Reverse Outsourcing Presents Unique HR Challenges

By Heidi Russell Rafferty May 25, 2010

Patni ​Computer Systems is one of the first India-based global IT outsourcers. In 1972, its founder and chairman, Narendra Patni, graduated from MIT, launched the company in Cambridge, Mass., and then returned to Mumbai, India, spinning out IT software and consulting services from there. The company is a poster-child example of outsourcing, handling business that otherwise would have been done by Americans, for Americans.

But today Patni is doing an about-face: or, what many in the industry refer to as, “reverse outsourcing.” It has invested in its U.S. operations to recruit more customers that want to keep projects onshore. Patni wants to be closer to them for practical reasons.

The company has set a goal to increase the size and scope of its North American operations beyond its three principal service delivery centers. Recently, Patni announced a new North American hub for Business Process Outsourcing operations in El Paso, Texas. These moves will give Patni further manpower to take on more general business while giving the company increased expertise to build out new business areas, says Tony Viola, VP of Marketing of Patni Americas. Of its 14,000 employees, 2,800 are foreign nationals—and of those, 2,300 are in North America, Viola said.

Patni isn’t the only company getting into the reverse outsourcing game. More Indian firms are staking their flags in U.S. soil, citing the American work ethic and client satisfaction. But what are the ramifications for human resource issues? Challenges and opportunities abound for the savvy HR professional, all of which can be used to a company’s advantage, Viola said.

Following are his tips on making the most of the reverse outsourcing trend.

A Recruiter’s Dream

Consider this: In the spring of 2010, the U.S. unemployment rate was at its highest since World War II, at “a shade under” 10 percent, or the equivalent of 15 million Americans, Viola said. The statistics for the workforce 25 years old and under were even starker. He says they comprised roughly 25 percent of the unemployed. It behooves an HR professional to tap that workforce on behalf of your foreign corporation, Viola advised, as more unemployed means a greater talent pool from which to fish.

“This has opened up opportunities for companies like ours to look at acquiring and investing in talent locally. We have an affordable and ready workforce across all disciplines,” Viola said. “A lot of the customers are looking for us to do the things that are socially right and consistent with corporate initiatives and motives, and one of those is to put people locally to work. We’re balancing that motive with obligations to our shareholders to deliver profitability.”

The other aspect pushing the new hiring and staffing models is driven by North American clients who are more easily accessible. Companies like Patni can use the “reversed outsourced” workforce to reduce the strain of interacting with a fully distributed workforce around the world, Viola said.

And how does this work logistically? Collaborative software technology makes it easy for HR to put a dream team together for your client. Your U.S. team can interact with clients in the country but be led by professionals in Mumbai, for example. “They can be led by anybody with the right talent for that particular project,” Viola said. “We might have one that requires project management skills, and the leader may be in Mexico, and his team might include North America, Mexico or India. It’s not dictated by country of origin as much as it is the skill sets of what we can use.”

Reverse outsourcers have a good grasp on where they will find particular talent. They come to the United States because it’s known as a “hotbed” for sophisticated software architecture, for example. They tap into other countries—like those in Eastern Europe for mathematicians and scientists. By looking globally, they have discovered a diverse workforce that improves product offerings profoundly, Viola said.

“The whole notion of diversity, not just in respect to gender but building a culturally diverse organization, is to tap into people from these geographies and wind up enhancing the overall knowledge of the workforce while having a richer interaction and stimulating environment that spawns creativity and advancement,” he said.

Consummate Communicators

Another challenge arises for the HR professional: Locating talent that not only is well versed in their skill sets but also have a knack for communicating with clients and co-workers in the U.S. and abroad. Each candidate should be tested on collaboration skills; they shouldn’t just be a specialist in their field but should understand the entire industry and how it is affected globally, Viola said.

“Test their written linguistic skills, which are critical to the success of your business, from crafting sensitive correspondence to being able to get subtle messages across. It’s an art form. It’s difficult for people, whether English is their primary language or secondary. It’s a tough skill to find.”

Managing from Afar

HR should be careful to find project and program managers who understand how to manage the reverse-outsourced workforce. It doesn’t matter if your manager is in India, or is an Indian national on-site managing the U.S. team. That person must be able to understand the nuances of language, work habits and traits, not to mention dealing with time-zone differences.

“This is a skill set that is largely done on the job or cultivated on the job, but it’s becoming a massive requirement,” Viola said, adding that finding qualified leaders is a big HR challenge.

More Core Challenges

At a minimum, you need HR practices that support the fundamentals of salary, wage rates, vacation, health care, and investment as a core offering. But as a reverse-outsourced HR person, you have to tweak those things “to where you have the core critical mass talent,” Viola said. “A benefits plan in India is not applicable in the United States,” he added.

What to do? Make sure the core is customized to your people’s country. “Nothing irritates employees more than dealing with an HR practice for one geography and it has nothing to do with what they deal with,” Viola said. “The issues around retention and development for younger employees in particular are critical. For example, our HR professionals need mechanisms to identify talent,” Viola said. Patni supports a series of surveys that are initiated by HR to take the pulse of U.S. employees on job satisfaction.

Indian firms are concerned about H-1B visas, which allow their nationals to go to the United States and supervise the reverse-outsourced U.S. teams. “The thing we’ve seen recently is that there has been a slowdown of the approval process. There’s more evaluation going on and more requests for justification. The amount of paperwork we have to provide is more so than in the past, but it’s understandable, given that there are 15 million people out of work in this country. I believe the current evaluation period is driven more by issues regarding unemployment rather than anything else,” Viola said.

That said, there is no shortage of these visas, said Frida P. Glucoft, an immigration attorney in Los Angeles. Although 65,000 visas are available annually, as of April 2010, the Department of Homeland Security announced that only 15,000 applications were filed in the current cycle.

“There’s not a heavy reliance on them, and it has steadily declined [since 2008] for the reason of the economy,” Glucoft said, adding that Indian companies have “scaled back dramatically in filings and in use of them.”

If you’re concerned about getting these visas for your workforce, though, you can ease the situation, she said. “If you’re an Indian company with a U.S. affiliate, for example, then the American subsidiary or affiliate files the visa petition for the Indian national.”

Heidi Russell Rafferty is a freelance writer and editor in Kentucky.


Job Finder

Find an HR Job Near You
Post a Job


Join us for the largest and best HR conference in the world, June 23-26, 2019 in Las Vegas.



Find the Right Vendor for Your HR Needs

SHRM’s HR Vendor Directory contains over 10,000 companies

Search & Connect