreign currency earner.

During his electioneering, US President Barack Obama had spoken against outsourcing. In one of his remarks, Mr Obama had said that he wanted to create jobs in Buffalo rather than in Bangalore.

During the current visit of the US President, both countries have agreed to resume talks on totalization agreement, a long pending demand of Indian IT industry.
This agreement, Indian experts say, will exempt Indians IT professionals, who are take up short-term assignments in the US, from paying social security tax.

Mr Modi noted that there are more than 1,00,000 Indian students in the United States and thousands of American students visiting India. “They are sowing the partnerships of tomorrow. And, the success of 3 million Indian Americans points to our potential,” PM said.


Obama’s New IT Project Initiative – A Step In The Right Direction

January 8th, 2014

The Wall Street Journal on Saturday had a front page article on the White House initiative to create a new agency to manage large IT projects and increase federal hiring of key IT specialists from industry.  The White House has stated this is in response to the failure of the rollout.outsourcing36

As someone who has provided IT services to the government (cybersecurity, software development, project managers) for over 12 years, I think this is a step in the right direction, but it misses some of the key reasons for the failure of the site and some of the blind spots in the current IT procurement process.

The problems noted by the White House are by no means new.  Dr. Marv Langston, former Department of Defense Chief Information Officer (CIO) noted these and other problems with the federal process for acquiring IT systems in his blog, here.

Congressman Darrell Issa (R CA-49), the Chairman of the House Oversight and Government Reform Committee, sponsored bill HR 1232, the  Federal Information Technology Acquisition Reform Act, with similar goals, reform the way in which the federal government procures information technology systems.

The problems the White House has noted in the Wall Street Journal Article without doubt exist.   These include the lack of internal expertise within some federal agencies to manage large IT projects, the extended hiring process to hire federal workers, and lack of a single concentrated government entity that manages IT projects.  In addition, the following issues compound the problem:

A contract selection process based upon the military industrial complex vs. innovation and fixed prices.  As a defense contractor, I find the term “military industrial complex” most often used by former (or current) hippies who believe that if the U.S. eliminated their military all the other world powers would follow our example and we’d join arms across the world and sing “Cumbaya”.  In this context, I use the term to describe an acquisition process which has been developed with huge influence from behemoth defense contractors with the aim of steering the huge bulk of federal money right back to…you guessed it!  To even bid on federal government work requires an infrastructure that would make most small business owners cringe, and the cost of dealing with the federal government compliance requirements drives up the price of services and goods well over what would normally be a market rate.

The prevalent use of “cost plus” contracts. Cost Plus contracts are used by the government to procure services or products that are too difficult to properly scope.  The government agrees to cover all of the contractor’s costs, and the contractor agrees to take a much lower profit (sometimes below 5%) in order to get the work.  Unfortunately, the use of these contracts has become more prevalent for several reasons.  First, is there is very little scoping requirement on the part of the government, they just pay the legitimate costs of the contractor.  Second, the idea of limiting contractors’ profit, or “fee” appeals to a large number of federal employees who chafe at the idea of contractors making “too much money.”  Unfortunately, the net effect of these contracts is apparent to any high school economics student: contractors continue to inflate their costs and the taxpayer pays far more than they should for the final product.  In addition, the contracts become viewed as a jobs program for contract employees (many of whom are retired federal or military personnel) rather than an efficient means of procuring services using taxpayer money.  I have seen hundreds and hundreds of IT contracts that are scoped not by the deliverables, but by the number of people that will be employed on the contract.  Can you imagine Microsoft outsourcing a large software project by stating that they needed “25 software developers for a five year period”?

Delegation to local officials who based awards upon local preferences vs the actual company’s capability.  “All government work is local.”  I have heard this quote many times over the years, and it is true.  Whatever state or region is assigned a specific acquisition project, the locally based federal officials are likely to give some sort of preference, overt or subtle, to local contractors or those with a strong local presence.  This is not a symptom of corruption necessarily, but it is human nature to trust those whom one knows.  Unfortunately, this can lead to skewed acquisitions that may exclude highly qualified companies that can’t afford to have an office in Littletown, Middle America.
A procurement process that is often delayed by months or years.   Many federal procurements take 18-24 months.  Even with those large timeframes procurements can often be delayed another 12-18 months beyond the due date, with an end result of a system that was scoped 3-4 years prior finally being awarded.  With technology cycles being what they are, the original procurement sometimes may not even be require any longer, or might have been supplanted by another technology.

