Adopting the Indian perspective

Market research firm IDC recently estimated that by 2007, 23 percent of all IT services jobs will be offshore, up from 5 percent in 2003. The figures refer to IT work done for US-based companies.

Companies argue that so-called offshoring can save money and preserve US jobs, but critics say the practice undermines US tech leadership and hurts IT workers already reeling from job cuts during the recent downturn.

Nilekani can be seen as a founding father of overseas outsourcing. He helped launch Infosys in 1981. In the fourth quarter of 2003, Infosys' revenue hit $275.9m, up 38 percent from the year-ago period. The company and its subsidiary Progeon, which focuses on business process outsourcing, now employs more than 23,000 workers.

A significant number of Infosys' workers hold temporary visas in the United States. In a recent filing with the US Securities and Exchange Commission, Infosys said that about 2,600 of its employees in the United States held H-1B visas, while about 800 workers held L-1 visas as of 30 September, 2003. Use of those visas has drawn fire, given the job market troubles of US tech workers.

In a recent interview with CNET.News.com, Nilekani defended the visa programs and said that the debate over offshore outsourcing misses a wider picture: global free trade has advantages and disadvantages on both sides of the Pacific Ocean.

Q: Who wins and who loses from offshore relocations?
A: The Indian companies and Indian employees win, and so do the American companies that outsource. For the American companies, this clearly is an instrument for them to improve their productivity, reduce their cost and have higher quality. And that is required for their financial longevity and the robustness of their business models.

And for the Indian companies, it creates not only growth but also a tremendous amount of jobs, which are required in a country like India and is helping spur its overall economic growth. So I think it is a healthy development; it is part of globalisation. For the last several years, we have all been talking about lowering the barriers of protectionism between countries, and this is part of that process.

What is the average compensation difference for a job that gets moved from Santa Clara, California, say to Bangalore?
I think it would vary. It would vary by maybe a factor of three times, four times or five times.

And what about the overall cost for clients? I gather that is not necessarily the same.
Yes, because there are other costs related to remote development. So, I would say that the cost of offshore development would be about a little more than half of what it could cost on-site.

What kinds of technology jobs are safer in the United States?
I think that the US technology industry is the fountainhead of innovation, and I think that innovation will always be led by the United States. There is going to be a continuous stream of new technologies coming in and new companies coming to exploit that technology. That innovation cycle, I think, is the strength and heart of the US model.

Tell me how that will work, though, if a lot of basic programming work gets sent overseas. Can't you imagine that there won't be a pool of talent that gets started in the lower ranks of the IT world and then gets a chance to develop those higher-level skills?
Innovation requires people who are both very close to the technology trends and people who understand customer needs -- and especially customer needs that are unmet and that they can meet. So it requires both very strong technology knowledge as well as customer access and customer intimacy. So I think the United States will always lead in those matters.