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Did Better.com hire Indian techies only because they are cheaper?

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Reuters/Steve Marcus
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The unceremonious mass firing of 900 of his employees by Better.com CEO Vishal Garg, his temporary departure in November 2021 following a backlash, and a resignation spree sparked by his quiet return last month haven’t still hurt the US-based firm’s headcount.

If anything, it only increased from 8,100 last June to 9,300 by the end of 2021. This was likely due to a considerable role played by the traditional strengths of the Indian technology sector: plenty of affordable, English-speaking human capital amid a dearth of exactly that in the US.

Following a redistribution of talent by the New York-based online mortgage company, the bulk of the new jobs it generated—1,000—is now in India. The proportion of Better.com employees working in India increased from 38% on June 30 to 44% on Dec. 31, Bloomberg noted.

During India’s rise as an outsourcing hub in the 1990s, many companies looked at it as a coding base.

“The entire outsourcing industry is built on the premise that locations like India need to be leveraged to serve US markets,” says Yugal Joshi, partner at consultancy Everest Group. “There are two broad reasons. One, the cost of servicing from India is cheaper, and second, there is massive availability of talent for that price.”

There are other reasons (pdf), too.

Cost and quality of Indian tech talent

It’s a fact that Indian techies are relatively inexpensive. The cost per hire for them is “almost 40% less or even lesser at times” compared to those in the US, according to N Shivakumar, founder at executive search and recruitment firm ResourceTree Global Services.

It is, however, not only about cost. India is able to offer scale and quality as well, Shivakumar adds.

In 2021 alone, the country churned out a million engineering graduates. Most developers in the Indian market are acquainted with new-age technologies—those who aren’t, up-skill swiftly. They’ve been fluent in English but lacked soft skills earlier. However, that’s also changing, courtesy holistic up-skilling programmes.

Furthermore, India is a democracy with a politically stable climate. In recent years, the government, with its Digital India mission, has increasingly become even more of an enabler for companies hiring techies locally, providing tax benefits, low service charges, and robust intellectual property policies.

In any case, American firms aren’t taking a big risk moving operations halfway across the world. High-level functions like “product management, owning product strategy, and building next-generation offerings,” still happen in the US. It’s mostly on rote execution that happens in India, Joshi adds.

“In the case of Better.com, the subsequent increase of employees in its Gurgaon office in India were mostly for production and related roles (2,900 of them),” says Ajay Kumar Thalluri, business fundamentals analyst at GlobalData. “The company’s tilt towards India could be for cost optimization and to offset production from its US offices to India.”

Lack of STEM talent in the US

Better.com isn’t alone in recruiting heavily in India. In 2021, US companies such as Oracle, IBM, and Cognizant were seen posting more jobs in India than the US, market research from GlobalData revealed. Microsoft is also expanding in India with new offices and is hiring to commission a data center in the country.

American engineers are likely superior but there just aren’t enough of them. And the pandemic has only worsened the glaring gaps. Plus, given the massive tech and startup scene in the US, the competition for hiring talent is fierce. As a result, whatever local talent is available can be increasingly picky, ask for higher pay, and demand flexibility.

“In the US, many companies cite unwillingness of employees to relocate to other locations, a lack of available talent pool in general, and, for the compensation they offer in particular, less inclination to put in long hours as some of the hiring challenges,” says Joshi.

Employers and policymakers recognise there is a pressing need to reduce education and hiring friction and retain international students with immigration-friendly policies. But until then, looking east remains the best bet.

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