The deadline for cities to apply to become Amazon’s second headquarters (or HQ2) is Thursday. While proposals have come from all over the map, it is unlikely that any metro area with fewer than 4 million people will make the grade, according to Everest Group, a Dallas-based consulting and research firm.
As the proposal deadline for cities vying to be home to Amazon’s second North American headquarters looms, New York City is lighting up some of its most iconic landmarks Wednesday night.
To support the city’s official bid for what’s being dubbed as “HQ2,” the Empire State Building, One World Trade, 4 Times Square, 1 Bryant Park, Bloomberg Tower, Pier 17 in the Seaport District, billboards in and near Times Square and LinkNYC kiosks across the five boroughs will all turn “Amazon orange” at exactly 9 p.m., the New York City Economic Development Corporation announced.
Though officials think New York is a prime contender for Amazon’s HQ2, how does the city measure up to some of the other cities bidding?
For IT professionals, there’s no evidence that President Donald Trump is reducing the risk that their job might go offshore.
Offshore outsourcing firms, who are the largest users of H-1B visas, often use visa workers to facilitate the transfer of work. The Trump administration has criticized the visa program for this reason. Analysts have long argued that increasing visa wages, and changing the way visas are distributed, may hurt the ability IT services firms to use visa workers in offshoring.
But the administration, as well as Congress, have not taken any major actions on the visa program. The offshore outsourcing industry is breathing easier, but it is still seeing changes.
The rate of growth among the largest India IT services firms has been consistently declining for the last eight quarters, according to Jimit Arora, who leads Everest Group’s IT Services research practice.
Recently, about 400 senior executives of Cognizant accepted the company’s voluntary separation package. Cognizant had announced this programme for directors, associate VPs and senior VPs a few months ago.
Peter Bendor Samuel, CEO of IT consulting firm Everest Group, said industry growth has slowed and the ‘arbitrage first’ segment (traditional IT services) is in secular decline. “When this is added to the pyramid factory model, which requires new freshers to be brought in every year to keep cost low, it results in an excess of more experienced employees,” he said in an interview to ET in May.
As costs rise in developing countries, and automation eliminates the most mindless tasks, some manufacturing and service businesses are going home—but with greatly reduced labor needs.
A different equation pertains to reshoring decisions on white-collar work. Shipping is irrelevant when the product is database management or help-desk assistance. Wage growth has slowed with the growing supply of educated graduates in key outsource countries, says Michel Janssen, Dallas-based chief of research at consultant Everest Group. India’s university student population has more than doubled since 2008, to 25 million, dampening their elders’ pay demands. “We predicted that the labor arbitrage for service outsourcing would be finished by 2015–2020,” Janssen says. “Now we expect it to be there until 2040–2050.”
India’s position as a labor arbitrage market may continue for another “25-35 years”, said IT consultancy Everest Group. However, it is unlikely that earlier offshored work would be back to its home market, it added.
“There is no doubt that India is still a highly attractive and viable option for low-cost labor, albeit not quite as good as it was 15 years ago, but still very compelling, and it will likely remain so for another three decades,” said Michel Janssen, Chief Researcher at Everest. “We move out our estimate for the end of the India labor arbitrage to beyond the 2040-50 time horizon.” Indian IT firms have put it that they have shifted from a model based purely on labor arbitrage and have been hiring in bulk onshore.
A decade ago, Everest Group made some predictions about the India global services industry; recently we cracked open the time capsule to check out our predictive capabilities. We found that we got some things right, some things wrong, and some things very wrong. The outcome of our recent analysis, though, is a huge boost in confidence for the prospering India global services industry.
Entry-level IT jobs will continue to see low wage as the Indian software services industry foresees a slowdown in offshore services to the country in future.
Salary growth prospects for entry-level IT professionals will not be much given the fact that offshore jobs will not come in large quantities in contrast with the sharply growing number of information technology graduates, said a report by Everest Group, a Dallas, US-based IT consulting and research firm.
“More competition will keep the salary down over the 25-35 years horizon. The wage growth will remain muted. People were getting 8-10 per cent growth (on an average), but they will now be getting 4-5 per cent as they move up the pyramid. But the pressure will still remain on the entry-level positions,” said Michel Janssen, Chief Research Guru, Everest Group, Dallas, US-based IT research firm.
Arkadev Basak recently contributed an article on Total Talent Acquisition in Supply & Demand Chain Executive.
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