U.S. Payrolls Change Lives in India

Discussion in 'Economics' started by omcate, Feb 22, 2004.

  1. omcate



    Published by New York Times on February 22, 2004:

    ANGALORE, India, Feb. 21 — A social revolution is under way in India's numerous back offices and call centers.

    Many of the employees are barely in their 20's, and just a year or two ago they were living traditional lives in their parents' homes, often in smaller towns.

    Now, caste, religion and other age-old Indian social divisions are being shaken. Empowered by an ample paycheck, often from big American companies like American Express and America Online, some Indian workers are living lavishly on credit cards, and their open-mindedness is breaking conventions about dating.

    Foreign companies are rushing to India, lured by its low wages, high technology and good communication networks, and the country's annual surge of 1.5 million English-speaking university graduates.

    Roopa Murthy, 24, works at 24/7 Customer, a back-office company that employs 3,000 others like her — well-educated, English-speaking workers from middle-class families. This small army works mostly for American companies and some Canadian and British businesses, selling services for satellite television, handling credit card and insurance inquiries, and selling telephone cards offering online support for technology companies.

    Ms. Murthy moved to Bangalore in 2002, with an accounting degree from a women's college. She shunned smoking, drinking and late nights.

    Now, she earns $400 a month, a sum several times her father's salary when he retired after decades in government service. She sends part of her earnings home to help out the family. Once shy and introverted, she has changed into a self-assured young woman.

    Her newfound confidence, she said, came from dealing with hundreds of strangers around the globe. Her long hair is now cut in a short style similar to the one worn by her idol, the character Dana Scully of the television show "X-Files," whose name she has adopted at her workplace to answer customer inquiries or to market products and services on the telephone. Her daily makeup includes foundation, lipstick, eyeliner and sometimes eye shadow.

    The salwar kameez, the loose-fitting Indian dress that was a standard in her wardrobe back home, has given way to Western attire with designer labels. Ms. Murthy, who said she owned one pair of sandals through college, now has Nike and Adidas sneakers and half a dozen other pairs of footwear.

    "I wear a deodorant daily," said Ms. Murthy, who recalled that her parents could only afford her bare necessities. All her life in Mysore, the furthest Ms. Murthy ever pushed her parental curfew was until 9 p.m. In contrast, these days her favorite night spots are Geoffrey's, a hip smoke-filled pub where she drinks dry martinis and rum, and The Club, a crowded suburban discothèque she said she visited twice a month.

    She is "seeing someone," she said, but confessed that her parents would frown upon this, as well as her drinking and the tank tops she wears to the disco. "It is difficult to talk to Indian parents about things like boyfriends," she said.

    Ms. Murthy's younger sister has also moved to Bangalore and works at the same call center. The sisters share a house with two girlfriends from Mysore who work in another back office. After spending on essentials like rent and sending money home to her parents, Ms. Murthy said she was still left with enough to splurge on imported cosmetics and jeans, a cellphone and dinner at an American chain restaurant.

    Not long ago, she got a credit card that she carries when she shops at the malls in Bangalore.

    In low-cost India, about 150,000 jobs similar to Ms. Murthy's have sprung up in the past two years. The back-office industry has been a boon for thousands of job-hunting Indians. Ms. Murthy's new customs are shared by many of her co-workers, most of whom work nights to connect with Americans during daylight hours in the United States.

    Most workers are cut off from friends and family because of the unusual working hours. Some have moved out of their parents' homes for the first time and migrated to cities like Bangalore from distant towns.

    "Loneliness drives them to relationships, and they are worried because most of them come from traditional middle-class families where the parents are very controlling," said Prakash Gurbuxani, chief executive of TransWorks, a call center with 1,000 employees that provides back-office services to American and British companies.

    New employees struggle to adapt to the new mores. "There are fresh recruits who come to me with questions like, `What is flirting?' " said Anna Chandy, who counsels workers at ICICI OneSource, a call center.

    Binitha Venugopal, who used to answer calls at ICICI OneSource, which employs 4,200 people, said her co-workers were gradually becoming Americanized. "They are materialistic, their values are changing," she said. Dating and live-in relationships are common.

