Even though the practice of global IT outsourcing has become a more and more popular trend among corporations, the use of that cost-saving strategy may soon take a dip. Last quarter saw a significant increase in companies filling their information technology positions with non-domestic tech professionals. However, an outsourcing scandal that is currently circulating the IT community may discourage enterprises from using this modern staffing method to meet their tech employment demand.
According to CIO.com, the apparent lull in IT outsourcing experienced in the first half of this year was interrupted by a third quarter surge. In fact, the total monetary amount of the 343 outsourcing contracts made during that time came to $5.8 billion. Those remarkable statistics are especially noteworthy as third quarters normally tend to relent when it comes to making these kinds of deals.
This year, the outsourcing trajectory seemed to have been different due to economic factors. As there was more uncertainty in the beginning half of the year, corporations were likely to be less keen on expanding their operations and employing more staff members of any sort. For this reason, IT experts believe that a fair proportion of businesses decided to wait it out before issuing any outsourcing contracts.
This delay caused companies to evaluate the length and magnitude of their proposed deals, which may have prompted them split up contracts into smaller, separate ones. As a result, once these organizations felt secure enough to extend outsourcing work to international IT professionals, there happened to be more of them than initially anticipated. The number of deals struck ended up being the highest recorded figure ever in terms of third quarter performance, CIO reported.
Outsourcing to start trending downward
With that said, this upswing in outsourcing is not expected to last long, especially throughout the North American continent. As the economic market starts to level out, companies may be returning to hiring domestic IT professionals. Outsourcing contracts are predicted to become increasingly shorter, having outsiders complete smaller projects in a narrower timeframe. In the end, information technology experts maintain that the coming year will see outsourcing market activity that is slower than even that of 2012.
In light of recent events, this market forecast is now expected to stand even truer. Bloomberg reported that the software corporation Infosys is read to shell out approximately $35 million in settlement money after it allegedly misused B-1 visas to get around American outsourcing protocol.
Currently, there is a very limited number of H1-B visas available, making it challenging for companies with outsourcing aspirations to hire foreign IT professionals. In order to continue its outsourcing expansion, Infosys supposedly decide to take matters into its own hands. Instead of jumping through the necessary government hoops to make sure that it was legally employing offshore staff members with an H-1B visa, the company may have resorted to sponsoring these representatives so that they could obtain a B-1 visa.
The latter category of work permit is not subject to restrictions like the former, which made it an appealing device for the software giant that relies on outsourcing jobs to turn over a hefty profit. Now, the company is facing a great amount of scrutiny. The U.S. government was conducting a thorough investigation, looking into whether these B-1 visas had been obtained for the wrong purposes.
Though Infosys has been fully cooperating with the authorities, it has denied these claims.
“As reflected in the settlement, Infosys denies and disputes any claims of systemic visa fraud, misuse of visas for competitive advantage, or immigration abuse,” read a statement released by Infosys. “Those claims are untrue and are assertions that remain unproven. The Company’s use of B-1 visas was for legitimate business purposes and not in any way intended to circumvent the requirements of the H-1B program. Only .02% of the days that Infosys employees worked on U.S. projects in 2012 were performed by B-1 visa holders.”
Legal action to be a deterrent
Though nothing had been confirmed yet with regards to the investigation, the company chose to nip everything in the bud and agree to a settlement. It is now prepared to pay tens of millions of dollars.
Given this situation, other companies may be hesitant with their outsourcing their tech work to non-domestic workers. This practice has already been restricted due to visa limitations, making it difficult to contract the foreign IT professionals. Additionally, the Infosys investigation only shows the U.S. government’s lack of tolerance when it comes to firms trying to cut corners in their outsourcing practices. Consequently, other enterprises may begin to be extra cautious, opting to be on the safer side with their staffing by relying on more domestic information technology personnel.