Attrition is about 17% at Infosys, the company Verizon is using for outsourced IT

Indian outsourcing firm Infosys made a name for itself in the United States by supplying companies with IT workers from other countries, primarily India, through the H1-B visa process. But now that the Trump administration has made that visa process much more difficult, Infosys has pivoted. Instead of bringing so many Indian IT workers to the U.S., it’s putting a big focus on training American workers within the U.S.

Last October, Verizon notified many of its information technology employees that their jobs were being transferred to Infosys and that they would become Infosys employees. The deal amounted to about $700 million for Infosys. The Verizon IT employees were offered compensation that was comparable to what they received at Verizon. According to the Wall Street Journal, about 2,500 Verizon employees were affected.

In January, the Times of India reported that Infosys’ contract with Verizon had grown from $700 million to about $950 million. Verizon declined to elaborate on its relationship with Infosys for this story. A company spokesperson referred to its official statement from December 2018, which said: “We’ve recently reached an agreement to transition select functions within Verizon’s global information technology (IT) organization to Infosys. All impacted employees will receive comparable, competitive offers, and are expected to transition to Infosys in the fourth quarter 2018 to continue performing functions that will now be IT Managed Services for Verizon. We have an extremely talented team at Verizon and are fortunate to continue to work with them in this new capacity.”

Infosys attrition

On its earnings call for the fourth quarter and year ending March 31, 2019, Pravin Rao, COO of Infosys, said attrition among Infosys employees has been higher than the company expected: between 17.8% and 18.3%. He said attrition was highest among workers with three to five years’ experience among its global workforce and with two to three years’ experience among its American workforce. The company is taking steps to reduce the level of attrition, including increasing compensation for its U.S. employees by about 1% to 1.5%. He said Infosys would be comfortable with a 10% to 15% attrition rate, and that it would probably be on the higher side at around 13%.

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In addition to raises, Rao said the company plans to do a better job communicating with its employees. “It’s about engagement; we are investing a lot in skills, we are doing a much better job in articulating and rotating people. This will probably take a couple of quarters,” he said.

For context, attrition is high for the IT sector in general. According to a blog by LinkedIn talent analyst Michael Booz, attrition for IT software employees in 2017 was about 13%.

Rao said, “There is a shortage of talent globally.” To cope with the situation, Infosys is reskilling its employees and also hiring people in adjacent areas and then training them. “It is a great time to work in tech, there are lot of disruptions happening," said Rao. "It’s a huge opportunity for people.”

Infosys CEO Salil Parekh said on the company’s recent earnings call, “We’re seeing good traction in the telecom sector developing. There is obviously going to be a wage increase, but a lot of focus is on how we build localization. The three-year journey for us is well laid out.”

Infosys' presence in the U.S.

In February, Infosys announced that it had established 5G Living Labs in five global locations, two of those being in the United States: Richardson, Texas, and Indianapolis, Indiana. The company said the 5G Living Labs would bring forth new offerings that would help communication service providers accelerate and monetize their 5G network deployments. 

Infosys declined to comment on which U.S. telecom operators and vendors it’s working with, other than Verizon. But it probably made strategic choices for the locations of its 5G Living Labs. Major employers in Richardson, Texas, include AT&T, Cisco, Fujitsu, and Amdocs.

Indianapolis, on the other hand, is not home to any major telecom company. The city’s biggest employers are in healthcare, which is another industry vertical that Infosys serves. But Infosys has also chosen Indianapolis as its new U.S. Education Center. The outsourcing firm is building the residential training center for its employees—and the employees of select clients—to prepare American workers in technology skills.

“We are excited to break ground on our U.S. Education Center, a physical embodiment of our long-term commitment to reskilling American workers,” said Rao in a statement. “We look forward to the important role this facility will play in our efforts to train our 10,000 new American hires as well as our existing employees and those of our clients.”

In other telecom moves, in December, Infosys joined the Open Networking Foundation as a supply-chain partner. It will work with the open source group in its capacity as an integrator of telecom software and technology.