A broken Small Business Innovation Research (SBIR) process .  This federal program started as a great idea, setting aside small (100K-$1M) research projects for small companies with easier an acquisition process to generate innovative ideas from something other than the typical huge defense behemoths.  Unfortunately, however, the program suffers from very low conversion rates from successful research projects to programs, partially because of the need for better integration with programs that it is supposed to benefit.  As stated, these programs might have been in procurement and in development for close to, or over, a decade and even if a SBIR program comes up with an innovation that could be useful, the ability to change the program to incorporate that innovation is highly limited, if not impossible without re-procuring the entire system.

Before trying to invent a new solution to something people familiar with the problem have been aware of for years, the White House should look carefully at Issa’s HR  1232 bill, it likely addresses most of the issues that cropped up with the ACA Healthcare exchanges.  It would have been good if someone from the White House had looked at it earlier, before attempting such a massive IT project without any assurances that it would simply “go” using the same old broken procurement systems.


Premji asks PM to take up unfair US immigration bill with Obama

August 27th, 2013

As the fate of the H-1B visa program rests with the US Congress, Indian tech firms are losing sleep over proposed changes to the H-1B visa portion of the US immigration bill. Wipro Chairman Azim Premji asked Prime Minister Manmohan Singh on Sunday to seek the intervention of President Obama to remove provisions that are “discriminatory” towards Indian tech firms.Outsourcing22

The US Senate passed an immigration bill in June that would increase the yearly H-1B cap to 180,000 from 85,000 which is good, but there are several killer provisions in the bill that could hobble Indian outsourcing firms’ businesses in the US.

Unfortunately, a coalition of US high-tech companies and pro-labor Democrats have twisted the worthy goal of knocking down America’s barriers to technical foreign talent into blatant protectionism.

Azim Premji. ReutersAzim Premji. Reuters
“Provisions of the Senate bill that are discriminatory and target Indian companies are — outplacement bans and restrictions; attestation on recruitment of US workers; and higher wages to H-1B employees vs. American employees,” Premji said in a letter addressed to Singh.

“We want your support to seek White House intervention to eliminate the discriminatory provisions in both the Senate and House bills and to treat Indian IT service providers at par,” said Premji.

The Wipro chairman noted that fixing the H-1B flaw in the immigration bill was in the interest of increasing India-US trade by five times from the current level of US$100 billion.

Killer provisions for Indian companies

Firstly, a company with more than 15 percent of its workforce on H-1Bs will be restricted from placing H-1B workers at the offices of their clients, an approach used by nearly all Indian IT services groups.

Secondly, the proposed legislation suggests that from 2016 any company with more than half of its staff on such work permits will be forbidden from applying for more visas, effectively creating a cap on temporary immigrant staff.

Thirdly, seeking to prevent undercutting American salaries, the bill would require H-1B workers be paid more than under current law, and impose steep fees of $10,000 per visa on big companies with more than half of their staff on H-1B visas.

The H1-B and L-1 Visa portion of the immigration bill is designed in a way that makes it more difficult and costly for Indian IT firms to bring in workers on temporary visas, while easing restrictions on US firms using those resources by increasing the annual cap on work visas.

Companies such as Infosys, Wipro, Cognizant and Tata Consultancy Services have set up large US offices with American employees to be closer to clients, but there is always an offshore angle. They rely heavily on H-1B visas to allow Indian staff to fly to the US when they are needed for face-to-face consultations and to work on projects in the US as part of their “global service delivery” model.

Indian companies naturally need some portion of their staff on-site in the US to understand the systems and specifications of their American clients, which is why they are heavy H-1B users. US companies often contractually require Indian tech firms to place employees on site to troubleshoot. The outplacement restriction deals a body blow to this whole business model.

US tech companies Microsoft and Accenture support these H-1B restrictions for the simple reason that in a world of finite visas, fewer visas for Indian companies means more for itself.

“Both companies have been expanding their IT operations in India and are directly competing with Indian companies for American “offshore” business. IBM now generates about a third of its revenues in India where it employs over 100,000 people. The visa restrictions are simply an effort to cripple their foreign competitors and capture their offshore market share, something that won’t save a single American job,” said Business Insider, a US technology and business website.

IBM now generates about a third of its revenues in India where it employs over 100,000 people. But because IBM and Accenture have a large American workforce, they will be able to hire even more H-1Bs than the Indian companies without running afoul of the new visa regime, notes the US news site.

