SPACE WIRE
India's Infosys sets up US consultancy, hopes to offset outsourcing anger
BANGALORE, India (AFP) Apr 08, 2004
In a move it hopes will reduce US anger over outsourcing, India's biggest-listed software firm Infosys Technologies said Thursday it had set up a consulting unit in the United States that will employ 500 workers.

Four top consulting leaders from global firms such as EDS Consulting, Cap Gemini Ernst and Young and Deloitte Offshore have joined the management of Texas-based Infosys Consulting Inc, the company's chief said.

"Infosys has shown its commitment by making an investment of 20 million dollars in the firm and by creating jobs in the United States," said Infosys Consulting chairman S. Gopalakrishnan.

"This will counter the outsourcing sentiment out there," he told reporters.

Outsourcing has become a contentious issue in the US presidential race, with Democratic presidential contender John Kerry accusing the White House of failing to stem the shifting of US jobs, mainly to India.

Kerry has proposed a tax change to discourage moving jobs overseas.

A host of foreign firms have set up Indian bases to take advantage of a cheap labour pool, resulting in job losses in the United States and other western nations.

Banks such as HSBC and Lloyds TSB, telecommunications groups BT and AT and T and insurers Aviva and Prudential have brought jobs to India where computer-literate, English-speaking workers earn a fraction of their western peers' wages.

Stephen Pratt, chief executive officer of Infosys Consulting, said in the first year the unit wold hire 75 employees in the United States.

"In the US, it's an election year. I will let the politicians speak for themselves. But when it comes to business it is the higher level of performance which counts," Pratt said of the benefits of outsourcing.

"We will grow to 500 (employees) in the next three years," he said, adding Infosys Consulting would target large North American and European clients.

Nandan Nilekani, chief executive officer of Infosys Technologies, said setting up a new consulting firm was "low-risk."

"We're entering this space from a different orbit. The new firm has a world-class blue-chip team and a strong brand," Nilekani said.

"During the last few years we are increasing our presence in different regions and creating local employment. In Australia we've created 330 jobs, in Canada another 100 and also we have development centres in the US and the UK."

"We're increasing our global footprint," he said.

Infosys Technologies, the parent firm, posted a 28 percent rise in third quarter net profit to 3.3 billion rupees (71.3 million dollars).

The Nasdaq-listed company, which earns the lion's share of its revenues from the United States, is also India's second-largest software exporter.

The announcement comes after India's largest private telecoms firm, Bharti Televentures, last month awarded an in-house IT services contract to US computer giant IBM worth up to 750 million dollars.

Bharti Televentures chairman Sunil Bharti Mittal said he hoped the move would "take the sting out of outsourcing" for Americans.

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