SAP Watch

Jun 12 2007   6:40PM GMT

SAP, H1B visas and… India outsourcing its IT jobs?

JackDanahy Jack Danahy Profile: JackDanahy

There is something both strange and ironic going on right now. Remember the heated debate about the proposed increase in H1B visas just the other week? Well, earlier today Mary Hayes Weier made some interesting comments regarding the IT talent shortage in India. Among other things, research firm Gartner has gone so far as advising Indian CIOs to — wait for it! — outsource IT work.

Yes, you read that right. At the same time as American IT workers are up in arms about a perceived army of cheap, foreign competition charging the castle Gates (sorry!), the very same Indians that tend to drift into the crosshairs are now looking to send their own IT jobs offshore. It’s an odd twist, to be sure. From Weier’s article:

There’s plenty of anecdotal evidence that shows India on the verge of a talent crisis […] they start looking offshore, to Hong Kong and Singapore, for IT workers rather than fight for talent within their own country. The growing economy in India has created big IT budgets, yet India CIOs often can’t beat the big service companies like Tata and IBM at the recruiting game.

SAP career expert Jon Reed shared his thoughts on the initial H1B debate last month, so we figured it was time to check back in for an update on this latest development:

The irony of India soon having to offshore its own technical needs is a fascinating one. But how much does this really change the globalization of the information worker?

To get a handle on this story’s impact on the SAP market, we have to start with the assumption that offshoring trends in SAP follow a similar pattern to overall IT offshoring trends. Since the bulk of IT offshoring is done by large companies running either Oracle or SAP ERP platforms, this seems like a fair assumption.

So how does this news impact the SAP market? It’s a tricky question because the overall technical capacity across the world has not yet been fully leveraged by offshoring. However, this Information Week piece makes a good point: The cultural and language mix with India was perfect for U.S. based companies. Other countries may have the technical capacity but the cultural and language barriers might negatively impact the return on investment for offshoring.

Overall, I would say that this is good news in the short term for SAP consultants, in particular those based in the U.S. Any limits on the supply of qualified consultants means a corresponding uptick in rates is likely. But in the long run, as this author concedes, the
globalization trends are not going away. Ultimately, we are far from reaching worldwide technical capacity. It may take time to conquer some of the barriers, but I guarantee you there is a wave of entrepreneurs in Russia, Mexico, China and elsewhere working feverishly to do just that. I wouldn’t bet against them.

This means that the general advice I have always given SAP consultants about offshoring still holds: Try to avoid commodified skill sets, especially on the development side. Become indispensable by gaining a business process background, industry expertise, team lead experience, and crucial exposure to the latest SAP tools and releases. Yes, the offshoring question has gotten more complicated with India at capacity. But the long term trend of the globalization of the information worker is still in the adolescent stages. It will continue to grow, and functional work will eventually be impacted also.

There you have it: Potential short-term respite, but the worldwide globalization movement isn’t going to stop anytime soon. Use the time wisely — beef up your skills and make yourself outsourcing-proof before India increases capacity and/or other markets unlock the key to easier partnerships with U.S. companies.

