- IT recruiting in the US has become overrun with Indian recruiters and companies which primarily employ Indians in the US and Indians working in India who do not have the right to work in the US market.
- Trust is declining to the degree that it is reducing the overall IT contract market.
Introduction to Indian Recruiters
The rise of Indian recruiters into the US and European IT markets have to lead to great dislocations for the domestic IT workers. They are changing everything from rates to terms and conditions in contracts to refashion the IT contract market entirely around Indian ethics and labor standards. In this article, you will learn about things I have seen first hand in the market for SAP contracting.
How Indian Recruiters Operate
I have been an SAP consultant/contractor for some years now, and there is a change that has been going on for a while but has been accelerating very quickly in just the past few years. This change is, I believe, going to have significant implications for the IT contracting market, and in ways that I think is not generally anticipated.
The Massive Rise in Indian Recruiters
There are three types of Indian recruiters that I will discuss. They are the following:
- Indians who are US citizens who now work in recruiting.
- Indians who are in the US, but who are not authorized to work in the US. My understanding is that the most significant numbers of people who operate this way are the wives of Indian who are married to men that are in the US under the H1B or related program.
- Indians who are based in India, but who work the US market.
The last two types are in a strange legal category. Neither of these two groups has the right to work in the recruiting market in the US, and many Indians are flouting the law on a very large scale, but on the other hand, I don’t believe that there is anyone who enforces these laws. Whether overseas Indians can somehow create a company in the US and if the wives of H1B holders generate a company under the husband’s name, I don’t need to get into at this exact mechanism, as its where I have any insights, however, one way or another it is being done.
What this is leading to is a massive increase in the number of recruiters that are working the field, and an increasing number don’t have the authorization to do the work they are doing in the US.
The New Life of an IT Contractor
The changes have been quite significant. The best way to understand them is to read through as a list.
- In the past, there used to be far fewer recruiters for one specific job. In the past, I would often be contacted by a single recruiter, who was US-based, and either I was either placed or not. However, now I am inundated by requests, and flooded by Indian recruiters specifically, while the number of “American” recruiters is beginning to decline. The increase in correspondence means that there are now many recruiters for a single consulting roll. Honestly, I now have a hard time keeping it straight. I have an email inbox filled with names I can’t pronounce, with company names that all seem to be some derivation of “BizTechSysInfoIT.” This is highly confusing especially when so many of these recruiters now often hold out the client name until the last possible moment.
- I have performed a direct comparison through some projects for over a year now, and the rates are lower when the recruiter is Indian is lower 100% of the time. I can say this with confidence because I compared the American recruiter versus the Indian recruiter for the same projects. I have kept a record and of these projects and I found when the recruiter is Indian the rates are on average 17% less. And the rate reduction goes beyond this as the Indian recruiters seem to have a depressing effect on contract rates generally, which are right now roughly 30% off of their average level. Why is this? The story is entirely consistent that the “client will only pay a certain” amount, but when I check through other sources the rate being paid to the consulting company is the same. Here the math gets a bit more tenuous, however, because the exact rate paid the consulting company is an estimate on my part. But the percentage the consultant receives from the project is roughly 37% of what the customer is paying the consulting company. This is I believe a historically high percentage of the total which is paid, and this means that the recruiters, and specifically the Indian recruiters, are absorbing more of the overall rate. This is particularly strange when one considers how low the costs are incurred by offshore Indians (where $10,000 goes a long way). Interestingly the Indian recruiters are incredibly consistent on the rates they offer.
- Recruiters working in India attempt to hide their origin by having a US number that calls my phone. However, what gives them away is the combination of the fact that the English skills of the Indian based recruiters is significantly different than US-based Indians, and secondly, the voice quality is very low because they are using a VOIP service, as calling from a cell phone from India to the US would be quite expensive. The combination of the accent/English skills with the poor quality voice quality of VOIP makes it very difficult to communicate with them. Some of these conversations are ridiculous with the person stating their name, stating the SAP module and then asking me if I am interested. This is why I started asking them to send the requisition through email, which I tend to ignore.
- The average quality of service of an Indian recruiter based in India is low. The vast majority of Indian based recruiters cannot develop relationships with the US IT consultants; there is no ability to understand the consultant beyond them being a bag of skills. Rather than try to robotically work down a list of questions, and then ensure that the rate that they obtain is the absolute lowest possible. This is an entirely foreign experience from many domestic recruiters where I feel as if I am having a real conversation. Although, this might be a good time to bring up the fact that some of my discussions with recruiters from the UK, who have greatly declined in the US market, also tended to have a very similar extractive feel to them.
What the Future Holds with Indian Recruiters
The rise of Indian recruiters means that it is much more of a hassle, with more miscommunication issues, lower pay then the contracting market I entered years ago. It means the US and Europe have subordinated the interests of their domestic IT workers to the desires and interests of recent Indian immigrants and to Indians who are back in India. On the demand side, the companies are inundated with requests from many different recruiters. I was recently discussing this with someone, and one can imagine the need for a recruiter for recruiters or recruiting wrangler so that the many recruiters that are going after the same roles can serve as another intermediary roll to the final customer, and they can then take another piece of the rate. This would end up with three intermediaries (the consulting company, the recruiter and the recruiter “wrangler”), and we will have reached a new level of ridiculousness.
Trust is declining the SAP contracting marketplace, and I see several outcomes from this change, which has been genuinely breathtaking regarding how quickly it has occurred:
- Many contractors will exit the market, opting for full-time employment. This is due to a combination of the hassle of dealing with recruiters who are now so numerous and are challenging to communicate with, combined with the fact that the rates offered by Indian recruiters now make full-time employment attractive again.
- Clients will be more incentivized to hire full-time employees as the contract market will become filled with less experienced consultants.
Therefore, my prediction is that the contract market will change, and change in a way that is bad for all of the pre-existing parties.
Financial Bias Disclosure
Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.
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