Feb. 12 (Bloomberg) -- T.V. Mohandas Pai says he wants to hire more expatriates for Infosys Technologies Ltd., India’s second-largest software exporter, as the global economic recovery boosts sales. Stricter visa rules prompted by unskilled Chinese workers are holding him back.
Infosys has about 20 foreign workers and needs “many more” to help it expand abroad, said Pai, who runs the Bangalore-based company’s human resources department. Companies in Asia’s third-biggest economy are using annual growth averaging 8.7 percent in fiscal years 2006-2009 to reverse a decades-long “brain drain” to the U.S. and Europe.
The government toughened regulations for foreign workers last year after discovering that about 40,000 Chinese building power plants used business visas instead of employment visas, skirting taxes and taking jobs from locals. The crackdown restricted employment visas to skilled people in senior jobs and limited foreigners to 1 percent of a project’s workforce.
“We need to get expats to help us understand the complexity of businesses,” Pai said. “But instead of helping, the government has tightened the visa rules. The problem in India is policymakers are totally out of line with reality.”
Building Power Plants
India is attracting foreign workers facing jobless rates of 9.7 percent in the U.S. and 10 percent in the 16-nation euro region. India doesn’t regularly release unemployment data.
Little attention was paid to visas in the past decade as the government sought investments from abroad. The number of registered foreign nationals more than doubled to 351,999 in 2007 from 137,474 the year before, according to the latest data from the Ministry of Home Affairs Web site.
Three power plants being built by billionaire Anil Ambani’sReliance Power Ltd. placed orders with Shanghai Electric Group Co. Lanco Infratech Ltd. awarded a contract for its 1,015- megawatt plant to Deyang, China-based Dongfang Electric Corp.
“It has come to the notice of the government that a large number of foreign nationals, including Chinese, were coming for execution of projects/contracts in India on Business Visas instead of the Employment Visas,” Harish Rawat, junior minister for labor, said Dec. 16 in a written response to lawmakers.
Foreign workers without employment visas aren’t paying taxes, said Amitabh Singh, a partner at Ernst & Young Pvt. in New Delhi.
7.2 Percent Growth
The government forecasts economic growth will reach 7.2 percent in the year ending March. India recorded the highest average pay increase in the Asia-Pacific region in 2009 at 6.3 percent, Lincolnshire, Illinois-based Hewitt Associates Inc. said in October.
“It has become a hot destination,” said Jeffrey Joerres, chief executive officer of staffing company Manpower Inc. “India and China are on the front end of the recovery.”
Infosys is benefiting from a strong rebound in the financial services industry, Chief Executive Officer S. Gopalakrishnan said Jan. 28. The company on Jan. 12 reported profit that beat analysts’ estimates and raised its annual revenue forecast.
Sales may rise as much as 2 percent to $4.76 billion in the year ending March 31, compared with an earlier prediction of a 1.3 percent drop.
‘Hard Work, Sacrifice’
Matthew Barney, 40, left Wisconsin a year ago and moved his family near Bangalore to become head of leadership development for Infosys.
“Indian culture today is similar to the original cultural values that drove the U.S.,” said Barney, whose wife is Indian. “Both value hard work and sacrifice today for the next generation to have a better standard of living.”
India’s travel and tourism economy is expected to grow 7.7 percent a year in real terms from 2010 to 2019, according to a 2009 report by the World Travel & Tourism Council. Gurgaon-based Air Works India Engineering Pvt. hired American Todd Hattaway as president of airline maintenance last year.
“Aviation is developing so fast and to be a major part of that will definitely enhance my career,” Hattaway said.
Deepak Gupta, country head and managing director of executive-search firm Korn/Ferry International, said the new rules may dim India’s attractiveness to foreign workers.
“The visa system has to be made more friendly,” Gupta said. “It’s not going to help make India a global employment destination.”
Favoring Indians
The government said Nov. 25 that employment visas would only be granted to professionals including technical experts, senior executives and managers. The visas “will not be granted for jobs for which a large number of qualified Indians are available,” M. Ramachandran, a Home Affairs junior minister, said in a written statement to parliament.
The Ministry of Labour and Employment said foreign nationals cannot total more than 1 percent of a workforce, with between five and 20 allowed on a project.
The Chinese government received numerous complaints from companies and said, “We hope India will be considerate of the circumstances of Chinese firms there,” state-run China Daily reported Nov. 3.
In December, India amended the rules to allow up to 40 foreigners on power and steel projects through June. Companies seeking more overseas workers need labor ministry approval.
Pai said limiting foreigners will do more harm than good.
“We need substantial relaxation in work permit policies,” he said. “India needs to get many, many more expats.”
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