AT THE (OUT)SOURCE:

At the center of a culture shift: A pioneer says outsourcing will ultimately benefit US, India. Others are less sanguine. (Robert Weisman, May 25, 2004, Boston Globe)

It doesn't look much different from the other three-family, gambrel-roofed homes lining the blocks behind Central Square. But for students of the Indian outsourcing movement, the olive gray house at 10 St. Paul St. could qualify as a historic landmark.

It was here, in the fall of 1972, where one of the earliest ''offshore" business models was conceived and tested by Indian-born MIT graduate Narendra K. Patni and his bride, Poonam. Their experiment has mushroomed into a business empire, and a global phenomenon that is fueling productivity -- along with controversy.

The newlyweds launched a pilot project in their third-floor apartment, designating the living room as the ''United States" and the bedroom as ''India."

In one room, they wrote instructions for the conversion of data from paper documents to computers. In the other room, a small team of MIT students typed the data into a Flexowriter machine that spat out paper tape -- the first and most labor-intensive task in what then was a multiple-step, data-conversion process.

A key ground rule was that there would be no oral communication -- only written notes -- between people in the two rooms. That was because phone connections between the United States and India were still spotty in the 1970s. Written instructions would have to suffice.

''That was the first major attempt to outsource services," said Narendra Patni, 62, who shuttles between his US office in Kendall Square and his headquarters in Bombay as chief executive of Patni Computer Systems Ltd., a $250 million-a-year technology services firm that recently went public in India. ''I felt from the beginning there was economic significance to it."

His wife has a different, less grandiose memory. ''It wasn't easy hauling the Flexowriter up all those stairs," she recalled. [...]

Even among Patni's admirers, not everyone is so sanguine about the impact of outsourcing, especially as the practice spreads to higher-wage job categories such as software programming.

Jay Forrester, a retired professor at MIT's Sloan School of Management and a pioneer in the field of systems dynamics, hired Patni to help him run his consulting and publishing company (no relation to Forrester Research) in the late 1960s. ''He was a very high-caliber person," Forrester said, ''and he's been very successful."

When Patni told him a few years later that he was shipping documents to India for data conversion, Forrester said, ''I was surprised because this was entirely new to me."

Today, more than 30 years later, the 85-year-old Forrester casts a skeptical eye on the burgeoning outsourcing movement.

''I think it's going to produce a tremendous political backlash, and will be significantly curtailed in a few years," he warned. ''I think it will drive the standard of living of the United States down to the level of the countries that we're outsourcing to."

Patni, for his part, believes the genie is out of the bottle.

Added Mr. Forrester: "Look at all those great jobs in the chemical industry we lost to Bhopal."

Posted by Orrin Judd at May 25, 2004 7:57 AM