    Ms. Venugopal said she obeys her parents' wishes and does not hang out with her colleagues at pubs and discos. Her parents have become a little relaxed about her staying out late for parties, but they are opposed to her boyfriend, a Christian. She is Hindu.

    "To make them happy, I've switched to a regular job, a day job," she said. Ms. Venugopal now works for a company that screens and recruits workers for call centers. She said she had decided not to marry her boyfriend without her parents' approval, but she said she would not settle for a marriage arranged by them with a husband of their choice.

    Many of these young Indians deal with car insurance but may never own a car; book hotel suites that cost nearly as much as their annual pay; and chat about pretzels, snow and baseball, which they have never tasted, seen or experienced.

    Ms. Murthy, who has never been outside India and does not even have a passport, said she sometimes envied her callers' lives. "They have such facilities — 24-hour convenience stores, 365-day power supply," she said.

    She said she hoped her job would help her move upward and onward. "I may be a small-town girl, but there is no way I'm going back to Mysore after this," she said.
  2. capitalism rocks !

  3. ertrader1

    ertrader1 Guest

    To bad the US has forgoten about captialism.........thank god for Airplanes and passports.......Next plane leaving the US?
  4. Thank God for free markets ...
  5. Thanks.
  6. BusinessWeek Online
    Friday February 20, 4:00 pm ET

    Stephen Haberman was one of a handful of folks in all of Chase County, Neb., who knew how to program a computer. In the spring of 1999, at the height of the Internet boom, the 17-year-old whiz wanted to strut his stuff outside of his windswept patch of prairie. He was too young for a nationwide programming competition sponsored by Microsoft Corp. (NasdaqNM:MSFT - News), so an older friend registered for him. Haberman wowed the judges with a flashy Web page design and finished second in the country. Emboldened, Stephen came up with a radical idea: Maybe he would skip college altogether and mine a quick fortune in dot-com gold. His mother, Cindy, put the kibosh on his plan. She steered him to a full scholarship at the University of Nebraska at Omaha.

    Half a world away, in the western Indian city of Nagpur, a 19-year-old named Deepa Paranjpe was having an argument with her father. Sure, computer science was heating up, he told her. Western companies were frantically hiring Indians to scour millions of software programs and eradicate the much-feared millennium bug. But this craze would pass. The former railroad employee urged his daughter to pursue traditional engineering, a much safer course. Deepa had always respected her father's opinions. When he demanded perfection at school, she delivered nothing less. But she turned a deaf ear to his career advice and plunged into software. After all, this was the industry poised to change the world.

    As Stephen and Deepa emerge this summer from graduate school -- one in Pittsburgh, the other in Bombay -- they'll find that their decisions of a half-decade ago placed their dreams on a collision course. The Internet links that were being pieced together at the turn of the century now provide broadband connections between multinational companies and brainy programmers the world over. For Deepa and tens of thousands of other Indian students, the globalization of technology offers the promise of power and riches in a blossoming local tech industry. But for Stephen and his classmates in the U.S., the sudden need to compete with workers across the world ushers in an era of uncertainty. Will good jobs be waiting for them when they graduate? "I might have been better served getting an MBA," Stephen says.

    U.S. software programmers' career prospects, once dazzling, are now in doubt. Just look at global giants, from IBM (NYSE:IBM - News) and Electronic Data Systems (NYSE:EDS - News) to Lehman Brothers (NYSE:LEH - News) and Merrill Lynch (MER.). They're rushing to hire tech workers offshore while liquidating thousands of jobs in America. In the past three years, offshore programming jobs have nearly tripled, from 27,000 to an estimated 80,000, according to Forrester Research Inc. (NasdaqNM:FORR - News). And Gartner Inc. figures that by yearend, 1 of every 10 jobs in U.S. tech companies will move to emerging markets. In other words, recruiters who look at Stephen will also consider someone like Deepa -- who's willing to do the same job for one-fifth the pay. U.S. software developers "are competing with everyone else in the world who has a PC," says Robert R. Bishop, chief executive of computer maker Silicon Graphics Inc. (NYSE:SGI - News).
  7. For many of America's 3 million software programmers, it's paradise lost. Just a few years back, they held the keys to the Information Age. Their profession not only lavished many with stock options and six-figure salaries but also gave them the means to start companies that could change the world -- the next Microsoft, Netscape (NYSE:AOL - News), or Google. Now, these veterans of Silicon Valley and Boston's Route 128 exchange heart-rending job-loss stories on Web sites such as yourjobisgoingtoindia.com. Suddenly, the programmers share the fate of millions of industrial workers, in textiles, autos, and steel, whose jobs have marched to Mexico and China.

