Author: Amol Sharma
Publication: The Christian Science
Monitor
Date: June 18, 2003
URL: http://www.csmonitor.com/2003/0618/p01s03-wosc.html
Remember that scene from "The Nutty
Professor II" when Eddie Murphy morphs into a baby?
It looks like Hollywood at its special-
effects best. But the scene was produced in a studio 16 time zones - and
a cultural world - away, in Bangalore, India.
US companies have outsourced mundane
data entry and programming to India for years. But increasingly, US firms
are farming out much more sophisticated work to the world's second most
populous nation, taking advantage of skilled accountants, market researchers,
and medical technicians - even special- effects artists - who work for
nickels on the dollar.
Behind the push are the need to
cut costs, advances in telecommunications technologies, and growing confidence
in India's labor force. "As large global corporations and institutions
are becoming more comfortable with the offshore model and more sophisticated
in managing business practices remotely, they are moving more complex processes
offshore," says Peter Lowes, a partner in the outsourcing practice at Deloitte
Touche Tohmatsu.
Forrester Research estimates that
3.3 million jobs will be outsourced to low-wage countries like India by
2015. India's leading technology trade group, NASSCOM, says the Indian
back-office sector will grow 65 percent this year, to $2.3 billion.
The trend is not sitting well with
laid-off workers in the US, who are protesting the phenomenon in online
chat rooms and discussion groups. Six states are considering legislation
that would ban taxpayer-funded contracts from going offshore, which means
India in many cases.
But the austere US economy may leave
companies with little choice.
"In order to drive earnings growth
in an environment where revenues are flat, the only alternative is to cut
cost," says Mr. Lowes. "But you have to do that while maintaining quality
of service to your customers." India is attractive, he says, because the
quality of service is often comparable to or better than in the US.
Years of outsourcing experience
have convinced many American companies that Indian workers are highly skilled,
efficient, and creative.
"The comfort level of American companies
with Indian workers is growing, and it will continue to grow," says Gurucharan
Das, a leading economic analyst and a consultant for Indian companies looking
to win outsourcing contracts.
Coming back for more
The quality of special- effects
work done in India has apparently impressed the big Hollywood studios,
who keep coming back for more.
"The artistic traditions in this
country are ancient, so we draw on that," says S.S. Dahiya, whose Bangalore
firm, Compudyne Winfosystems, has crafted special- effects scenes in "Independence
Day," "Men in Black," and "Swordfish," among others.
Mr. Dahiya says he can do the same
work as a Hollywood effects studio - but for 70 percent of the cost. The
starting salary of a graphic artist at Compudyne is just $5,000 a year,
paltry by US standards.
The outsourcing of animation and
film production is just picking up steam and appears to be poised for a
boom. The trade group NASSCOM recently pegged the country's animation and
digital- media industry at $600 million, and said it is expected to grow
to $5 billion by 2008. "The Indian animation market is suddenly waking
up to a host of global opportunities," says NASSCOM president Kiran Karnik.
Another industry poised to send
high-skilled jobs to India is financial services. Indians have proved their
merit over the years in processing insurance claims and credit cards. Now
some of the world's leading firms are handing over more sensitive, higher-end
financial-services work.
Consulting firm A.T. Kearney recently
released a study that made waves on Wall Street. It stated that 500,000
financial-services jobs will be outsourced to India in the next five years.
The reason: Top Indian business graduates are viewed as highly competent
- and their annual salary of $12,000 pales in comparison with the six figures
demanded by top American MBAs.
This year, Ernst & Young started
sending tax returns - which far outpace simple data entry in complexity
- to its Indian office for processing. About 50 American companies now
trust Indians to tabulate some 35,000 returns, a figure that is likely
to grow dramatically, experts say.
The Indians charged with this work
are chartered accountants. Still, this sector may grow gradually, given
that many firms aren't convinced Indians can learn the US tax code thoroughly
and are reluctant to outsource such a sensitive process.
Investment banks are also taking
a closer look at India's offerings. JP Morgan Chase & Co. said staff
in its Bombay office will begin producing research reports on US stocks
this summer. There is speculation in the industry that Deutsche Bank and
Morgan Stanley plan to do the same, but neither company has officially
announced such intentions.
Help on the night shift
India is making forays into medicine
as well, building on years of experience transcribing dictation for American
doctors.
In a small Bangalore office building,
Indian radiologists are downloading CT scans done at Boston's Massachusetts
General Hospital, analyzing them, and sending back three-dimensional computer
models highlighting problem areas - though not providing official diagnoses.
Wipro, one of India's leading technology
companies, has made the arrangement possible by building a telecommunications
system that allows several gigabytes of data to be sent between Mass General
and Bangalore every day.
Unlike other outsourcing ventures,
the primary goal isn't to save money, but to alleviate stress on Mass General's
radiology staff, particularly during night shifts.
"It's not really a cost advantage;
it's a time advantage," says Sanjay Saini, head of CT services at Mass
General and a professor of radiology at Harvard Medical School. "The best
place to do that nighttime work is on the other side of the world, where
it's daytime."
But even if there are no savings
for Mass General, the hospital is still getting a good return on its investment.
The Indian radiologists are doing the work of US medical technicians and
earning comparable pay, though their education and training is more like
that of American doctors.
Eventually, Dr. Saini hopes to bring
Indians to the US to gain medical licenses so they can return to India
and offer full patient care services, albeit remotely.
But, he says, that idea is meeting
with resistance. Some in the American medical community question the overall
quality of Indian medicine - and the privacy safeguards for medical information
sent to India.
Average yearly salaries for IT programmers
US $63,331
Poland and Hungary $4,800 to $8,000
India $5,880
Philippines $6,564
Malaysia $7,200
Russian Federation $5,000 to $7,500
China $8,952
Canada $28,174
Ireland $23,000 to $34,000
Israel $15,000 to $38,000