Matt Danielsson

10  Comments on this Post

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  • Sapperperson
    Why do journalists always talk about what a great mix people from India and the US are? Have they never spoken to a person born and raised in India? The culture is completely different! And they do not speak English in India, at least not the American version. There is also little tolerance in the US for the use of 'text-speak' in formal e-mails and communications with customers. Unprofessional and tacky! It's like talking to an 8 year old! Besides, the reason they have such a shortage is because keep sending all of their talented people to the US on H-1B's and L-1's. This lets the corporations destroy two coountries at once while they search for the next source of cheap, young labor.
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  • AC
    There is no TALENT CRISIS IN INDIA ...totally untrue Really this does'nt seem to be true I am an indian working in SAP market in india ...well I am hearing this for the first time that india is off shoring it's SAP work elsewhere . This is not true there is no off shoring going on except the normal one .. The US will benefit if it keeps the H1B limited ,but on the other hand how many of its engineers/CFAs/MBAs will finish their courses and invest more money in learning SAP ,which many people in india do.It is difficult for general American public to put in the efforts required for such activities as the culture is totally different and they expect very high returns from very little efforts very early . SAP's future is india and US combined not either one seperately,China will not be able to make it strongly in SAP at least in the next 20 years ..their food is difficult to eat for most people ,it is communist ...and they are little aggresive and hostile offence .. SO this article is absolutely correct about the future career moves , but guys really sorry India is not going annnnnnnnnnnnnywhere we are there steady and strong to give the world any technical expertise required anytime anywhere ;-) like DHL .... For all my US friends ,guys we are not here to snatch your jobs it is only Uncle SAM style boards of the companies who are making these decisions, in any case anyone of you interested in working in india advice come here for around 2 years ...upgrade your skills get certified in really cheap rates compared to US ...learn yoga meditation etc ...go to himalayas for a few days a week in Goa ...and back to will be most fulfilling days of your life .
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  • AKK
    Sensationalism at its height... These reports are for nothing but to induce sensationalism in a sensitive topic. I work for SAP in India and the reality is far from what is mentioned here. Yes, there is a talent shortage in India and it is more to do with the fact that higher education/technical education is not within the reach of a large section of the Indian middle class. only the upper and mid sections of the middle class have access to quality education here and it is too expensive for the lower middle class which is a major chunk. As a result there are too many fly-by-night institutes which churn the so-called "Skilled SAP/Oracle Professionals" with fake experience. This is affecting the quality of SAP professionals available in the Indian market and as a result there is a demand supply gap of "Quality" SAP/Oracle professionals. The future of Indian demand supply gap will be determined in the next 5 years on how well the Govt of India addresses this issue. If it follows the same lethargic path, then China will definitely beat us in the High Tech Talent pool arena- not only in the US market, but also in other markets. Considering the PPP of India and US, most Indian SAP professionals are well paid in India and the US H-1B dream is more of a prestige issue and it is a motivational factor for them. With the US dollar falling steadily against the Indian rupee, already many Indians are thinking against going to the US. In the next couple of years, they will look at going to US only to add value to their CV and not for settling down. Its high time the US public start addressing their demand supply gap in High Tech jobs rather than stopping Corporates from filling in their Teams with talent pool from India/China using H1B / L-1. US firms would like their costs to come down but without compromising on their local jobs coming down. This is nothing but expecting to have the cake and eat it too. It is basic economic logic which is found wanting here !!!
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  • CAF
    I am new to SAP (Not to IT) and most of my experience with SAP consultants has been with foreigners (India). Initially, communication was difficult and they had to repeat a lot of things over and over because we just couldn’t understand them. While our foreign SAP consultants were very knowledgeable in SAP mechanics and customizing, their understanding of actual business processes outside of SAP mechanics was marginal (My opinion). Our consultants had many years of experience with SAP implementation, but it was difficult to explain our actual business processes in a way they could relate it to SAP. So for us, working with foreign SAP consultants was a challenge to say the least! I think working with any product for many years and continuous education with that product would provide you with the ability to consult, American or foreign. But it’s the “business process background, industry expertise, team lead experience” as well as written communication skills, the ability to effectively learn and use new technique and tools for the trade that makes the real difference. To me, that’s worth the price of a good consultant American or foreign!
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  • ITworker
    Is there any real proof of an IT shortage in America? I do not see the shortage and I work in IT. The rules behind H1-B visa's are almost never followed, there are lawyers putting on classes to meet the H1-B requirements for attempting to find American employees without really trying to fill the job. Companies have sucked up H1-B visa limits in hours not days. Most of these are temp agencies so no one can get a report and see how many H1-b visa's a company actually uses. Enforce the rules around H1-B visas then if there is a need fine, and I doubt seriously you will find there is a need. I have not worked with a H1-B visa recipient and found them to be any better or any worse than other consultants. Then again I have not worked with very many good consultants, in general.
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  • SP