    "Leap of Faith"

    This exodus throws the future of America's tech economy into question. For decades, the U.S. has been the world's technology leader -- thanks in large part to its dominance of software, now a $200 billion-a-year U.S. industry. Sure, foreigners have made their share of the machines. But the U.S. has held on to control of much of the innovative brainwork and reaped rich dividends, from Microsoft to the entrepreneurial hotbed of Silicon Valley. The question now is whether the U.S. can continue to lead the industry as programming spreads around the globe from India to Bulgaria. Politicians are jumping on the issue in the election season. And it will probably rage on for years, affecting everything from global trade to elementary-school math and science curriculums.

    Countering the doomsayers, optimists from San Jose, Calif., to Bangalore see the offshore wave as a godsend, the latest productivity miracle of the Internet. Companies that manage it well -- no easy task -- can build virtual workforces spread around the world, not only soaking up low-cost talent but also tapping the biggest brains on earth to collaborate on complex projects. Marc Andreessen, Netscape Communications Corp.'s co-founder and now chairman of Opsware Inc. (NasdaqNM:OPSW - News), a Sunnyvale (Calif.) startup, sees this reshuffling of brainpower leading to bold new applications and sparking growth in other industries, from bioengineering to energy. This could mean a wealth of good new jobs, even more than U.S. companies could fill. "It requires a leap of faith," Andreessen admits. But "in 500 years of Western history, there has always been something new. Always always always always always."

    This time, though, there's no guarantee that the next earth-shaking innovations will pop up in America. Deepa, for example, has high-speed Internet, a world-class university, and a venture-capital industry that's starting to take shape in Bombay. What's more, her home country is luring back entrepreneurs and technologists who lived in Silicon Valley during the bubble years. Many came home to India after the crash and now are sowing the seeds of California's startup culture throughout the subcontinent. What's to stop Deepa from mixing the same magic that Andreessen conjured a decade ago when he co-founded Netscape? It's clear that in a networked world, U.S. leadership in innovation will find itself under siege.

    The fallout from this painful process could be toxic. One danger is that high-tech horror stories -- the pink slips and falling wages -- will scare the coming generation of American math whizzes away from software careers, starving the tech economy of brainpower. While the number of students in computer-science programs is holding steady -- for now -- the elite schools have seen applications fall by as much as 30% in two years. If that trend continues, the U.S. will be relying more than ever on foreign-born graduates for software innovation. And as more foreigners decide to start careers and companies back in their home countries, the U.S. could find itself lacking a vital resource. Microsoft CEO Steven A. Ballmer says the shortfall of U.S. tech students worries him more than any other issue. "The U.S. is No. 3 now in the world and falling behind quickly No. 1 (India) and No. 2 (China) in terms of computer-science graduates," he said in late 2003 at a forum in New York.

    Fear in the industry is palpable. Some of it recalls the scares of years past: OPEC buying up the world in the '70s and Japan Inc. taking charge a decade later. The lesson from those episodes is to resist quick fixes and trust in the long-term adaptability of the U.S. economy. Job-protection laws, for example, may be tempting. But they could hobble American companies in the global marketplace. Flexibility is precisely what has allowed the U.S. tech industry to adapt to competition from overseas. In 1985, under pressure from Japanese rivals, Intel Corp. exited the memory-chip business to concentrate all its resources in microprocessors. The result: Intel stands unrivaled in the business today.

    While the departure of programming jobs is a major concern, it's not a national crisis yet. Unemployment in the industry is 7%. So far, the less-creative software jobs are the ones being moved offshore: bug-fixing, updating antiquated code, and routine programming tasks that require many hands. And some software companies are demonstrating that they can compete against lower-cost rivals with improved programming methods, more automation, and innovative business models.

