Infosys sets up US consulting subsidiary

Software bellwether Infosys Technologies Ltd said on Thursday it had set up a US-based consulting unit with an ambitious hiring plan to matc...

Software bellwether Infosys Technologies Ltd said on Thursday it had set up a US-based consulting unit with an ambitious hiring plan to match rivals and counter a US backlash against outsourcing.

With an initial $20 million investment, the Texas-based unit will hire 75 people in the US in the first year and then raise global headcount to 500 over three years, officials of Infosys, the country’s largest listed software exporter, told a news conference. The new unit, Infosys Consulting Inc, will ultimately aim to take on bigger players such as Accenture and Electronic Data Systems, which in turn are aggressively hiring in low-cost India.

After years of Indo-American exchanges in the labour market, companies in the two countries have started shifting capital as well. On Wednesday, US Computer giant IBM announced the purchase of India’s third-largest technical and support services firm, Daksh, estimated to be worth as much as $200 million.

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Infosys said its US subsidiary would help it match global players in business consulting. ‘‘The quality will be higher, and risks will be lower,’’ said Stephen Pratt, Chief Executive of the new subsidiary.

Pratt, a former Deloitte Consulting partner, joins PaulCole, earlier with Cap Gemini Ernst & Young, Romil Bahl, who was earlier with EDS and Raj Joshi, also an ex-Deloitte partner, in the new unit. Shares of Infosys closed down about a quarter of a percent at 5,312.70 Rupees. Bombay’s benchmark 30-share index gained 0.4 pc. Infosys has steadily grown from being a provider of low-cost software services to global firms to a giant offering an array of services like business consulting and product development.

Only 4.5 pc of its revenue comes from business consulting, company officials said, adding that Infosys, with sales crossing $1.0 billion, needed to step up its goals. Infosys aims to provide consulting based on its knowledge of clients and industry problems in key markets such as the United States, and then apply solutions from India to help them work better.

The announcement of its new unit, based in President George W. Bush’s home state of Texas, comes against a backdrop of controversy in a US election year over job losses resulting from outsourcing to low-cost locations like India.

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‘‘We are creating jobs in the US and that should help us counter some of the anti-outsourcing sentiment,’’ said Kris Gopalakrishnan, chief operating officer of Infosys. ‘‘We are actually becoming a full-service company.’’ Infosys says it believes in a ‘‘global delivery model’’ and will hire workers in places that suit it best for costs and quality, though the bulk of its nearly 25,000-strong workforce is based in India.