SNEAKING UP AT A SNAIL'S PACE (via Mike Daley):

The Rise Of India: Growth is only just starting, but the country's brainpower is already reshaping Corporate America (Manjeet Kripalani and Pete Engardio With Steve Hamm, DECEMBER 8, 2003, Business Week)

Plenty of Americans know of India's inexpensive software writers and have figured out that the nice clerk who booked their air ticket is in Delhi. But these are just superficial signs of India's capabilities. Quietly but with breathtaking speed, India and its millions of world-class
engineering, business, and medical graduates are becoming enmeshed in America's New Economy in ways most of us barely imagine. "India has always had brilliant, educated people," says tech-trend forecaster Paul Saffo of the Institute for the Future in Menlo Park, Calif. "Now Indians are taking the lead in colonizing cyberspace."

This techno take-off is wonderful for India -- but terrifying for many Americans. In fact, India's emergence is fast turning into the latest Rorschach test on globalization. Many see India's digital workers as bearers of new prosperity to a deserving nation and vital partners of Corporate
America. Others see them as shock troops in the final assault on good-paying jobs. Howard Rubin, executive vice-president of Meta Group Inc., a Stamford (Conn.) information-technology consultant, notes that big U.S. companies are shedding 500 to 2,000 IT staffers at a time. "These people won't get reabsorbed into the workforce until they get the right skills," he says. Even Indian execs see the problem. "What happened in manufacturing is happening in services," says Azim H. Premji, chairman of IT supplier Wipro Ltd. "That raises a lot of social issues for the U.S." [...]

Tech luminary Andrew S. Grove, CEO of Intel Corp. (INTC ), warns that "it's a very valid question" to ask whether America could eventually lose its overwhelming dominance in IT, just as it did in electronics manufacturing. Plunging global telecom costs, lower engineering wages abroad, and new interactive-design software are driving revolutionary change, Grove said at a software conference in October. "From a technical and productivity standpoint, the engineer sitting 6,000 miles away might as well be in the next cubicle and on the local area network." To maintain America's edge, he said, Washington and U.S. industry must double software productivity through more R&D investment and science education.

But there's also a far more positive view -- that harnessing Indian brainpower will greatly boost American tech and services leadership by filling a big projected shortfall in skilled labor as baby boomers retire. That's especially possible with smarter U.S. policy. Companies from GE Medical Systems (GE ) to Cummins (CUM ) to Microsoft (MSFT ) to enterprise-software firm PeopleSoft (PSFT ) that are hiring in India say they aren't laying off any U.S. engineers. Instead, by augmenting their U.S. R&D teams with the 260,000 engineers pumped out by Indian schools each year, they can afford to throw many more brains at a task and speed up product launches, develop more prototypes, and upgrade quality. A top electrical or chemical engineering grad from Indian Institutes of Technology (IITS) earns about $10,000 a year -- roughly one-eighth of U.S. starting pay. Says Rajat Gupta, an IIT-Delhi grad and senior partner at consulting firm McKinsey & Co.: "Offshoring work will spur innovation, job creation, and dramatic increases in productivity that will be passed on to the consumer."
Whether you regard the trend as disruptive or benefical, one thing is clear. Corporate America no longer feels it can afford to ignore India. "There's just no place left to squeeze" costs in the U.S., says Chris Disher, a Booz Allen Hamilton Inc. outsourcing specialist. "That's why every CEO is looking at India, and every board is asking about it." neoIT, a consultant advising U.S. clients on how to set up shop in India, says it has been deluged by big companies that have been slow to move offshore. "It is getting to a state where companies are literally desperate," says Bangalore-based neoIT managing partner Avinash Vashistha. [...]

Throughout U.S. history, workers have been pushed off farms, textile mills, and steel plants. In the end, the workforce has managed to move up to better-paying, higher-quality jobs. That could well happen again. There will still be a crying need for U.S. engineers, for example. But what's called for are engineers who can work closely with customers, manage research teams, and creatively improve business processes. Displaced technicians who lack such skills will need retraining; those entering school will need broader educations.

Adapting to the India effect will be traumatic, but there's no sign Corporate America is turning back. Yet the India challenge also presents an enormous opportunity for the U.S. If America can handle the transition right, the end result could be a brain gain that accelerates productivity
and innovation. India and the U.S., nations that barely interacted 15 years ago, could turn out to be the ideal economic partners for the new century.

Regardless of whether it's a good or a bad thing, the astonishing thing is that American political and intellectual elites continue to ignore India and to pretend that Europe matters. India is the single most important nation to our future--both economic and geopolitical--but when's the last time you heard a politician so much as mention it?

MORE:
-Wake-Up Call for the West: SPECIAL REPORT.Concern is growing at the exodus of British jobs to call centres in India ... but we have seen nothing yet. (Douglas Fraser, 30 November 2003, Sunday Herald)
-Call Centre Kings: In a world without borders a booming India is poised to clean up. And Kiran Karnik, a leading architect of the Bangalore boom, is determined to make the most of it (30 November 2003, Sunday Herald)

Posted by Orrin Judd at November 30, 2003 5:01 PM