    For the rest of the decade, the U.S. will probably maintain a strong hold on its software leadership, even as competition grows. The vast U.S. economy remains the richest market for software and the best laboratory for new ideas. The country's universities are packed with global all-stars. And the U. S. capital markets remain second to none. But time is running short for Americans to address this looming challenge. John Parkinson, chief technologist at Cap Gemini Ernst & Young, estimates that U.S. companies, students, and universities have five years to come up with responses to global shifts. "Scenarios start to look wild and wacky after 2010," he says. And within a decade, "the new consumer base in India and China will be moving the world."
  8. People Skills

    To thrive in that wacky world, programmers like Stephen must undergo the career equivalent of an extreme makeover. Traditionally, the profession has attracted brainy introverts who are content to code away in isolation. With so much of that work going overseas, though, the most successful American programmers will be those who master people skills. The industry is hungry for liaisons between customers and basic programmers and for managers who can run teams of programmers scattered around the world. While pay for basic application development has plummeted 17.5% in the past two years, according to Foote Partners, a consultant in New Canaan, Conn., U.S. project managers have seen their pay rise an average of 14.3% since 2002.

    Finding those high-status jobs won't be easy. Last summer, 34-year-old Hal Reed was so hungry for a programming job that he answered an ad in the Boston Globe for contract work at cMarkets, a Cambridge (Mass.) startup. The pay was $45,000 -- barely more than an outsourcing company charges for Indian labor. But he took it. Fortunately for him, he was able to convince his new boss quickly that he was much more than a programmer. He could lead a team. Within weeks, his boss nearly doubled Reed's pay and made him the chief software architect. "He had great strategic thinking skills," says Jon Carson, cMarkets' chief executive. "You can't outsource that."

    To prepare students for the hot jobs, universities may need to revamp their computer-science programs. Carnegie Mellon University, where Stephen now studies, has already begun that process. His one-year master's program focuses on giving students the skills needed to manage teams and to play the role of software architect. Such workers are the visionaries who design massive projects or products that hundreds or even thousands of programmers flesh out.

    The key players in the drama, including these two master's students, Stephen and Deepa, don't have the luxury to wait and see how it turns out. Their time is now. Deepa graduates in May from the Bombay campus of the Indian Institute of Technology, a top university nestled between two lakes. Stephen emerges three months later from the Pittsburgh campus of CMU.

    The options they're eyeing illustrate the unfolding map of an industry in full mutation. A software career is no refuge for the faint of heart. Deepa, for example, could suffer if the U.S. government moves to block offshore development or if rocky experiences in foreign lands spark an industry backlash. And Stephen, if he misplays his hand, could find himself competing with lowballing Filipinos or Uruguayans.

    For now, their stories reflect the moods in their two countries -- one with lots to lose, the other with a world to win. Deepa is brimming with optimism about the future, convinced that her opportunities are limited by nothing more than her imagination. She is thinking not only about the next job but about the startup that she'll found after that. Stephen, by contrast, is cautious. Even at 22, he's attuned to the risks of a global market for software talent. While confident he'll make a good living, he's plotting out a career that sacrifices opportunities for a measure of safety. Self-protection, an afterthought five years ago, is a pillar of his strategy.
  9. Seeking a Niche

    It's midday in the windowless basement labs at CMU's Wean Hall. Stephen, tall and lanky, wearing a white T-shirt tucked into jeans, leans back in his chair and ponders his future. He signed up for the master's program at CMU on the advice of a professor in Omaha who told him that graduates with an MS could land more interesting jobs and make more money. But now the big recruiters coming onto the snowy Pittsburgh campus -- companies such as Microsoft and Amazon.com Inc. (NasdaqNM:AMZN - News) -- are hiring cheaper undergrads, he says, and barely giving the masters a look. Sure, other recruiters come knocking. Banks, he says with a grimace. Insurance companies. But the idea of working in a finance-industry tech shop leaves him cold. "I'm not even interviewing," he says.