Lobbying push moves to the House

The US-India Business Council and Nasscom, which represents India’s technology sector, which clocks in $100 billion in annual revenue, are spearheading a lobbying push to get lawmakers in the House to kill complicated and restrictive provisions for H-1B and L-1 visas. They are explaining to lawmakers that the bill creates more H-1B visas, but then makes it harder to use with all the new government rules.

House Speaker John Boehner said earlier in the day that his chamber will not simply take up whatever the Senate passes. India’s effort now will be to replace the Senate provisions with a much cleaner H-1B bill proposed by Republican Congressman Darrell Issa that has already passed House Judiciary Committee. House Republicans have delayed consideration of immigration bills until September.

India raised concerns about the immigration bill with Secretary of State John Kerry when he was in New Delhi saying the issue of short-term work visas shouldn’t be mixed up with immigration.

The proposed reforms could force Indian IT companies to hire thousands of new American employees or make acquisitions to ramp up American staff.

“Over the short term, the legislation would likely have a negative impact on Indian-heritage IT companies and give a competitive edge to US firms,” said Sid Pai, Partner and President, ISG Asia Pacific. “Over the long term, however, the provisions could encourage Indian firms to expand their US presence. Specifically, to avoid the provisions of the bill, Indian companies may step up local hiring and focus on acquisitions of US-based companies.”

Premji pointed out that contrary to misconception, “Indian IT companies in US in the past five years have created American jobs of at least 35,000 and today support 280,000 jobs in the U.S. Three out of these four jobs are held by Americans. Contrary to this, a leading American services company in the last six years has reduced 36,000 American workers.”

The Times of India reported that Wipro had spent $240,000 till July this year on lobbying in the US, compared to $210,000 it spent in the whole of 2012.

Indian companies are steadily creating more jobs in America and have paid more than 15 billion in taxes to the US treasury, according to Nasscom.


Can’t find IT talent? It’s all about marketing: Obama 2012 CTO

May 29th, 2013

As the discussion on whether Australia is suffering from an IT skills shortage continues, and companies like Westpac use it as an excuse to partially justify the rise of outsourcing, Harper Reed has a different outlook. According to Barrack Obama’s 2012 re-election campaign CTO, the root of the problem is that companies are not making these IT jobs look desirable.outsourcing30

Reed has been described as the mastermind behind US President Barrack Obama’s re-election in 2012. He has been recognised for using technology to stimulate voters to hit the polls and drive donations to the Obama campaign. Prior to his work with Obama, he was the CTO for Threadless and has a wealth of experience when it comes to hiring staff for various IT teams he has put together in the past.

“What I’ve heard over and over again is that there is a lack of tech talent in Australia,” he said at CeBit Australia 2013 in Sydney. “One of the biggest problems is people don’t talk about the solution — they don’t talk about what they’re doing that’s compelling.”

“When you’re hiring people, you always need to talk about why people want to work with you.”

With many IT job descriptions sounding awfully dry and in need of “jazzing up”, selling what you want to achieve to a potential employee is much more effective than just telling he or she what you expect them to do for you, Reed said.

“You really need to sell what you are doing,” he said. “You can’t just say ‘I need a Ruby Rails engineer’ — you need to say ‘I’m saving the world by doing so and so’.

“Attract people by telling them the problems you are trying to solve, not by telling them the requirements for the solution. It’s not fun to be a Rails engineer, but it’s fun to solve big problems.”

‘Big data is bullshit’
Reed is officially sick of the term big data, which has been thrown around in the IT industry with rising frequency.

“The thing about big data is the ‘big’ is bullshit — the big part is already solved,” he said. “We’ve done big, and we should be talking about the data, so just say data.”

Reed is famous for using large amounts of data during the Obama re-election campaign to target individuals — what he calls “microtargetting” — through a number of outlets including social media and emails. The campaign would use the data to contact people at a very personal level, encouraging them to either rally up some friends to vote in a country where voting is not compulsory, or to simply donate money.

But Reed is bored with big data. Rather than being obsessed with the term, he wants to see IT vendors think more about how to use data to answer big questions.

“I don’t want to see big data anymore,” Reed said. “I don’t want to see all the marketing stuff — I want to see Oracle, EMC, and all those companies to come out and say ‘here’s a product that will give you big answers’.

