Sikka's plan to hire 10,000 Americans will cost Infosys $1 billion in wages

Infosys’ planned move to hire 10,000 Americans would mean an increase of only  about five per cent in its workforce, but it might cost the company about $1 billion in wages, assuming an average annual salary of $100,000 to each individual. The company had 200,364 employees at the end of March. Analysts say Indian companies pay an annual salary of about $60,000 to an immigrant working for them on H1-B visa in the US.

Local employees (US citizens) costs about 20 per cet more than Indian immigrants. Earlier this year, a couple of Bills put up before the US House of Representatives sought to raise the minimum wage paid to immigrant IT professionals to about $100,000 a year. This could raise the wage bill of most Indian IT companies catering to the US market.

For 2016-17, Infosys’ consolidated employee expenses stood at Rs 37,659 crore, according to Capitaline data, an increase of 9.5 per cent over the previous year. 

At the current dollar-rupee rate of 64.21, an increase in employee expenses by a billion dollar (assuming other things remaining constant) would lead to a 17 per cent increase in employee expenses of Infosys. Employee costs as a percentage of revenue have hovered around 55 per cent levels in the last two fiscal years. 

For profit margins to remain intact, the company will have to ensure that its revenues, on account of these new recruits, grow at a similar rate.