    The 17-year-old hotshot who was ready to skip college and make a mint has undergone quite a change. He's married, has witnessed the bumps in the world of software, and plans to establish "an upper-middle-class lifestyle, and maybe more" as a businessman. His plan is to carve out a niche for himself back in Omaha. He'll gather three or four colleagues and produce custom software for businesses in town, from hospitals and steakhouses to law firms. Omaha is plenty big, he says, for a good business, but it's remote enough to insulate his startup from offshore competition -- and even from the bigger competitors in Chicago.

    Stephen understands the threat posed by smart and hungry programmers in distant lands. He was once such a programmer himself. From his senior year in high school all the way through college, he worked as a freelancer for a New York software-development company, Beachead Technologies Inc. Geoff Brookins, Beachead's young founder, spotted Stephen's prize-winning entry in the 1999 Microsoft Web-site design contest. He called Nebraska, sent Stephen some work, and was blown away. "He did two months of work in three days," he recalls. Brookins quickly signed him on at $15 an hour, ultimately paying him $45 an hour. Like the Indians, Stephen provided a low-cost alternative to big-city programmers -- but he had an advantage because he spoke American English and was only one time zone away from New York.

    The job let Stephen work on projects that normally would have been far beyond the reach of a student. One was to create IBM's (NYSE:IBM - News) Web page for its Linux operating-system technology -- a crucial arm of Big Blue's business. "Stephen was lead engineer on that project," Brookins says. The student also got to spend much of the summer of 2001 working at Beachead's office in New York City. It was a fun contrast to Nebraska, he recalls. But he stopped working for Beachead after he moved to Pittsburgh last summer.

    It was there that Stephen got a strong signal that the prospects were dimming for programmers. When his wife, Amy, a fellow computer-science student from Nebraska, began looking for programming work, she came back to their suburban apartment disheartened. The only available jobs, she says, "would have paid me interns' rates." She ditched the profession and is now writing a Christian-themed novel.

    Then, Stephen's old boss hammered home the dangers of coding for a living in a wired world. Beachead's competitors were finding cheaper labor offshore, and Brookins, to win contracts, had to match them. Last fall, he logged on to a Web site, RentACoder, a matchmaking service between employers and some 30,000 programmers around the world. There, Brookins found a 27-year-old Romanian named Florentin Badea, a star from Bucharest's Polytechnic University and the 11th-ranked programmer on the whole site. Badea was willing to charge just $250 for a project that would have cost $2,000, Brookins estimates, if Stephen had done it.

    Those same global forces, Stephen admits, could eventually hollow out his business in Omaha. Already, Indian tech-services outfits such as Infosys and Wipro are competing head-to-head with U.S. companies in this country. But Stephen is betting that by working closely with customers, he can whip bigger firms on quality and service. He says he'll give the venture six months to a year and then see what happens.

    Ultrafast Track

    Deepa sees a reverse image of Stephen's worldview. Where the prospects for U.S. tech grads seem to narrow as they peer into the future, she's looking down an eight-lane highway. Yet she faces her own set of challenges, she acknowledges, while sipping tea with her classmates in a breezy open-air cafeteria on the Indian Institute of Technology's Bombay campus. They don't want to be cogs in a software-programming factory -- India's role to date. Instead, they want India to be a tech powerhouse in its own right. "Good Indian engineers can do good design work, but we need a venture industry" so Indians can start their own companies, says Deepa. Her pals nod in agreement.

    Deepa is positioned on India's ultrafast track. The country pins high hopes on the 3,000 students in the six Institutes of Technology. Their alumni are stars locally and worldwide -- including Yogen Dalal, a top venture capitalist at Mayfield, and Desh Deshpande, founder of Sycamore Networks and Cascade Communications. Within this elite, Deepa and her friends are a rarified breed. They aced the grueling national exams, ranking in the top 0.2% and winning places in the school of computer science. They're known as "toppers." The challenge for Deepa's small crowd is to move beyond the achievements of Dalal and Deshpande, who notched their successes for U.S. companies, and to make their mark with new Indian companies.