“Because I’m tired of big data; I think it’s boring.”


US tech industry cautiously welcomes Senate immigration bill

April 17th, 2013

Tech industry officials welcomed a bipartisan US Senate immigration bill on Tuesday, saying they hoped it would make it easier to hire highly skilled workers from abroad, while laying the groundwork to renegotiate portions they oppose.

The bipartisan “Gang of Eight” group of senators released highlights of the bill, backed by President Barack Obama, that seeks to reform the immigration system and nearly doubles the quota for H-1B visas for skilled workers. us-tech-industry-cautiously-welcomes-senate-immigration-bill

For months, the tech sector has ratcheted up pressure on the US Congress to make highly skilled immigration rules more flexible, arguing that there are not enough highly skilled American workers to fill its growing number of specialty job openings.

“This really does a lot to address our concerns about being able to hire workers when we need them,” Intel Corp policy director Peter Muller said in an interview on Tuesday. “We’re certainly going to be looking into details of this going forward … but in terms of the big picture, we’re very encouraged and pleased.”

The bill did not propose raising the number of H-1B visas as high as 300,000, as big tech companies had sought in the past, but it would allow the cap to rise to as high as 180,000 in future years, and sets aside 25,000 such visas for graduates with degrees in science, technology, engineering and math.

Companies will likely appreciate some provisions of the bill, including loosening of green card or permanent residency provisions, said Stuart Anderson, executive director of the National Foundation for American Policy, a think tank backed by the pro-entrepreneurship Kauffman Foundation and others.

“But the H-1B provisions will be considered a disaster,” he said, citing measures including expanded Department of Labor authority to investigate companies over their decisions to hire H-1B workers.

“Trying to defend yourself for something that has a large degree of subjectivity could be a problem for some companies,” Anderson said.

Most companies and tech groups, including the new group formed by Facebook Inc’s Mark Zuckerberg to lobby on the issue, withheld comment awaiting a review of the full text of the bill.

“We’re very encouraged that they produced a bill and we see a lot of positives, but we do have some concerns we hope to see worked out,” said Dan Turrentine, vice president for government relations at TechNet, a group representing such companies as Google Inc, Cisco Systems Inc, Apple Inc

and Yahoo! Inc. Tech companies will be watching several provisions in the bill that risk becoming hindrances to prompt hiring, including new requirements to pay H-1B visa holders higher wages and to recruit American workers prior to hiring foreigners.

Both provisions seek to address the concerns of workers’ groups that oppose raising the number of H-1B visas, saying companies use the visas as a way to hire cheaper workers who lack job mobility.

“We appreciate that the Senate Gang recognizes that serious problems with the H-1B program can be resolved by more STEM green cards, delivered faster,” said Marc Apter, president of IEEE-USA, which represents US engineering, computing and technology workers, in a statement.

“In fact, the proposed increases in green cards make H-1B increases unnecessary,” Apter said.

The bill also includes provisions that would hurt so-called “H-1B-dependent” companies, like many IT outsourcing firms that employ high numbers of H-1B visa holders – programmers they temporarily hire out to corporate customers.

Those outsourcing firms could have to pay higher fees and wages than companies that depend less on H-1B workers, like Apple, Google and Facebook.

A spokesman for Tata Consulting Services, an outsourcing company, said he could not comment before seeing the full bill.

“We think it’s very reasonable to add additional requirements to the users of the H-1B visa, but those also have to be workable requirements, so that’s something we’re going to pay close attention to,” said Intel’s Muller.

“But we know it’s going to be a long process … and as a starting point, we’re really encouraged.”


Obama re-election not best news for IT outsourcing industry: iGATE CEO

November 23rd, 2012

The re-election of US President Barack Obama is not the best news for IT outsourcing industry, according to CEO of iGATE, Phaneesh Murthy. “Not the best news for India or the IT outsourcing industry. However, we need to understand how much of the election rhetoric continues into 2013 and that will determine the full implications to us,” Murthy said.

obama_elex_us_ap“The concern over the deficit and jobs will continue (in the US) and in my mind, will force the sluggishness to remain in the economy,” he said. Obama on Tuesday won a second term in office overcoming a stiff initial challenge from his Republican challenger Mitt Romney.

Obama in this presidential elections campaign had criticised outsourcing of jobs to countries like India saying that US needs to create jobs locally. The US and Europe account for over 80 per cent of revenues of the Indian IT industry.


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