    Talent shortage in India!!! The top three IT companies in India hired 100,000 people last year, and 20,000 or more were hired by IBM and Accenture. And Infosys received 1 Million job applications last year. Not my idea of a talent shortage. The author talks about apple's planned 3000 people shop not starting, that's something to do with Apple's capacity. India is outsourcing its IT jobs to Indian Tier 2 and Tier 3 cities, that's a new boom coming up. Companies like Infosys are scaling up their training centers to seat 25,000 (from 4000 at present) people at any given time, all being trained in cutting edge IT skills. Lots of people comment about the lack of quality of IT people coming India. They are comparing a SAP professional from USA who has 20 years of Industry experience and then has 10 years of SAP experience, against an entry level Indian IT professional just out of training.
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  • rlb
    I have worked with H1B Visa workers on a couple of projects and have found they are not all highly skilled as their resumes have indicated. They have doctored resumes to get in the US and then learn on the job. If you are looking to outsource your business, interview the candidates first to see if they actually know what is on their resumes. Also make sure it is a face to face interview because we have interviewed via phone and spoken to someone with nearly perfect English and the person that shows up can barely speaks English.
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  • fedup
    Another issue with outsourcing to India is American companies are looking for a way not to hire Americans even if they meet the qualifications. Read the following article: See the video (it gets interesting about 1:40 minutes into it):
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  • KSS
    I’m learning that the true state of the SAP market in US and it’s relation with H1B debate is not yet fully uncovered or wonder whether the government, law makers, companies care? Before jumping into that, is there really talent shortage in India - Yes and No. Yes, as the demand for experienced professionals is high and not enough supply. No, as there is lot of supply of fresh talents. Big companies hire fresh candidates with zero to 2 yrs of experience. I worked for big companies in India and what they do is hire a bunch of kids and put them through a training cycle for 3-4 months. People do put in fake experience and try to move high up the chain or across verticals. With the 'Anyone can code' paradigm, candidates from all walks of life are getting into IT. If any staff is short of certain skills, then they go through training and they are back in new projects/companies. I would say IT in India is staff-skill management, be it SAP, Mainframes or open systems. But understand one thing that go around in the Indian IT world: You can be an expert in any domain/product overnight by attending few training classes. If a client needs a SAP XI body in San Francisco or Singapore or Sao Paulo, no worries, Indian, Chinese or any body shopping company will send them even if they don’t have them. Increasing H1B quota is not the solution. American companies will keep growing and they will eventually need more people every year. Supply of talent has to come from the US schools and universities - Just like India, hire fresh talent and groom them. If the US companies need 5-10yrs experienced people out of the sky, then open up the quota. But for the level of work done – For eg, SAP upgrades, you don't need a highly skilled talent. Prior training, proper division of labor and common sense approach will suffice for a entry level person. Most of the people who come on H1B stay in US and finally apply for PERM processing which will allow the H1b holders to stay in US forever. Again, as the US Govt increase H1B quota, they are essentially increasing the pool for PERM processing and one would see more of those youtube videos like the one posted in the last comment. From my experience, business process knowledge is more of common sense and practical approach. I agree that one will naturally gain more knowledge as you get burned and figure out processes over long years of experience. But when there is an opportunity that shows up that allows inexperienced people to take advantage, then we all are bound to see challenges in working with the H1B candidates. Essentially increasing the H1B quota will bring in more of the inexperienced people and people with fake experience to the job market. How? - Body shoppers in US,India,china,UK will try to get take advantage of the systems and hunt for more bodies (ones that want to move across the chain) with less experience and push them into US. There are thousands of these companies that just bring in people to US through the H1B programme. Increase in quota will see many of these companies mushrooming everywhere. American companies looking for temp SAP talents will hire them without doing background checks and thereby allowing fake experienced people to get on with the job. Background checks are costlier and take about 3-6 months and for a 3 month temp job which company will do background checks? And this loop hole is very much suitable for the body shoppers to bring in anyone, even a plumber (not to take any offense) as a XI architect, not that I’m suggesting that plumbing is more related with the integration of interfaces. Why they do this? – Body shoppers earn a cut on the earnings of those H1B candidates that they bring in to the market (direct cut from the US employers as temps mostly are not paid directly by the company). It's a win-win situation for US employers. US employers need temp employees without any overhead and the body shoppers are ready to supply those talents. You ask them for any qualification or skill level, they will say that they have them ready to take. But behind the scenes, resumes are changed and quick training is provided just to be an expert. What’s the long term effect? Actually there is no effect. The inexperienced candidates that are brought into the market with fake experience gains real experience over a period of time say, 4-5 years turning them skillful enough to get permanent jobs. They go on to apply for PERM processing. In fact they get highly skilled as they move across companies, learn different systems, and project management and execution styles. The only effect that I can think off is more foreigners are now becoming part of the American society. Not that it’s bad as we are becoming part of the global village and I take the liberty in assuming that the American people are not more accustomed to rubbing shoulders with people from multi-nations. What’s the solution? After watching Sicko, the new Micheal Moore movie, I sometimes think, socialism with stuffed capitalism will do the trick. National SAP talent registry with ebay-style bidding process? (perhaps maintained by SearchSAP) And this will show real talent requirements and also make it fake-proof. Maybe I'm wrong and I’m sure there are many other good ideas to overcome talent shortages, but definitely I think increasing H1B quota is not one of them.
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  • Robins Tomar
    Actually Indians are giving more scope and time to Americans to focus on cutting edge technology and research rather then doing the same usual stuff daily.
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