    That means bypassing the bread-and-butter service giants, such as Tata, Infosys, and Wipro, that dominate the Indian stage. The jobs they offer, says Deepa, sound boring. To get their hands on exciting research and more creative programming, she and her friends are banking mostly on U.S. companies in India, including Intel, Texas Instruments, and Veritas. This summer, when Deepa graduates, she'll be a software engineer at the Pune operations of Veritas Software Corp. (NasdaqNM:VRTS - News), a Silicon Valley storage-software maker. Her pay will start at $10,620 a year -- plenty for a comfortable middle-class life in India. "I'm living my dream," she says.

    And thrilling her family. Her father, Arun Paranjpe, who grew up in Mhow, a tiny army-base town in central India, could afford only a bachelor's degree, which prepared him for work as an officer in India's railways. He regretted not advancing further and along with Deepa's homemaker mother, he pushed his two daughters toward advanced professional degrees. So while she studied Indian classical vocal music for nine years and escaped, when she could, to the cricket field, Deepa always finished at the top of her class in mathematics. That helped her land a plum spot in the computer-science program at Nagpur University.

    Now Deepa is ITT-Bombay's star in search technology -- and she's hoping that this specialty will be her ticket to a rip-roaring career. She routinely works till 3 a.m. in the department's new 20-pod computer lab, doing research on search engines. She admits the work at Veritas, at least initially, will involve more routine database tasks than the cutting-edge work she's hoping for. But if Veritas disappoints, a topper like Deepa will have plenty of other options. Both the search giant Google Inc. and the Web portal Yahoo! are setting up research and development centers in India this year. Deepa hopes to manage a research lab some day, and ultimately, she says, "I'd like to be an entrepreneur."

    But she's an entrepreneurial revolutionary and family traditionalist at the same time. It's part of her balancing act. Consider her eventual marriage. As an attractive, professional woman, she'll make a prize catch in India's conservative marriage market. Deepa expects she will have an arranged marriage: Her parents will chose a suitable husband for her from within her own caste. But she is firm: Her husband would have to be an entrepreneur, or a tech whiz, and preferably in the same field, "so we can have a common platform and he can understand my work," she says.

    Maybe one day the couple will be able to raise venture money together. While venture-capital investing didn't exist in India until a few years ago, the industry is starting to take root. In 2003, India's 85 venture-capital firms invested about $162 million in tech companies, according to estimates from the India trade group National Association of Software & Services Cos. That's up from zero in 1998. Still, it's miles short of the financial support available to Stephen and his classmates. The 700 U.S. venture firms poured $9.2 billion into tech startups last year, according to market researcher VentureOne.
  10. Multicultural Edge

    Diversity is another advantage the U.S. has over India. Take a stroll with Deepa through the leafy ITT campus, and practically everyone is Indian. Stephen's scene at CMU, by contrast, feels like the U.N. Classmates joke in Asian and European languages, and a strong smell of microwaved curry floats in the air. This atmosphere extends to American tech companies. With their diverse workforces, American companies can field teams that speak Mandarin, Hindi, French, Russian -- you name it. As global software projects take shape, with development ceaselessly following the path of daylight around the globe, multicultural teams have a big edge. Who better than U.S.-based workers to stitch together these projects and manage them? "These people can act as bridges to the global economy," says Amar Gupta, a technology professor at Massachusetts Institute of Technology's Sloan School of Management.

    The question is whether the technology industry can respond quickly enough to a revolution that's racing ahead on Internet time. Stephen's former boss, Brookins, frets that the pace could overwhelm the coming generation of U.S. programmers, including his former Nebraska star. "He's a genius. He's the future of the country. (But) if the question is whether there's going to be a happy ending for Stephen, there's a big question mark there," Brookins says. Stephen is betting that quality and customer service will offset the cost advantage of having computer programmers 10 time zones away. He still sees software in the U. S. as a path to wealth -- "though I won't really know until I get out there," he says.

    While Stephen is busy mounting his defenses, Deepa is setting out on the hard climb to build Silicon India. Much like their two countries, the leader is looking cautiously over his shoulder while the challenger is chugging single-mindedly ahead. No matter which way they may zig or zag, both of them are prepared to encounter rough competition from every corner of the globe. There's no such thing as a safe distance in software anymore.
    #10     Feb 22, 2004