Infosys Ltd ADR (NYSE:INFY) has announced that it will be receiving a $1 million grant from Wake County as part of its planned expansion that will lead to the creation of 2,000 new jobs.
Wake County managed to woo the Indian firm to set up shop in its yard, beating out heavy competition from other counties with a similar agenda. Infosys announced that it planned to expand its reach in the US by building the new tech hub. This spurred a lot of interest from various states and counties.
Elected officials from Raleigh and Wake County approved various packages on Tuesday for expansions that were previously announced by numerous firms including Verizon Communications Inc. (NYSE:VZ) and Infosys. The latter had announced in July that it would set up the planned technology hub in Wake County but the specific location was not disclosed.
Raleigh City officials announced that they would offer a $1 million business investment grant to the Indian company. The grant will be spread out over a period of five years. However, Infosys will have to create a minimum of 2,000 new jobs by 2021 in order to secure the grant. This could introduce moral hazard in incentivising the creation of jobs that are not needed, leading to unnecessary job loss once the grant is secured. The officials also expect the average annual salaries of the employees at $72,146.
“If you pick us, here’s what we’re gonna give you. That’s how the game is played,” stated John Boyette Jr., the spokesman for Raleigh City.
The total business investment package that has been offered to Infosys by the state of North Carolina is roughly $22 million to help attract it amid the heavy competition from other cities. There were other major cities from the neighboring states including Texas, Ohio, Maryland, Virginia, Utah, Connecticut and Georgia that were also in the running. The Indian company has withheld the details of the location which it selected for its operations. It is however clear that its new headquarters will be in Raleigh. The company currently boasts of a global workforce of 200,000 people with 27,000 of them in the U.S.
Infosys stock closed the latest trading session on Thursday at $14.53.