There is a bill in the US to impose a 25 per cent tax on the hiring of foreigners. Call it an outsourcing tax, as it aims to curtail giving of American jobs to foreigners. The collected fund will be used to re-skill or better-skill Americans so that they become employable in place of the immigrants. Recently, the US President Donald Trump coaxed foreign MNCs to invest in the country, cut out illegal immigrants from the workforces, and export experts to train Americans. The bill takes the idea quite forward, and wants every company that hires a foreigner to cough money to train an American.
Couple this with another news from the IT sector in India. A media report claims that after a hiatus of nearly five years, Infosys, one of the country’s largest IT service providers, plans to recruit from campuses. The company has asked senior employees to be prepared to go for interviews in Tier II and III engineering colleges. Coming after Infosys reduced hirings by more than 75 per cent in 2024, which has picked up a bit in 2025, it seems like good news. This is especially so after TCS, an IT giant, announced a plan to lay off two per cent of its global workforce, or 12,000 employees.
But let us give it a twirl. For five years, Infosys did not go to college. It implies that it hired people with experience, maybe 1-2 years or more. It was not interested in fresh and raw talent that it had to train for a few weeks or months. It wanted people, who could hit the road running, and take up slack wherever it occurred, either at the clients’ ends, or at the outsourcing campuses in India. Then, last year, it slashed the hirings, which meant that it did not need as many people as it thought it would. Now, despite hirings having gone up, it is looking at campuses, and wish to go to college again.
Clearly, Infosys is now seeking cheaper talent, even if it is inexperienced. According to the company, it is more cost-effective to train the first-timers, rather than pay the salaries of the more-experienced lot. This obviously means there are pressures on its financials, which have increased in the past year or so. The industry, including most of the big players, has been confronted with single-digit growth for the second consecutive year. Infosys’ stock price, which was around Rs 2,000 in December 2024, currently rules at Rs 1,500, or a reduction of almost a third of its value. On Tuesday, the share price soared by 4.65 per cent by mid-day because of the company’s decision to buy back shares from the investors.
North America remains the most coveted market for IT firms. In the case of TCS, the region contributes almost half of its revenues. The situation is more worrisome for Infosys. The contribution of North America was 60 per cent in FY24, which came down a notch in FY25. With Trump against immigrants, the US officials against the H-1B visa regime, and bills like the Hiring Tax one, the road ahead is full of obstacles. The Indian firms are banking on the premise that the US tech firms, and others in Europe, will outsource more work. But they will demand lucrative rates, and better contractual terms.
Given such a scenario, it is better to hire cheaper first-time employees than seasoned ones. Human resource is the highest cost-component for services firms, especially the IT ones. It makes sense to opt for campus recruitments. There is another curl in the matter. The GDP growth figure for the previous April-June quarter shows a higher-than-expected 7.8 per cent growth, largely because of a more than nine per cent growth in the services sector. This means that there are more opportunities in the local market. To cater to it, the IT firms do not need seasoned employees, like in the case of more-demanding and stringent foreign clients.
However, it shows that different IT firms are following different strategies to cope with the US pressures. TCS is axing people, maybe because it has high-volume, low-value business that it needs to get away from. Infosys is hiring, but taking people who cost less, maybe because it feels that it will need to go for low-value contracts, both in the foreign and local markets, and clients may demand more work for the same rates due to the changing geopolitical dynamics. As we said earlier, although campus recruitment is a positive sign, it comes linked with a few negative factors and some doubts.