India winning higher-status jobs from US
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.
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.
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